Your Directors hereby present the 57th Annual Report on the business and operations of your company along with audited financial statements for the year ended 31st March 2019.
Financial Highlights :
The summary of the financial performance of the Company for the year ended 31st March 2019 is as follows.
|(Rs. in Lakhs)|
|Revenue from operation||20812.23||26087.92|
|Earnings before Finance|
|Cost Depreciation & Tax||248.18||(222.49)|
|Less: Finance Cost||1265.63||1381.73|
|Depreciation & Tax||(1017.45)||(1604.22)|
|Less: Depreciation and amortization||409.15||554.82|
|Exceptional items & Tax||(1426.60)||(2159.04)|
|Add: Exceptional Items||(19.50)||-|
|Add: Profit from discontinued operations||(156.48)||-|
|Profit/(Loss) before tax||(1602.58)||(2159.04)|
|Less: Current and deferred Tax||-||-|
|Add: Other Comprehensive Income||673.30||-|
|Profit/(Loss) after Tax||(929.27)||(2159.04)|
Review of business operations
During the year under review your Company continued to operate below its normal rated capacity. On account of unviable nature of operations the Company discontinued its manufacturing facility in SUPER SARA unit from May 2018 resulting in a lower turnover during the year. Some of the plant and machinery at this unit have been gainfully shifted to Super A and Super B units. The land and building at Super Sara unit has been leased to a leading auto component manufacturer with effect from March 2019. On account of severe working capital constraints the Company could not operate Super A and B units at its normal full capacity. This resulted in the fixed costs being absorbed over a lower volume thus affecting the profitability. Besides this the cotton yarn market was very sluggish during most part of the year affecting the movement as well the price realisation.
However in spite of these adverse circumstances the Earnings before Depreciation and Interest was positive at Rs. 248 lakhs as against a loss of Rs. 222 lakhs in the previous year. After deducting the finance costs and depreciation operating loss during the year amounted to Rs. 1427 lakhs as against a loss of Rs. 2159 lakhs during the previous year. Further the losses arising out of the SUPER SARA unit aggregated to Rs. 156.48 lakhs which is shown under Profit/loss from Discontinued Operations as required under Ind AS 105 of Companies (Indian Accounting Standards) Rules 2015 specified as per the provisions of the Companies Act 2013 as amended from time to time. As mandated by IND AS the lands has been revalued at its current value resulting in a revaluation profit of Rs. 1472 lakhs. This has been included in other comprehensive income as stipulated in IND AS. After considering this the net loss of the Company was brought down to Rs. 929 lakhs as against the net loss in the previous year of Rs. 2159 lakhs. Further we had to pay FSI charges of Rs. 980.13 lakhs to AP Transco which was under protest about 4 years back which was also disputed by us and pending before the Supreme Court. Since the final decision of the Supreme Court went against the Company the opening balance of Retained earnings as at April 1 2017 grouped under Other Equity forming part of the Balance sheet above has been adjusted to the extent of Prior period item (expenses/losses) amounting to Rs. 980.13 lakhs. The same is given effect as per the disclosure requirement as enumerated in Ind AS - 8 as notified under Companies (Indian Accounting Standards) Rules 2015 of the Companies Act 2013 as amended.
Outlook for the current year
Due to volatility of cotton prices there is an element of uncertainty in the cotton yarn markets. To ease the working capital situation the Company is in the process of disposing some of the surplus land owned by the Company in Coimbatore and Hindupur after getting the necessary approvals from the Company's bankers. In view of the lower working capital requirements for synthetic and blended yarn we are in the process of migrating to man made fibres. Also a portion of our manufacturing facilities is being given on buyback to well established customers with a view to further reduce the working capital requirements. As a result of the above steps we hope to show an improved performance during the current year.
Change in the nature of business
There was no change in the nature of principal business of the Company during the financial year ended 31st March 2019.
Transfer to Reserves
During the year under review no amount has been transferred to general reserves. However the current year loss of Rs. 929.27 Lakhs has been adjusted against the retained earnings under the head other equity.
Due to losses incurred by the Company during the year under review the Directors have not recommended any Dividend for the year ended 31st March 2019.
The issued subscribed and paid-up share capital of the Company as on 31st March 2019 stood at Rs. 55000000/- divided into 55000000 equity shares of Rs. 1/- each. During the year under review the Company has not made any fresh issue of shares.
