To the Members
The Directors hereby present the 58th Annual Report of the Super Spinning MillsLimited on the business and operations of your company along with audited financialstatements for the year ended 31st March 2020.
The summary of the financial performance of the Company for the year ended 31st March2020 is as follows.
(Rs. In Lakhs)
|Particulars ||31.03.2020 ||31.03.2019 |
|Revenue from operation ||14560.63 ||20812.23 |
|Other Income ||443.40 ||150.12 |
|Total Revenue ||15004.03 ||20962.35 |
|Earnings before Finance Cost Depreciation & Tax ||(564.20) ||(505.78) |
|Less: Finance Cost ||880.50 ||1265.63 |
|Earnings before ||(1444.70) ||(1771.41) |
|Depreciation & Tax || || |
|Less: Depreciation and amortization ||389.56 ||409.15 |
|Profit/ (Loss) before Exceptional Items & Tax ||(1834.26) ||(2180.56) |
|Add: Exceptional Items ||704.00 ||734.47 |
|Add: Profit from Discontinued operations ||- ||(156.48) |
|Profit / (Loss) before Tax ||(1130.26) ||(1602.57) |
|Less: Current and deferred Tax ||- ||- |
|Add : Other Comprehensive Income ||(98.60) ||673.30 |
|Profit / (Loss) after Tax ||(1228.86) ||(929.27) |
Review of business operations
During the year under review your Company continued to operate below its normal ratedcapacity resulting in a lower turnover during the year. On account of severe workingcapital constraints the Company could not operate Super A and B units at its normal fullcapacity. Besides this the cotton yarn market was very sluggish during most part of theyear affecting the movement as well the price realisation.
However in spite of all these adverse circumstances the Earnings before Depreciationand Interest was at a loss of Rs 564.20 lakhs as against a profit of Rs. 505.78 lakhs inthe previous year. After deducting the finance costs and depreciation operating lossduring the year amounted to Rs. 1228.86 lakhs as against a loss of Rs. 929.27 lakhsduring the previous year.
Outlook for the current year
In the light of the changing economic scenario and due to increasing competitiveenvironment particularly from the unorganized sector SUPER A UNIT manufacturing facilityhas became uncompetitive. Several initiatives such as substantial improvements in qualityand service cost reduction etc. were taken in the past. However the performance of theUnit did not improve. As the Unit is considered no longer viable for operations afterconsidering various options the Board of directors have decided to sell the same in theoverall best interest of all the stakeholders.
The Board of Directors of the Company at its meeting held on 27th June 2020 approvedto sell/ transfer/ dispose off its Manufacturing unit along with 36.26 Acres of landsituated at Company's SUPER A UNIT - Kirikera Hindupur Andhra Pradesh("Undertaking") together with all specified tangible and intangible assets inrelation to the Undertaking (excluding its brand name and the specific liabilities) to anyprospective buyer. Further in the Postal Ballot held on 5th August 2020 the same wasapproved by the shareholders of the company. The net proceeds from the sale of theUndertaking will be utilized to repay the existing loans employee settlements creditorspayments and reduce the interest burden for enhancement of working capital of the Company.With regard to the SUPER B unit in view of the lower working capital requirements forsynthetic and blended yarn we have migrated to man made fibres and we are takingstringent measures for improving the productiviity and reducing the wage cost. TheCOVID-19 pandemic has brought the textile market on the whole to a standstill since thebeginning of this financial year. It has adversely impacted exports as well as thedomestic sales. Your Company has started its partial operations in May 2020. Demand ofskilled workmen seems to be one of the main constrain faced. Despite these challenges wehope for 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 thefinancial year ended 31st March 2020.
Transfer to Reserves
During the year under review no amount has been transferred to general reserves.However the current year loss of Rs 1130.26 Lakhs has been adjusted against the retainedearnings under the head "other equity".
Due to losses incurred by the Company during the year under review the Directors havenot recommended any Dividend for the year ended 31st March 2020.
