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Surana Corporation Ltd.

BSE: 531102 Sector: Consumer
BSE 00:00 | 22 Apr Surana Corporation Ltd
NSE 05:30 | 01 Jan Surana Corporation Ltd
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52-Week high 0.32
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Mkt Cap.(Rs cr) 1
Buy Price 0.31
Buy Qty 8000.00
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Sell Qty 1000.00

Surana Corporation Ltd. (SURANACORP) - Director Report

Company director report



The Members

The Directors of the Company present to you the 26th Annual Report ofthe Company together with the Audited Balance Sheet as at 31st March2017 and the Statement of Profit and Loss for the year ending on 31stMarch 2017.


The Financial Results of the Company for the year under review is summarized below foryour perusal and consideration.

(Rs. in Crores)























The company has achieved a Net Revenue of Rs. 234.66 Crores as against the Net Revenueof Rs. 1196.33 Crores in the previous financial year. The Net Revenue of the year wasmainly dependent on the trading activities as the Manufacturing activity was almost Nildue to the non operation of factory premises. Further going forward with the levy ofExcise on Gold Jewellery by the Finance Bill 2016 there has been a negative sentimentprevailing in the market.

Revenues from wind power generation during the year amounted to Rs.3.10 Crores asagainst Rs.3.68 Crores for the previous year. The fall in wind energy division has been onaccount of failure of almost half the capacity of the project because of locationalfactors. Along with this there have been evacuation problems for abnormal period duringthe peak season.

The company has incurred a loss after tax of Rs.319.27 Crores as against loss aftertaxes amounting to Rs.299.62 Crores in the previous year. The major factors contributingto this loss has been the ballooning interest cost and non ability of the company to scaleup its operations for want of working capital funds release from banks.


The Gem and Jewellery sector had been affected due to restrictions imposed by RBI onthe Bullion trade during the year 2013. Due to the RBI guidelines it had a profoundimpact on working capital financing of the domestic jewelers as RBI restricted the importof gold on consignment

basis only for the export purpose and asked banks to restrict issuance of LCagainst 100% cash margin. These moves reduced the gold supply during the last and currentfinancial year.

Due to the non availability of the Gold in the market per se and the business model thecompany was operating the average credit period for the domestic customers got extended toaround 90- 120 days. Similarly in respect to the restriction on import and export of Goldthe export business of the company also suffered.

Due to the above external factors as discussed the Company has faced difficulties inmanaging its cash flows and working capital requirements. In order to correct its workingcapital position and liquidity challenges arising out of the mismatch of the loanmaturities and potential projected earnings the Company had approached the lenders forrestructuring of its entire debt for suitable realignment under Corporate DebtRestructuring (CDR) mechanism. The CDR Cell approved the proposal of debt restructuringwith super majority of the lenders at the CDR Empowered Group (EG) meeting held on24.10.2014 and issued the Letter of Approval (LOA) on 22.11.2014 based on which thelenders agreeing to the package has signed the Master Restructuring Agreement (MRA) on20.01.2015. The lenders have restructured the debts of the Company to the extent of Rs.1547.15 Crores under the CDR mechanism.

As part of the CDR the identified sticky debtors have mortgaged their assets ascollateral under the CDR package. A detailed understanding of this is provided under theDebtors position.

The salient features of the package were as under:

1 Repayment of Restructured Term Loans (‘RTL') after moratorium of 2 years fromcut-off date in 32 structured quarterly installments commencing from 30th June2017 to March 2024. The moratorium period of 2 years has expired on June 30 2017.

2. Conversion of various irregular/outstanding/devolved financial facilities intoWorking Capital Term Loan (‘WCTL') and "Fund based working Capital".

3. Unpaid Interest due on certain existing facilities on cutoff date interest accruedduring the moratorium period on WCTL and interest on fund based working capital facilitiesfor certain period were to be converted into Funded Interest Term Loans (‘FITLs') .

4. Contribution of Rs 35.20 Crore in the CL by promoters in lieu of bank sacrifice inthe form of equity/and/or unsecured loans on terms and conditions stipulated by/acceptedto CDR EG.

5. An additional Working capital facilities (fund based) limits of Rs. 139.94 Croreshall be reconstituted.

Even after company has complied all the conditions as stipulated in the CDR and everyConsortium banker assuring the company of release of additional credits into the workingcapital account it has been holding back substantial amount. Such unilateral holding upof funds affects the day to day operations of the company and also destroys the company'sgoodwill in the market. This leads to a situation of losing the market and consequentlyincurring losses.

Even after many request submitted by the Company the bankers are not in a position totake a positive look for releasing additional working capital facility as the banks hasput the company under wait and watch. Because of these hurdles and restrictions thecompany is unable to do the operations freely in the market and the realization from thedebtors also getting delayed. However at the JLM cum Consortium meeting held on April 202016 the consortium bankers have taken the decision for exiting from CDR and informed thecompany that the same shall be

communicated in CDR EG meeting to be held on April 27 2016. The resh proposal in theform of company entering into the real sector business (subject to the approval ofshareholders) for promoting the properties pledged by the sticky debtors to the companyand promoters properties for settling the dues of the consortium bankers where submittedto the bankers for their approval however the company has not received any communicationfrom the bankers on the same.

