The Directors have great pleasure in presenting the 78th Annual Report together withthe Audited Financial Statements for the financial year ended 31st March 2020.
| || ||(Rs. In Crores) |
|Particulars ||FY 2019-20 ||FY 2018-19 |
|Total Income ||5530 ||5633 |
|Profit Before Interest Depreciation & Tax ||854 ||805 |
|Interest & Financial Charges || ||26 |
|Depreciation Amortization and Impairment ||206 ||184 |
|Profit Before Tax & Exceptional Items ||628 ||595 |
|Exceptional Items Gain/(Loss) || ||82 |
|Profit Before Tax ||628 ||677 |
|Tax Expenses ||132 ||216 |
|Profit After Tax ||496 ||461 |
|Other Comprehensive Income (Net of Taxes) ||(4) ||(2) |
|Total Comprehensive Income ||492 ||459 |
R in Crores
|(i) Dividend on 127026870 Equity Shares of Rs.2/- each @ 700 % i.e. Rs.14 /- per share as under: || || |
|(Previous year @ 650% i.e. Rs.13/- per equity share || || |
|) (a) Interim Dividend @200 % i.e. Rs.4/-per share (already paid in November 2019) ||51 || |
|(b) 2nd Interim Dividend @500 % i.e. Rs.10/- per share (already paid in March 2020) ||127 ||178 |
|(ii) Corporate Dividend Tax as applicable || ||36 |
|TOTAL || ||214 |
The Board of Directors of the Company had adopted the Dividend Distribution Policy onJanuary 25 2017 in line with the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. The Policy is uploaded on the Company's website at www.supreme.co.in
OVERVIEW OF THE FINANCIAL PERFORMANCE
The financial performance highlights for the year ended 31st March 2020 are asfollows -The Company sold 411521 MT of Plastic goods and achieved net product turnover ofRs.5408 Crores during the year under review against sales of 397983 MT and net productturnover of Rs.5437 crores in the previous year achieving volume growth about 3 % andproduct value degrowth about 1 % respectively.
Total Income and Operating Profit for the year under review amounted to Rs.5530 croresand Rs.854 crores respectively as compared to Rs.5633 crores and Rs.805 crores in theprevious financial year.
The Profit before Tax and Profit after Tax for the year under review amounted to Rs.628crores and Rs.496 crores respectively as compared to Rs.677 crores and Rs.461 crores inthe previous financial year.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management's Discussion and Analysis forms an integral part of this report andgives detail of the overview industry structure and developments different productgroups of the Company operational performance of its various business segments.
The Company's financial discipline and prudence is reflected in strong credit ratingascribed by CRISIL as under.-
|Total Bank Loan Facilities ||R 1760.80 crores |
|Rated || |
|Long-Term Rating ||CRISIL AA/Stable (outlook revision from Positive'; rating reaffirmed) |
|Short-Term Rating ||CRISIL A1+ (Reaffirmed) |
|R 200 crore commercial paper ||CRISIL A1+ (reaffirmed) |
In accordance with the terms and conditions governing the Fixed Deposit Scheme theCompany has exercised the option to repay on 1st April 2014 all the Fixed Deposits withaccrued interest as at the end of 31st March 2014. Accordingly the Company is not havingany Fixed Deposit as on 31st March 2020 except 6 deposits amounting to Rs.90 thousandwhich remained unclaimed as on 31st March 2020.
DIRECTORS' RESPONSIBILITY STATEMENT:
The Board of Directors acknowledge the responsibility for ensuing compliances with theprovisions of Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 in thepreparation of annual accounts for the year ended on 31st March 2020 and state that:
in the preparation of the annual accounts the applicable accounting standardshad been followed and there is no material departures from the same;
the Directors have selected such accounting policies and applied 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 as at 31st March 2020 and of the profitof the Company for the year ended on that date ;
the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
the Directors have prepared the annual accounts on a going concern basis;
the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively;
The Company has taken the requisite steps to comply with the recommendations concerningCorporate Governance.