Transfer of Unclaimed Dividend to Investor Education and Protection Fund
There was no amount to be transferred during the year to the Investor Education and Protection Fund established by the Central Government.
Extract of Annual Return
The extract of Annual Return in the prescribed Form No.MGT-9 pursuant to Section 92(3) read with Rule 12 of the Companies (Management and Administration) Rules 2014 is furnished as Annexure 1 to this Report.
Board and Committee meetings
Detailed composition of the Board & various Committees number of meetings held during the year attendance particulars of the directors in such meetings are provided in this annual report under Corporate Governance Report.
Statement on compliance with Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively. The Company has duly complied with Secretarial Standards issued by the Institute of Company Secretaries of India on the meeting of the Board of Directors (SS-1) and General Meetings (SS-2).
Directors Responsibility Statement
Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 with respect to Directors' Responsibility Statement it is hereby confirmed that:
a) in the preparation of the annual accounts the applicable accounting standards had been followed and there are no material departures from those standards;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the loss of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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 have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively and
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Details in respect of frauds reported by Auditors under Section 143(12) of the Companies Act 2013 other than those which are reportable to the Central Government
There have been no frauds reported by the Auditors pursuant to Section 143(12) of the Companies Act 2013.
Declaration of Independent Directors
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Further they have also declared that they are not aware of any circumstance or situation which exist or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.
Company's Policy Relating to Directors Appointment Payment of Remuneration and other matters provided
The Company pursuant to the provisions of Section 178 of the Companies Act 2013 and in terms of Regulation 19(4) of the SEBI Listing Regulations has formulated a policy on Nomination and Remuneration for its Directors Key Managerial Personnel and Senior Management. The Nomination and Remuneration Policy of the Company is annexed herewith as Annexure 2 and can also be accessed on the Company's website at the link http:// www.superspinning.com/wp-content/uploads/2019/03/ NominationAndRemunerationPolicy.pdf
Comments on Auditors' Report
There were no qualifications reservations adverse remarks or disclaimers made by M/s. Sethia Prabhad & Hegde Statutory Auditors and Mr. M.D.Selvaraj of MDS & Associates Secretarial Auditor in their report.
Particulars of Loans Guarantees or Investments made under Section 186 of the Companies Act 2013
During the year under review the Company has not granted any loans or given any security or made any investments pursuant to the provisions of Section 186 of the Companies Act 2013. However the details in respect of investments made by the Company in the earlier years are disclosed in the notes to the financial statements.
Particulars of contracts or transactions with related parties
All the transactions entered into by the Company with related parties as defined under the Companies Act 2013 and Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 during the financial year 2018-19 were in the ordinary course of business and on arms' length basis.
The particulars of contract and arrangement entered into by the Company with related parties referred to in Sub-section (1) of Section 188 of the Companies Act 2013 including certain arm's length transactions under third proviso thereto are disclosed in Annexure 3 (Form No. AOC-2) and forms part of this Report.
The policy on related party transactions as approved by the Board of Directors of the Company has been uploaded on the company's website and may be accessed through the link at http:// www.superspinning.com/wp-content/uploads/2019/03/ PolicyOnRelatedPartyTransaction.pdf
Material changes and commitments affecting the financial position of the company
There have been no material changes and commitments affecting the financial position of the Company which have occurred between 31st March 2019 and the date of the report.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The information pertaining to conservation of energy technology absorption Foreign Exchange Earnings and outgo as required under section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is attached herewith as Annexure 4 to this report.
Risk Management Policy of the company
The Company recognizes that risk is an integral part of business and it is committed to managing the risks in a proactive and efficient manner. Keeping the same in mind the Board of Directors of the Company has formulated the Risk Management Policy. The Company does not face any risk other than those prevalent in the industry and it has taken all possible steps to overcome such risks. However some of the risks which may pose challenges are set out in the Management Discussion and Analysis Report which forms part of this report.
The Company has constituted Audit Committee in accordance with Section 177 of the Companies Act 2013. Kindly refer the Report on Corporate Governance for matters relating to the composition meetings and functions of the committee.
The Board has accepted the Audit Committee's recommendations during the year wherever required and hence no disclosure is required under Section 177(8) of the Companies Act 2013 with respect to rejection of any recommendations of Audit Committee by the Board.
