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Supreme Industries Ltd.

BSE: 509930 Sector: Industrials
NSE: SUPREMEIND ISIN Code: INE195A01028
BSE 00:00 | 17 Aug 1191.50 9.20
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OPEN 1190.00
PREVIOUS CLOSE 1182.30
VOLUME 1433
52-Week high 1489.95
52-Week low 1025.00
P/E 35.13
Mkt Cap.(Rs cr) 15,138
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1190.00
CLOSE 1182.30
VOLUME 1433
52-Week high 1489.95
52-Week low 1025.00
P/E 35.13
Mkt Cap.(Rs cr) 15,138
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Supreme Industries Ltd. (SUPREMEIND) - Director Report

Company director report

The Directors have great pleasure in presenting the 76th Annual Report together withthe Audited Financial Statements for the financial year ended 31st March 2018.

(v In Crores)

FY 2017-18 FY 2016-17
Particulars
Total Income 4984 4470
Profit Before Interest Depreciation & Tax 804 769
Interest & Financial Charges 22 30
Depreciation Amortization and Impairment 167 154
Profit Before Tax 615 585
Provision for Current Tax 209 195
Deferred Tax -3 11
Profit After Tax 409 379
Other Comprehensive Income (Net of Taxes) (1) (2)
Total Comprehensive Income 408 377

 

DIVIDEND
R in Crores
(i) Dividend on 127026870 Equity Shares of R 2/- each @ 600% i.e. R 12/-per share as under:- (Previous year @ 750% i.e. R 15/- per equity share (including Special Dividend @ 250% i.e. R 5/- per share)
(a) Interim Dividend @ 150% i.e. R 3/- per share (already paid in October 2017) 38
(b) Final Dividend recommended @
450% i.e. R 9/- per share 114 152
(ii) Corporate Dividend Tax as applicable (including R 7.76 crores paid on Interim Dividend) 32
184

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 2018 are asfollows -The Company sold 371176 MT of Plastic goods and achieved net product turnover ofR 4826 Crores during the year under review against sales of 340906 MT and net productturnover of R 4376 crores in the corresponding period of the previous year achievingvolume & product value growth of about 9.00% and 10.00% respectively.

Total Income and Operating Profit for the year under review amounted to R 4984 croresand R 804 crores respectively as compared to R 4470 crores and R 769 crores in theprevious financial year.

The Profit before Tax and Profit after Tax for the year under review amounted to R 615crores and R 409 crores respectively as compared to R 585 crores and R 379 crores in theprevious 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.

JOINT VENTURE

The Company has entered into a Joint Venture Agreement & Business TransferAgreement on 4th April 2018 with Kumi Kasei Co.Ltd. Japan (Kumi) and formed a jointventure company named Kumi Supreme India Private Ltd. (KSIPL). The company shall hold20.67% share capital of JVC. The joint venture would undertake the business of manufactureand sale of injection molded plastic components for automotive application at itsmanufacturing unit at Khushkhera in Rajasthan (Business). The Auto Comp Business (part ofCompany's industrial Product Segment) of the designated unit is proposed to be transferredby the company as a going concern on a slump sale basis. The said unit is primarilyengaged in the manufacturing of plastic components for Automotive application and formspart of Industrial Product Segment of the company. Company is not a major player in thefield of Automotive Components. Further certain advanced technological enhancement islikely to be required for the Business to grow. Kumi is already a Technical collaboratorof the company and has requisite skill set and technology and already catering to manyinternational customers. Kumi wanted to have its manufacturing set up in India andproposed joint venture would be a win win situation for both the organisations. Thetransaction will be consummated on an arm's length basis for a consideration ofapproximately R 97.15 crores plus value of Net Working Capital as on closing date subjectto closing adjustments.

The JVC is a ‘Related Party 'under Section 2(76) of the Companies Act 2013 andRegulation 2(zb) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 in the capacity of an ‘Associate Company' of the Company as well as by virtueof having a common director. The necessary approval is being obtained from theshareholders of the Company by means of Postal Ballot.

CREDIT RATING

The Company's financial discipline and prudence is reflected in strong credit ratingascribed by CRISIL.-

Total Bank Loan Facilities R 1760.8 crores
Rated
Long-Term Rating CRISIL AA/Stable (Reaffirmed)
Short-Term Rating CRISIL A1+ (Reaffirmed) R 200
crores short term debt

FIXED DEPOSITS

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 2018 except 15 deposits amounting to R 1.90 lacs whichremained unclaimed as on 31st March 2018.

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 2018 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 2018 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;

CORPORATE GOVERNANCE

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- I to 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 2018 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 76th 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 &associate 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 Company in the prescribedformat AOC-1 is annexed herewith as Annexure - III to this Report. The statementalso provides the details of performance and financial position of the Subsidiary Company& Associate Company.

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 R 431 croresfor the financial year ended 31st March 2018 as compared to R 428 crores for the previousfinancial year ended 31st March 2017.

Additional details regarding performance of the Associate Company & SubsidiaryCompany have been mentioned in the succeeding paragraphs.

ASSOCIATE COMPANY - SUPREME PETROCHEM LIMITED (SPL)

During the year the Company received an aggregate Dividend of R 4.50 per Equity Sharefrom Supreme Petrochem Ltd (SPL) - promoted jointly by your Company and the R RahejaGroup. Net revenues and net profit for the year ended 31st March 2018 were R 3112 croresand R 116 crores respectively.

SUBSIDIARY COMPANY

The Supreme Industries Overseas FZE Sharjah UAE a wholly owned subsidiary havingprincipal activity to promote globally Plastics piping products completed Twelve years ofsuccessful operation recording net profit of AED 318008/- during the year April 2017-March 2018.