A separate statement on Corporate Governance together with a certificate from theauditors of the Company regarding compliance of conditions of Corporate Governance asstipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015forms part of this Annual Report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING/OUTGO
Information on conservation of energy technology absorption foreign exchange earningsand outgo required to be given pursuant to Section 134(3) (m) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure-Ito this report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The prescribed particulars of Employees required under Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed herewith as Annexure-II to this Report.
The information required under Section 197(12) of the Companies Act 2013 read withRule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 and forming part of the Boards' Report for the year ended 31st March 2020 isgiven in the separate Annexure of this Report. The Annual Report excluding the aforesaidAnnexure is being sent to the Members of the Company in terms with the provision ofSection 136 of the Companies Act 2013. Members who are interested in obtaining theseparticulars may write to the Company Secretary at the Registered Office of the Company.The aforesaid Annexure is also available for inspection by Members at the RegisteredOffice of the Company 21 days before the 78th Annual General Meeting and up to the dateof the ensuing Annual General Meeting during the business hours on working days.
CONSOLIDATED FINANCIAL STATEMENT
The consolidated financial statements of the company & its subsidiary &associates which form part of Annual Report have been prepared in accordance with section129(3) of the Companies Act 2013. Further a statement containing the salient features ofthe Financial Statement of Subsidiary Company & Associate Companies in the prescribedformat AOC-1 is annexed herewith as Annexure-III to this Report. The statement alsoprovides the details of performance and financial position of the Subsidiary Company &Associate Companies.
In accordance with Section 136 of the Companies Act 2013 the Audited FinancialStatements including the consolidated financial statements & related information ofthe Company & Audited Accounts of its Subsidiary Company are available on the websitewww.supreme.co.in. These documents will also be available for inspection during businesshours at the registered office of the company. Any member desirous of obtaining a copy ofthe said financial statement may write to the Company Secretary at the Registered Officeof the company.
The Consolidated net profit of the company and its subsidiary amounted to Rs.463 croresfor the financial year ended 31st March 2020 as compared to Rs.446 crores for the previousfinancial year ended 31st March 2019.
Additional details regarding performance of the Associate Companies & SubsidiaryCompany have been mentioned in the succeeding paragraphs.
ASSOCIATE COMPANY-SUPREME PETROCHEM LIMITED (SPL)
During the year the Company received an aggregate Dividend of Rs.1736 lakhs fromSupreme Petrochem Ltd (SPL)-promoted jointly by your Company and the Rs.Raheja Group. Netrevenues and net profit for the year ended 31st March 2020 were Rs.2736 crores and Rs.102crores respectively.
ASSOCIATE COMPANY-KUMI SUPREME INDIA PRIVATE LIMITED
Kumi Supreme India Private Ltd. (KSIPL) is a joint venture between Kumi Kasei Co LtdJapan and the Company has reported Net revenues and net profit for the year ended 31stMarch 2020 were Rs.131 crores and Rs.2.5 crores respectively.
As per the mutual agreement arrived at with the majority partner viz Kumi Kasei Japan& pursuant to the approval of Board of Directors the company has divested (1)25025611 equity shares of Kumi Supreme India Private Limited (KSI) constituting 20.67%of its equity share capital to Kumi (Thailand) Co. Ltd (Kumi Thailand) a nominee of KumiKasei Co. Ltd Japan for a consideration of INR 243248939/- (Indian Rupees Two HundredForty Three Million Two Hundred Forty Eight. Thousand Nine Hundred Thirty Nine only) videShare Purchase Agreement (SPA) dated 23rd March 2020; (b) & consequently terminatedthe existing joint venture agreement between the Company Kumi and KSI dated 4 April 2018vide a Termination Agreement dated 31st March 2020; and (c) granted the limited right toKSI to continue to use the word Supreme' as part of its corporate name within theterms of such agreement. As an outcome of the exit completion KSI now ceases to be anassociate of the Company.
The Supreme Industries Overseas FZE entered into the 14th years of operation bybusiness procurement of US$ 7.53 Million during the financial year 2019-20 through tradepartners spread over twenty five countries mapping GCC Africa Australia Europe &Indian-sub-continent. While new channel partners are added during the financial year. Thede-growth is due to slack in demand during second half of the year and non-dispatch ofbooked orders in the last month of financial year. Supreme continued to supply pipingproducts to high value project orders exhibiting its commitment towards quality deliveryand services. Though Covid'19 has dampened the new business cycle Supreme Overseas isaiming to achieve decent growth during financial year 2020-21 by improving individualperformance of existing trade partners & by adding distributors in existing & newgeographies. It also expects high value orders from project market.