Whistle Blower Policy (Vigil Mechanism)
It is required to formulate a Whistle Blower policy in line with the provisions of Section 177 of the Companies Act 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 to enable the directors and employees to report concerns about unethical behaviour actual or suspected fraud or violation of the company's code of conduct or ethics policy. The Company has a policy which provides for adequate safeguards against victimization of director(s) / employee(s) who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower policy has been uploaded on the company's website and may be accessed through the link at http://www.superspinning.com/wp-content/uploads/ 2016/08/WhistleBlowerPolicy.pdf.
Corporate Social Responsibility initiatives
The Corporate Social Responsibility Committee comprises of Mr. C S K Prabhu Mr. Sumanth Ramamurthi and Mr. A R Balasundharam The company has adopted a Corporate Social Responsibility Policy defining therein the CSR activities to be undertaken by the Company in line with the provisions of Schedule VII of the Companies Act 2013. The Corporate Social Responsibility Committee of the Board is responsible for the implementation and effective monitoring of the CSR activities of the Company.
The Annual Report on Company's CSR activities of the Company is furnished in the prescribed format as Annexure 5 to this report.
Annual evaluation of the Board on its own performance and of the individual Directors
SEBI had issued a guidance note on Board Evaluation specifying the criteria for evaluation of performance of the Board of Directors Committees and the individual Directors. In accordance with the same the Nomination and Remuneration Committee has adopted suitable criteria to evaluate the Independent Directors Committees of the Board and the Board of Directors. The Independent Directors of the Company had also convened a separate meeting for this purpose on 9th February 2019. All the results of evaluation have been communicated to the Chairman of the Board.
Board of Directors
Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. A R Balasundharam (DIN: 07802383) Non-Executive Director of the Company who retires by rotation at the ensuing Annual General Meeting being eligible offers himself for reappointment. The Board recommends his reappointment in the forthcoming Annual General Meeting.
The term of office of Mr. C S K Prabhu and Mr. Balakrishnan Vijayakumar Independent directors expires on 31st May 2019. Both the directors have expressed their desire to retire from the duties of the Board. The Board recalled the tireless efforts and valuable contributions rendered by them during their long decades of association with the Company and placed on record their sincere appreciation to Mr. C S K Prabhu and Mr. Balakrishnan Vijayakumar. Mr. C G Kumar Mr. Sudarsan Varadaraj and Mrs. Suguna Ravichandran were appointed as independent directors of the company pursuant to Section 149 of the Companies Act 2013 for the first term of 5 years and will hold office upto 31st May 2019.Considering their knowledge expertise and experience in their respective fields and the substantial contribution made by these directors during their tenure as an independent directors since their appointment the nomination & remuneration committee and the board has recommended the reappointment of these directors as independent directors on the board of the company to hold office for the second term of five consecutive years commencing from 1st June 2019 and not liable to retire by rotation. The company has received declaration from all the directors that they continue to fulfill the criteria of independence as prescribed under Section 149(6) of the Companies Act 2013 as well as SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015 (including statutory re-enactment thereof for the time being in force).
In terms of the provisions of Section 160(1) of the Companies Act 2013 the company has received notice from a member signifying his intention to propose the candidature for the reappointment of Mr. C G Kumar Mr. Sudarsan Varadaraj and Mrs. Suguna Ravichandran for the office of Independent Directors.
The board of directors recommends the re-appointment of the independent directors by way of passing special resolution(s).
The Board of Directors based on the recommendation of the Nomination and Remuneration Committee at their meeting held on 30th May 2019 has approved the reappointment of Mr.Sumanth Ramamurthi as the Chairman and Managing Director of the Company for a further period of three years with effect from 01st April 2020. The terms and conditions of his appointment including his remuneration are subject to the approval of the Shareholders in the ensuing Annual General Meeting.
Accordingly necessary resolution proposing the reappointment of Mr. Sumanth Ramamurthi as Chairman and Managing Director of the Company has been included in the Agenda of the Notice convening the Annual General Meeting for the approval of the members.
Key Managerial Personnel
Key Managerial Personnel of the Company required under Sec 2(51) and 203 of the Companies Act 2013 are Mr. Sumanth Ramamurthi Chairman and Managing Director; Mr. B Sathyanarayan Reddy Chief Financial Officer and Mrs. Narmatha G K Company Secretary.