The issued subscribed and paid-up share capital of the Company as on 31st March 2020stood at Rs.55000000/- divided into 55000000 equity shares of Re.1/- each. Duringthe 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 andProtection 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 92read with Rule 12 of the Companies (Management and Administration) Rules 2014 isfurnished as Annexure 1 to this Report. The Annual Return of the Company asrequired under Section 92(3) of the Companies Act 2013 is available on the website of thecompany www.superspinning.com
Board and Committee meetings
Detailed composition of the Board & various Committees number of meetings heldduring the year attendance particulars of the directors in such meetings are providedunder Corporate Governance Report which forms part of this annual report.
Statement of Compliance with Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable secretarial standards and such systems are adequate and operatingeffectively. The Company has duly complied with Secretarial Standards issued by Instituteof Company Secretaries of India on meeting of the Board of Directors (SS-1) and GeneralMeetings (SS-2).
Directors Responsibility Statement
Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there are no material departures from those standards;
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 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 have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectivelyand
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.
Details in respect of frauds reported by Auditors under Section 143(12) of theCompanies 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 theCompanies Act 2013.
Declaration of Independent Directors
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as stipulated in Section 149(6) ofthe Companies Act 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Further they have also declared that they arenot aware of any circumstance or situation which exist or may be reasonably anticipatedthat could impair or impact their ability to discharge their duties with an objectiveindependent judgment and without any external influence. Based on the declarationsreceived from the Independent Directors the Board of Directors has confirmed that theymeet the criteria of independence as mentioned under Regulation 16(1)(b) of the SEBIListing Regulations and that they are independent of the management.
Statement regarding opinion of the board with regard to integrity expertise andexperience (including the proficiency) of the independent directors appointed during theyear
Board of Directors have evaluated the Independent Directors appointed/ re-appointedduring the year 2019-20 and opined that the integrity expertise and experience (includingproficiency) of the Independent Directors is satisfactory.
Company's Policy Relating to Directors Appointment Payment of Remuneration and othermatters
The Company pursuant to the provisions of Section 178 of the Companies Act 2013 and interms of Regulation 19(4) of the SEBI Listing Regulations has formulated a policy onNomination and Remuneration for its Directors Key Managerial Personnel and SeniorManagement. The Nomination and Remuneration Policy of the Company is annexed herewith as Annexure2 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 byM/s.Sethia Prabhad & Hedge Statutory Auditors and Mr.M.D.Selvaraj of MDS &Associates Secretarial Auditor in their report.
The Auditors report includes an emphasis of matter relating to COVID-19 Pandemic'simpact on company's financial performance which is given in the Note no: 52 to thefinancial statements.
Particulars of Loans Guarantees or Investments made under Section 186 of the CompaniesAct 2013
During the year under review the Company has not granted any loans or given anysecurity or made any investments pursuant to the provisions of Section 186 of theCompanies Act 2013. However the details in respect of investments made by the Company inthe 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 underthe Companies Act 2013 and Regulation 23 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 during the financial year 2019-20 were in the ordinarycourse of business and on arms' length basis.
The particulars of contract and arrangement entered into by the Company with relatedparties referred to Section 188(1) of the Companies Act 2013 including certain arm'slength transactions under third proviso thereto are disclosed in Annexure 3 (FormNo. AOC-2) and forms part of this Report.
The policy on related party transactions as approved by the Board of Directors of theCompany has been uploaded on the company's website and may be accessed through the link athttps://www.superspinning.com/wp-content/uploads/2020/06/RPTpolicy_20200610.pdf
Material changes and commitments affecting the financial position of the company
Due to outbreak of Covid-19 pandemic and based on the directives of the Government ofIndia Government of Andhra Pradesh the operations of the Company was suspended on 24thMarch 2020 and resumed on 04th May 2020 in phased manner with minimal work force byfollowing requsite precautions/guidelines. This has impacted the Turnover andProfitability of the Company.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The information pertaining to conservation of energy technology absorption ForeignExchange Earnings and outgo as required under section 134(3)(m) of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 is attached herewith as Annexure4 to this report.