The Board of Directors of the Company had adopted a Policy for determining materialsubsidiary company in line with the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. The Policy is uploaded on the Company's website atwww.supreme. co.in. Presently there is no material subsidiary company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri V.K. Taparia Executive Director (DIN: 00112567) of the Company retires byrotation at the forthcoming Annual General Meeting in accordance with provisions of theCompanies Act 2013 and the Articles of Association of the Company and being eligibleoffers himself for re-appointment.
Shri Ramanathan Kannan Independent Director (DIN: 00380328) is proposed forre-appointment as an Independent Director of the Company for a period of five years from16th September 2020 to 15th September 2025 who hold office as an Independent Director ofthe Company upto the close of business hours on 15th September 2020 in his present firstterm.
Shri Rajeev M. Pandia Independent Director (DIN: 00021730) is proposed forre-appointment as an Independent Director of the Company for a period of five years from16th September 2020 to 15th September 2025 who hold office as an Independent Director ofthe Company upto the close of business hours on 15th September 2020 in his present firstterm.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of the independence as prescribed both undersection 149(6) of the Companies Act 2013 and under Regulation 16 (1)(b) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
In accordance with the provisions of the Companies Act 2013 none of the IndependentDirectors are liable to retire by rotation.
KEY MANAGERIAL PERSONNEL
Shri M P Taparia Managing Director Shri P C Somani Chief Financial Officer and ShriR J Saboo VP (Corporate Affairs) & Company Secretary were appointed as Key ManagerialPersonnel of your Company in accordance with the provisions of Section 203 of theCompanies Act 2013 and there is no change in the same during the year under review.
DISCLOSURES RELATED TO BOARD COMMITTEES AND POLICIES a. Board Meetings: The Boardof Directors met 6 times during the year ended 31st March 2020 in accordance with theprovisions of the Companies Act 2013 and rules made there under.
The details thereof are given in the Corporate Governance Report.
b. Board Performance Evaluation:
(i) The Board in consultation with Nomination and Remuneration Committee has devisedcriteria for performance evaluation of Independent Directors Board/Committees and otherindividual Directors which includes criteria for performance evaluation of Non ExecutiveDirectors and Executive Directors. Performance evaluation has been carried out as per theNomination & Remuneration Policy.
Pursuant to amendment in section 178 by the Companies (Amendment) Act 2017 which iseffective from 7th May 2018 the Nomination and Remuneration Committee noted theamendment and decided to carryout evaluation of performance of Board its Committees andindividual Director by the Nomination and Remuneration committee. Accordingly Nominationand Remuneration Committee conducted the performance evaluation of Board its Committeesand individual Director in its meeting held on 23rd January 2020 The performanceevaluation of the Independent Directors was also carried by the entire Board. Theperformance evaluation of the Chairman Managing Director & Executive Directors wascarried out by the independent Directors at its separate meeting held on 23rd January2020.
(ii) The Board has on the recommendation of the Nomination & RemunerationCommittee framed a Nomination & Remuneration policy and Policy on fixation ofcriteria for selection & appointment of Directors & Senior Management Personnel.The Nomination & Remuneration Policy and Policy on fixation of criteria for selection& appointment of Directors & Senior Management Personnel are annexed herewith asAnnexure IV (A) & Annexure IV (B) to this Report.
The Statutory Auditors M/s Lodha & Co. Chartered Accountants having RegistrationNo 301051E was appointed in 74th Annual General Meeting to hold office from theconclusion of 74th Annual General meeting for a term of consecutive five years tillconclusion of 79th Annual General Meeting (subject to ratification of the appointment bythe members at every Annual General Meeting). The requirement of seeking ratification ofthe members for continuance of their appointment has been withdrawn consequent upon thechanges made by the Companies (Amendment) Act 2017 with effect from May 07 2018.