During the year under review Plastics Piping Division achieved export sales of US$7.357 million exceeding the target of 6.5 million US$ set for the year registering agrowth of 48% over the previous year.

Company's products are exported to twenty countries covering high value project salesinto Ethiopia & Maldives and trade supplies into GCC Iraq East Africa Europe UKIreland Philippines & Indian Sub-continent. Company is projecting to grow by 50% toachieve the sales volume of US$ 11.00 million through high value project sales as well bywidening the client base in existing & new geographies.

Company will continue to exhibit the products in various international exhibitions topromote the brand name & in-turn improve the export sales volume.

MATERIAL SUBSIDIARY

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

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. Shri B.L. Taparia Non Executive DirectorChairman (DIN No: 00112438) of the Company retires by rotation at the forthcoming AnnualGeneral Meeting in accordance with provisions of the Companies Act 2013 and the Articlesof Association of the Company and being eligible offers himself for re-appointment. ShriM. P. Taparia Managing Director (DIN No: 00112461) is proposed for re-appointment asManaging Director for the period of five years from 7th January 2019 to 6th January 2024.Shri S. J. Taparia Executive Director (DIN No: 00112513) is proposed for re-appointmentas Executive Director for the period of five years from 7th January 2019 to 6th January2024. Shri V. K. Taparia Executive Director (DIN No: 00112567) is proposed forre-appointment as Executive Director for the period of five years from 7th January 2019to 6th January 2024.

KEY MANAGERIAL PERSONNEL

Shri M P Taparia Managing Director Shri P C Somani Chief Financial Officer and ShriR J Saboo AVP (Corporate Affairs) & Company Secretary were appointed as KeyManagerial Personnel of your Company in accordance with the provisions of Section 203 ofthe Companies 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 Board of Directors met 5 times during the year ended 31st March 2018 in accordancewith the provisions of the Companies Act 2013 and rules made there under. The detailsthereof are given in the Corporate Governance Report.

b. Board Performance Evaluation:

(i) The Company has devised criteria for performance evaluation of IndependentDirectors Board/Committees and other individual Directors which includes criteria forperformance evaluation of Non Executive Directors and Executive Directors. Performanceevaluation has been carried out as per the Nomination & Remuneration Policy.

At the meeting of the Board all the relevant factors that are material for evaluatingthe performance of individual Directors the Board/ Committees were discussed in detail. Astructured questionnaire each for evaluation was prepared and recommended to the Board byNomination & Remuneration Committee for doing the required evaluation after takinginto consideration the input received from the Directors covering various aspects of theBoard's functioning such as adequacy of the composition of the Board and its Committeesexecution and performance of specific duties obligations and governance etc.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution qualifications knowledge skills and experience in therespective fields honesty integrity ethical behavior and leadership Independence ofjudgment safeguarding the interest of the Company attending the meetings regularlyunderstanding the business regulatory competitive and social environment understandingstrategic issues and challenges bringing outside information and perspective to Board fordeliberations ability to identify the cost benefits and implications of Board decisionsetc. The performance evaluation of the Independent Directors was also carried by theentire Board. The performance evaluation of the Chairman Managing Director &Executive Directors was carried out by the independent Directors at its separate meetingheld on 30th January 2018. The Directors expressed their satisfaction with the evaluationprocess.

(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 as

Annexure IV (A) & Annexure IV (B) to this Report.

AUDITORS Statutory Auditors

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 Auditors have confirmed theireligibility to the effect that the ratification of their appointment if made would bewithin the prescribed limits of the Companies Act 2013 and that they are not disqualifiedfor such appointment.

AUDITORS' REPORT

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.

SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31ST MARCH 2018

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 2018. Secretarial AuditReport issued by M/s. V. Laxman & Co Company Secretaries in Form MR-3 forms part tothis report Annexure V. The said report does not contain any observation orqualification requiring explanation or adverse remark.

MATERIAL CHANGES AND COMMITEMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes or commitments occurring after 31st March 2018 which mayaffect the financial position of the company or may require disclosure.

IMPLEMENTATION OF SAP

The Company has implemented SAP a leading ERP solution with effect from 1st April 2018by switching over from existing ERP. The implementation of SAP shall integrate all thebusiness process across the organisation. The new Regime of SAP shall bring discipline bytransforming the work culture thereby bringing transparency & structured informationsystem. The SAP implementation is under stabilization process & shall soon getestablished across all the activities. After full stabilization of the same it willenhance the productivity & improve efficiency of the organization in the entire gamutof activities.

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.

Significant audit observations & corrective action suggested are presented to theAudit Committee.

PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

All the transactions with Related Parties are placed before the Audit Committee as alsobefore the Board for approval. Prior omnibus approval of the Audit Committee and the Boardis obtained for the transactions which are of a foreseen and repetitive nature. Thetransactions entered into pursuant to the omnibus approval so granted are audited and astatement 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 2018 there were no transactions with related partieswhich qualify as material transactions.

The details of the related party transactions are set out in Note 38 to the standalonefinancial statements forming part of this Annual Report.

The Form AOC-2 pursuant to section 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) RiskAssessment; (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'senterprise risk management framework; and (b) Overseeing that all the risk that theorganization faces.

The key risks and mitigating actions are also placed before the Audit Committee of theCompany. Significant audit observations and follow up actions thereon are reported to theAudit Committee. The Audit Committee reviews adequacy and effectiveness of the Company'sinternal control environment and monitors the implementation of audit recommendationsincluding those relating to strengthening of the Company's risk management policies andsystems.

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.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure VIII.

GENERAL DISCLOSURE

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.

6. Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Woman at Workplace (Prevention Prohibition andRedressal) Act 2013.

ACKNOWLEDGEMENT

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: 26th April 2018