During the Financial 2016-17 the company was continuously negotiating with the leadBank SBI and other member banks to come forward for a compromise settlement by way of OneTime Settlement. By considering the company sincere efforts to settle of the dues by wayof One Time Settlement the lead Bank SBI and other member banks had provided their In-principle approval for settling the dues of the consortium at a One-Time Settlement of Rs.252 Crores at the Joint Lenders Meeting held on December 14 2016 and the company isawaiting for the individual sanction of the each banks to proceed further.


The paid up Equity Share Capital as on 31st March 2017 was Rs. 24.36Crores. During the year under report the Company has not issued any shares withdifferential voting rights nor granted stock options nor sweat equity.


Your Directors have not recommended any dividend for the financial year 2016-17 in viewof the losses incurred and the need to conserve resources of the Company. The Company isalso required to seek prior approval of the lenders for declaration of dividend in termsof the Corporate Debt Restructuring package.



The Gems and Jewellery sector plays a significant role in the Indian economycontributing around 6-7 per cent of the country's GDP. One of the fastest growing sectorsit is extremely export oriented and labour intensive.

Based on its potential for growth and value addition the Government of India hasdeclared the Gems and Jewellery sector as a focus area for export promotion. TheGovernment has recently undertaken various measures to promote investments and to upgradetechnology and skills to promote ‘Brand India' in the international market.

India is deemed to be the hub of the global jewellery market because of its low costsand availability of high-skilled labour. India is the world's largest cutting andpolishing centre for diamonds with the cutting and polishing industry being wellsupported by government policies. Moreover India exports 75 per cent of the world'spolished diamonds as per statistics from the Gems and Jewellery Export promotion Council(GJEPC). India's Gems and Jewellery sector has been contributing in a big way to thecountry's foreign exchange earnings (FEEs). The Government of India has viewed the sectoras a thrust area for export promotion. The Indian government presently allows 100 per centForeign Direct Investment (FDI) in the sector through the automatic route.


The gems and jewellery market in India is home to more than 500000 players with themajority being small players. India is one of the largest exporters of gems and jewelleryand the industry

is considered to play a vital role in the Indian economy as it contributes a majorchunk to the total foreign reserves of the country. UAE US Russia Singapore Hong KongLatin America and China are the biggest importers of Indian jewellery. The demand for goldin India rose by 15 per cent year-on-year to reach 123.5 tonnes during January-March 2017according to the World Gold Council (WGC). The Goods and Services Tax (GST) and monsoonwill steer India's gold demand going forward.


The Gems and Jewellery sector is witnessing changes in consumer preferences due toadoption of western lifestyle. Consumers are demanding new designs and varieties injewellery and branded jewellers are able to f^ilfl their changing demands better thanthe local unorganized players. Moreover increase in per capita income has led to anincrease in sales of jewellery as jewellery is a status symbol in India.

The cumulative Foreign Direct Investment (FDI) inflows in diamond and gold ornaments inthe period April 2000 - March 2017 were US$ 895.96 million according to Department ofIndustrial Policy and Promotion (DIPP).


• In the Union Budget 2017-18 the Government of India offered tax cuts for themiddle class and other sections of society (5 per cent for the Rs 250000-500000 taxslab; which was 10 per cent initially). All these measures will drive consumption whichwill be favourable to the gems and jewellery industry.

• The Government of India's proposal to cut corporate tax rates to 25 per cent formicro small and medium enterprises (MSMEs) having annual turnover up to Rs 50 crore (US$7.5 million) will benefit a large number of gems and jewellery exporters from MSMEcategory.

• The Government of India's announcement on establishing gold spot exchange couldhelp in India's participation in determining gold price in the international markets.

• The demonetisation move is encouraging people to use plastic money debit/credit cards for buying jewellery. This is good for the industry in the long run and willcreate more transparency.


In the coming years growth in Gems and Jewellery sector would be largely contributedby the development of large retailers/brands. Established brands are guiding the organisedmarket and are opening opportunities to grow. Increasing penetration of organised playersprovides variety in terms of products and designs. Also the relaxation of restrictions ofgold import is likely to provide a fillip to the industry. The improvement in availabilityalong with the reintroduction of low cost gold metal loans and likely stabilisation ofgold prices at lower levels is expected to drive volume growth for jewellers over short tomedium term. The demand for jewellery is expected to be signihcantly supported by therecent positive developments in the industry.

Mr Narendra Modi Prime Minister of India encouraged the diamond industry in SuratGujarat to come forward in making India number one in the gems and jewellery sector byfocusing on Design in India in addition to the Make in India campaign.