Risk Management Policy of the company
The Company recognizes that risk is an integral part of business and it is committed tomanaging the risks in a proactive and efficient manner. Keeping the same in mind theBoard of Directors of the Company has formulated the Risk Management Policy. The Companydoes not face any risk other than those prevalent in the industry and it has taken allpossible steps to overcome such risks. However some of the risks which may posechallenges are set out in the Management Discussion and Analysis Report which forms partof this report.
The Company has constituted Audit Committee in accordance with Section 177 of theCompanies Act 2013. Kindly refer the Report on Corporate Governance for matters relatingto the composition meetings and functions of the committee.
The Board has accepted the Audit Committee's recommendations during the year whereverrequired and hence no disclosure is required under Section 177(8) of the Companies Act2013 with respect to rejection of any recommendations of Audit Committee by the Board.
Whistle Blower Policy (Vigil Mechanism)
It is required to formulated a Whistle Blower policy in line with the provisions ofSection 177 of the Companies Act 2013 and Regulation 22 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 to enable the directors and employees to reportconcerns about unethical behaviour actual or suspected fraud or violation of thecompany's code of conduct or ethics policy. The Company has a policy which provides foradequate safeguards against victimization of director(s) / employee(s) who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee inexceptional cases. The Whistle Blower policy has been uploaded on the company's websiteand may be accessed through the link at http://www.superspinning.com/wp-content/uploads/2016/08/ WhistleBlowerPolicy.pdf.
Corporate Social Responsibility initiatives
The brief outline of the Corporate Social Responsibility (CSR) policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year underreview are set out in Annexure 5 of this report.
The company has adopted a Corporate Social Responsibility Policy defining therein theCSR activities to be undertaken by the Company in line with the provisions of Schedule VIIof the Companies Act 2013. The Corporate Social Responsibility Committee of the Board isresponsible for the implementation and effective monitoring of the CSR activities of theCompany.
Annual evaluation of the Board on its own performance and of the individual Directors
On the advice of the Board of Directors the Nomination and Remuneration Committee ofBoard of Directors of the Company have formulated the criteria for the evaluation of theperformance of Board of Individual Directors Board as a whole Committees of DirectorsIndependent Directors Non-Independent Directors and the Chairperson of the Board. Basedon that performance evaluation has been undertaken. The Independent Directors of theCompany have also convened a separate meeting for this purpose. All the results andevaluation has been communicated to the Chairperson of the Board of Directors.
The above criteria are based on the Guidance Note on Board Evaluation issued by theSecurities and Exchange Board of India on January 5 2017.
Directors and Key Managerial Personnel
Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. SumanthRamamurthi Chairman and Managing Director of the Company retires by rotation and beingeligible offers himself for reappointment. A resolution seeking shareholders' approval forhis re-appointment forms part of the Notice. Mr. C G Kumar Mr. Sudarsan Varadaraj andMrs. Suguna Ravichandran were re-appointed as Independent Directors of the Companypursuant to Section 149 of the Companies Act 2013 at the AGM held on 28th August 2019 tohold office for the second term of five consecutive years with effect from 1st June 2019and not liable to retire by rotation.
Mr. Sumanth Ramamurthi has been re-appointed as Chairman and Managing Director of theCompany for a further period of three years with effect from 01st April 2020 and theCompany had obtained the approval of the members at the Annual General Meeting held on28th August 2019.
Mr. A R Balasundharam (DIN: 07802383) Non-Executive Director of the Company retiredfrom the duties of the Board on 31st March 2020. The Board recalled the efforts andvaluable contributions rendered by him during his association with the Company and placedon record their sincere appreciation to Mr. A R Balasundharam. At the Board of Directorsmeeting held on 27th June 2020 Mr. Sanjay Krishna Ramamurthi (DIN: 08730627) wasappointed as the Additional Director of the Company. Subsequently in the Postal Ballotheld on 5th August 2020 the same was approved by the shareholders of the company.
Key Managerial Personnel of the Company required under Sec 2(51) and Section 203 of theCompanies Act 2013 are Mr. Sumanth Ramamurthi Chairman and Managing Director Mr. BSathyanarayan Reddy Chief Financial Officer and Mrs. Narmatha G K Company Secretary.