Mr. Dhilip Kumar who was the Chief Financial Officer had resigned from the services of the Company from 14.01.2019 and Mr.B Sathyanarayana Reddy was appointed as the Chief Financial Officer of the Company on 09.02.2019 Mrs. Ramaa Krishnan who was the Company Secretary had resigned from the services of the Company from 12.09.2018 and Mrs. Narmatha G K was appointed as the Company Secretary of the Company on 14.09.2018
Subsidiaries Joint Ventures and Associate Companies
The Company does not have any subsidiaries Joint Ventures or Associate Companies.
The Company has not accepted or renewed any fixed deposits from the public and shareholders during the year under review and hence there were no unpaid deposits as on 31st March 2019.
Details of significant and material orders passed by the regulators or Courts or Tribunals impacting the going concern status and Company's operation in future
There are no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future.
Adequacy of internal financial controls with reference to the financial statements
The Company has in place adequate internal control systems to monitor internal business process financial reporting and compliance with applicable regulations. During the year the Internal Auditor of the Company were assigned the responsibility for ensuring and reviewing the adequacy of legal compliance systems in the Company as required under the Companies Act 2013.
The audit Committee of the Board constantly reviews the observations of the internal auditor with respect to the internal control systems and their adequacy significant risk areas control mechanism and the operations of the Company. It also discusses and implements the recommendations made for corrective action through the internal audit reports. The committee also reviews the statutory auditors' report key issues significant process and accounting policies.
The Directors and the Management confirms that the Internal Financial Controls (IFC) is adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors Report.
M/s.Sethia Prabhad Hegde & Co. Chartered Accountants (FRN 013367S) Bengaluru were appointed as the statutory auditors of the company for a period of five years at the 55th Annual General Meeting of the company held on 1st December 2017. Pursuant to the amendment of Section 139 of the Companies Act 2013 the company is no longer required to seek the ratification of the appointment of the auditor at every annual general meeting. The company has received a certificate from M/s.Sethia Prabhad Hegde & Co. Chartered Accountants confirming that they are not disqualified from continuing as statutory auditors of the company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with corresponding rules framed thereunder the Company has appointed Mr. M.D.Selvaraj MDS & Associates Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The report of the Secretarial Audit in Form No. MR-3 for the financial year 2018-19 is annexed herewith as Annexure 6 to this report.
Further the Secretarial Compliance Report for the year ended 31st March 2019 issued by the Practicing Company Secretary pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has been filed with BSE Limited and the National Stock Exchange of India Limited. A copy of the same is available on the Company's website: www.superspinning.com
Based on the recommendation of the Audit Committee the Board of Directors has appointed Mr. R.Krishnan Cost Accountant (Membership No. 7799) as the Cost Auditor of the company for the financial year 2019-20. Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 the remuneration payable to the Cost Auditors is subject to the ratification of the members in a general meeting. The Board recommends the ratification of his remuneration. The Cost Audit Report for the financial year 2018-2019 will be filed within the required period under Companies Act 2013.
Particulars of Employees
The details pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed herewith as Annexure 7 to this report.
A detailed review of the operations performance and future outlook of the Company and its businesses is given in the Management's Discussion and Analysis Report (Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015) which forms part of this Report.
The Corporate Governance Report is annexed and forms part of this report. The Company has complied with the conditions relating to Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A report of the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed and forms part of this report.
Disclosure under the Sexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013
The Company has in place a policy on Sexual Harassment of Women at workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Internal Complaint Committee has been setup to redress complaints received regularly. There was no compliant received from any employee during the financial year 2018-19 and hence no complaint is outstanding as on 31st March 2019 for redressal
The Company continues to enjoy the cordial relationship with its employees at all levels.
The Directors thank the Company's Bankers Financial Institutions Customers Vendors Investors Suppliers and Business Associates for their unstinted support.
Your Directors wish to place on record their appreciation of the confidence reposed by the shareholders in the Company at all times.
The Board of Directors also wishes to place on record their appreciation for the contributions made by the employees towards the growth of the Company.
|For and on behalf of the Board|
|Chairman and Managing Director|
|30h May 2019|