The Statutory Auditors have given a confirmation to the effect that they are eligibleto continue with their appointment and that they have not been disqualified in any mannerfrom continuing as Statutory Auditors.
Note on financial statement referred to in the Auditor's Report are self-explanatoryand do not call for any further comments. The Auditor's Report does not contain anyqualification reservation or adverse remark except following: There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company except Rs.11.29 lakhs.
In terms of the provisions of Section 148 of the Act read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors onthe recommendation of the Audit Committee has appointed M/s. Kishore Bhatia &Associates Cost Accountants (Registration No: 00294) as Cost Auditor of the Company forthe financial year ending 31st March 2021 on a remuneration as mentioned in the Noticeconvening the 78th Annual General Meeting for conducting the audit of the cost recordsmaintained by the Company.
A Certificate from M/s. Kishore Bhatia & Associates Cost Accountants has beenreceived to the effect that their appointment as Cost Auditor of the Company if madewould be in accordance with the limits specified under Section 141 of the Act and Rulesframed thereunder.
A resolution seeking Members' approval for remuneration payable to Cost Auditor formspart of the Notice of the 78th Annual General Meeting of the Company and same isrecommended for your consideration.
Cost Audit Report for the year 31st March 2019 was filed with the Registrar ofCompanies within the prescribed time limit.
The Company is required to maintain Cost Records as specified by the Central Governmentunder sub-section (1) of section 148 of the Companies Act 2013.
Accordingly the Company has made and maintained such accounts and records.
SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31ST MARCH 2020
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed M/s V. Laxman & Co. Company Secretaries (C.P No. 744) to conductSecretarial Audit for the financial year ended on 31st March 2020.
Secretarial Audit Report issued by M/s. V. Laxman & Co Company Secretaries in FormMR-3 forms part to this report Annexure V. The said report does not contain anyobservation or qualification requiring explanation or adverse remark.
The details pertaining to composition of the Audit Committee and terms of reference areincluded in the Corporate Governance Report which forms part of this Report.
REPORTING OF FRAUDS
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and/or Board under Section 143(12) ofthe Act and Rules framed thereunder
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
In March 2020 the WHO declared the COVID 19 outbreak as a pandemic which continues tospread across the country. On 25/03/2020 the Government of India has declared thispandemic a health emergency ordered temporarily close of all non-essential businessesimposed restrictions on movement of goods/material travel etc. As the nature of businessperformed by the Company majorly fell under non-essential category these restrictionshad resulted in temporarily suspension of operations at most of its plants for a durationof about 25 to 35 days. The Company has since after receiving applicable permissionspartially commenced operations including despatch of goods to its' customers at all of itsmanufacturing facilities and scaling up the same gradually. There are no other materialchanges or commitments occurring after 31st March 2020 which may affect the financialposition of the company or may require disclosure.
IMPLEMENTATION OF SAP
Since implementation of SAP a leading ERP solution with effect from 1st April 2018 allthe units of the company are under the one platform for using SAP system. This is thesecond year of implementation of SAP which has since been rolled over. The SAP System hasbeen stabilised across all the units of the company & It has been effectively used toenhance the productivity and efficiency of the Organisation in the entire scale ofoperations. New applications are being developed added & customised to meet theusers' requirements. This would now facilitate in digital transformation and also help indata analytics for better decision making process.
INTERNAL FINANCIAL CONTROLS
The company has in place Internal Financial Control system commensurate with size& complexity of its operations to ensure proper recording of financial and operationalinformation & compliance of various internal controls & other regulatory &statutory compliances. During the year under review no material or serious observationhas been received from the Internal Auditors of the Company for inefficiency or inadequacyof such controls. Internal Auditors' comprising of professional Chartered Accountantsmonitor & evaluate the efficacy of Internal Financial Control system in the companyits compliance with operating system accounting procedures & policies at all thelocations of the company. Based on their report of Internal Audit function correctiveactions in the respective area are undertaken & controls are strengthened. Significantaudit observations & corrective action suggested are presented to the Audit Committee.
PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
All the transactions with Related Parties are placed before the Audit Committee as alsoplaced before the Board for approval. Prior omnibus approval of the Audit Committee andthe Board is obtained for the transactions which are of a foreseen and repetitive nature.The transactions entered into pursuant to the omnibus approval so granted are audited anda statement giving details of all related party transactions is placed before the AuditCommittee and the Board of Directors for their approval on a quarterly basis. Alltransactions entered into with related parties during the year were on arm's length basisin the ordinary course of business and in line with the threshold of materiality definedin the Company's policy on Related Party Transactions & are in accordance with theprovisions of the Companies Act 2013 Rules issued thereunder & Regulation 23 of(SEBI Listing Obligations and Disclosure Requirements) Regulations 2015. During thefinancial year ended on 31st March 2020 there were no transactions with related partieswhich qualify as material transactions.
The details of the related party transactions are set out in Note 40 to the standalonefinancial statements forming part of this Annual Report. The Form AOC-2 pursuant tosection 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies(Accounts)Rules 2014 is set out as Annexure VI to this Report.
The Policy on Related Party Transactions as approved by the Board is also uploaded onthe Company's website at the Link: www.supreme.co.in
PARTICULARS OF LOANS GUARANTEES INVESTMENTS AND SECURITIES
The company has complied with the provisions of section 185 & 186 of the Act to theextent applicable with respect to the loans and investments made.
VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES
A "Vigil Mechanism Policy" for Directors and employees of the Company isconstituted to provide a mechanism which ensures adequate safeguards to employees andDirectors from any victimization on rising of concerns of any violations of legal orregulatory requirements incorrect or misrepresentation of any financial statements andreports etc.
RISK MANAGEMENT POLICY
Your Company has an elaborate risk Management procedure and adopted a systematicapproach to mitigate risk associated with accomplishment of objectives operationsrevenues and regulations. Your Company believes that this would ensure mitigating stepsproactively and help to achieve stated objectives. The entity's objectives can be viewedin the context of four categories Strategic Operations Reporting and Compliance. TheCompany consider activities at all levels of the organization viz Enterprise levelDivision level Business unit level and Subsidiary level in Risk Management framework.The Risk Management process of the Company focuses on three elements viz.
(1) Risk Assessment;
(2) Risk Management;
(3) Risk Monitoring.
A Risk Management Committee is constituted which has been entrusted with theresponsibility to assist the Board in
(a) Overseeing and approving the Company's enterprise risk management framework; and
(b) Overseeing that all the risk that the organization faces. The key risks andmitigating actions are also placed before the Audit Committee of the Company. Significantaudit observations and follow up actions thereon are reported to the Audit Committee. TheAudit Committee reviews adequacy and effectiveness of the Company's internal controlenvironment and monitors the implementation of audit recommendations including thoserelating to strengthening of the Company's risk management policies and systems.
CORPORATE SOCIAL RESPONSIBILITY POLICY
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 are setout in Annexure of this Report in the format prescribed in the Companies (Corporate SocialResponsibility Policy) Rules 2014. Annexure VII.
The Policy is available on the website of the Company.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as approved by the Business Responsibility Committeeand Board of Directors forms part of this Annual Report.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has zero tolerance towards sexual harassment at the workplace and have apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder. As required under law anInternal Complaints Committee has been constituted for reporting and conducting inquiryinto the complaints made by the victim on the harassments at the work place. During theyear under review there were no cases filed pursuant to the Sexual Harassment of Woman atWorkplace (Prevention Prohibition and Redressal) Act 2013.
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure VIII.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (sweat equity shares) to employees of the Company under ESOS.
4. Neither the Managing Director nor the Whole Time Directors of the Company receivedany remuneration or commission from any of its subsidiary.
5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company operations in future.
The Board of Directors wishes to express its gratitude and record its sincereappreciation for the commitment and dedicated efforts put in by all the employees. YourDirectors take this opportunity to express their grateful appreciation for theencouragement cooperation and support received by the Company from the local authoritiesbankers customers suppliers and business associates. The directors are thankful to theesteemed shareholders for their continued support and the confidence reposed in theCompany and its management.
| ||For and on behalf of the Board of Directors |
| ||B. L. Taparia |
| ||Chairman |
|Place: Mumbai || |
|Date: 22nd May 2020 || |