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 andshareholders during the year under review and hence there were no unpaid deposits as on31st March 2020.
Details of significant and material orders passed by the regulators or Courts orTribunals impacting the going concern status and Company's operation in future
There are no significant and material order passed by the regulators or courts ortribunals 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 implemented and evaluated the Internal Financial Controls which providea reasonable assurance. During the year the Internal Auditor of the Company were assignedthe responsibility for ensuring and reviewing the adequacy of legal compliance systems inthe Company as required under the Companies Act 2013. The audit Committee of the Boardconstantly reviews the observations of the internal auditor with respect to the internalcontrol systems and their adequacy significant risk areas control mechanism and theoperations of the Company. It also discusses and implements the recommendations made forcorrective action through the internal audit reports. The Directors and Management confirmthat the Internal Financial Controls are adequate with respect to the operations of theCompany. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act 2013certifying the adequacy of Internal Financial Controls is annexed with the AuditorsReport.
M/s. Sethia Prabhad Hegde & Co. Chartered Accountants (FRN 013367S) Bengaluruwere appointed as the statutory auditors of the company for a period of five years at the55th Annual General Meeting of the company held on 1st December 2017. Pursuant to theamendment of Section 139 of the Companies Act 2013 the company is no longer required toseek 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 asstatutory auditors of the company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withcorresponding rules framed thereunder the Company has appointed Mr. M.D.Selvaraj MDS& Associates Company Secretaries in Practice to undertake the Secretarial Audit ofthe Company. The report of the Secretarial Audit in Form No. MR-3 for the financial year2019-20 is annexed herewith as Annexure 6 to this report.
Further the Secretarial Compliance Report for the year ended 31st March 2020 issuedby the Practicing Company Secretary pursuant to Regulation 24A of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 has been filed with BSELimited and the National Stock Exchange of India Limited. A copy of the same is availableon the Company's website: www. superspinning.com
Based on the recommendation of the Audit Committee the Board of Directors hasappointed Mr. R.Krishnan Cost Accountant (Membership No. 7799) as the Cost Auditor ofthe company for the financial year 2019-20. Pursuant to Section 148 of the Companies Act2013 read with the Companies (Audit and Auditors) Rules 2014 the remuneration payableto 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 thefinancial year 2019-2020 will be filed within the required period under Companies Act2013.
Maintenance of cost records under sub-section (1) of section 148 of the companies act2013
Pursuant to the provisions of Section 148(1) of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 the Company was required to maintain costrecords. Accordingly the company has duly made and maintained the cost records asmandated by the Central Government.
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 isannexed herewith as Annexure 7 to this report.
A detailed review of the operations performance and future outlook of the Company andits businesses is given in the Management's Discussion and Analysis Report (Regulation 34of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015) whichforms part of this Report.
The Corporate Governance Report is annexed to and forms part of this report. TheCompany has complied with the conditions relating to Corporate Governance as stipulated inSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A report of theStatutory Auditors of the Company confirming the compliance of conditions of CorporateGovernance as required by SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is annexed to this report and forms part of this report.
Disclosure under the Sexual Harassment of Women at workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has in place a policy on Sexual Harassment of Women at workplace in linewith the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition 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 2019-20 andhence no complaint is outstanding as on 31st March 2020 for redressal.
The Company continues to enjoy the cordial relationship with its employees at alllevels.
Your Directors wish to place on record their appreciation of the confidence reposed bythe shareholders in the Company at all times. The Directors thank the Company's BankersFinancial Institutions Customers Vendors Investors Suppliers and Business Associatesfor their unstinted support. The Board of Directors also wishes to place on record theirappreciation for the contributions made by the employees towards the growth of theCompany.
| ||By order of the Board |
| ||For Super Spinning Mills Limited |
| ||Sumanth Ramamurthi |
| ||Chairman & Managing Director |
|Coimbatore || |
| ||DIN: 00002773 |
|29th August 2020 || |