Exchange Rate Used: INR 1 = US$ 0.0155 as of April 17 2017.

References: Media Reports Press Releases Department of Industrial Policy andPromotion (DIPP) Reserve Bank of India Gem & Jewellery Export Promotion CouncilUnion Budget 2017-18


The global body expects Indian gold demand to be about 650-750 tonnes in 2017. Demandwas just a little more than 600 tonnes in the last calendar year. Incidentally the year2016 saw gold demand in India falling to its lowest level since 2009 as governmentpolicies along with weak rural sentiment kept consumers away. While the gold trade bodysaid that the outlook for 2017 was "cautious" it added that demand was likelyto improve going forward. The global body further stated that while demonetisation diddent economic growth it was helping large jewellery retailers and consumers in terms oftransparency and quality.

"Demonetisation is also boosting large jewellery retailers and they will continueto grab a larger share of the market. Over time consumers will move away from cashtowards digital payments and organised players should benefit from this trend. Thischange in market dynamics will result in more transparency and a better deal forconsumers protecting them from shady practices such as under-carating" the WGCsaid.



The Company has shi?ed its manufacturing facility from Tondiarpet to Madhavaram duringthe month of December 2014; this shift in factory operation has affected themanufacturing capacity of the Company since December 2014. The Company with a view tomitigate the loss of business on account of shift in factory has resorted to outsourcingof Jewellery manufacturing to a small set of trusted karigars.


The Wind energy division of your Company earned an income of Rs.3.10 Crores during thefinancial year 2016-17 as compared to an income of Rs.3.68 Crores in the previous year.The fall in wind energy division has been mainly due to shutting down of grid for abnormalperiod during the peak season. During the financial year due to non-payment of dues tothe State Bank of India where the 60 windmill assets owned by the company are pledgedwere taken on possession and subsequently sold by State Bank of India through privatetreaty to a third party. The sale proceeds are utilized by SBI for adjusting theoutstanding dues of the company. Accordingly the said investment has been impaired duringthe year.


Surana Corporation Limited had to face a stretch in its working capital needs as thecompany's debtors also stretched payments.

With restricted market conditions for jewellery sector the working capital cycle ofthe company has been badly affected. Almost all the jewelers have been asking for extendedcredit period whereby the company's liquidity is getting stretched. The credit period formore than Rs. 370 Crores of company's domestic debtors has got stretched to more than 180days. As the banks also not released any additional drawing power the company was unableto do/improve the operations in the market and which becomes difficult for the company tobring down the over drawings. Similarly because of the existing scenario there isenormous delay in realization from sticky debtors which includes foreign debtors also.

Debtors of Rs. 612.56 crores aged more than one year (referred as sticky) are coveredunder the Memorandum of understanding entered in June 2014 confirming the schedule ofrepayment. This

Schedule of repayment has been considered as part of company CDR proposal by theconsortium of Banks. Further the Memorandum also indicates coverage of these debtsbelonging to the some of the debtors by properties. These properties of the debtors havebeen mortgaged in favour of the consortium lenders of the company as part of CDR. Also thecompany reserves the rights to sell the said properties in case of non receipt ofscheduled payments .

During the financial year 2015-16 the Company has provided for an amount ofRs.302249611/- which was to be recovered as per the MOU but not recovered. During theyear 2015-16 the company has recovered a total of Rs.577222892/- from the stickydebtors. A portion of such recovery had happened in the form of takeover of coal and Steelstocks relating to the party. Even though the anticipated recovery from the sticky debtorswas Rs.597500375/- as per schedule of repayment of MOU the company has recognisedadditional provision for said domestic debtors from whom not recovered as per MOUindividually.

During the Financial Year 2016-17 there is no recovery from the sticky debtors and thecompany had issued notice under Section 434 of the Companies Act 1956. However thecompany is taking all necessary steps to approach NCLT under The Insolvency and BankruptcyCode.

Even though the company is confident of collecting all its debtors as an abundantprecaution the company is getting the debts securitized by collaterals wherever possible.The company is also in the process of negotiating with the debtors to seek early repaymentby giving some discounts. These measures will help the company to reduce the liquiditycrunch marginally and at the same time would give comfort the banks about therecoverability of the same.

The Company being continuously hounded by one or the other statutory authorities themarkets have been jittery in dealing with the company directly. Even though the market hasbeen faith on the promoters of the company but still our hesitant to have too much ofdirect exposure this hesitancy in the market has been restricting the company'sperformance. Hence the company with the view to overcome this hurdle and in order tomaintain the existing the market and trade have entered into a kind of agreement with"Sasyso Exim Private Limited " and " Thribovan Enterprises PrivateLimited" at an increase credit period term during the financial year 2016- 17. Thisarrangement effectively helps the company in maintaining its business share withoutsacrificing profitability.


As stated earlier the Company had obtained In-principle approval from the consortiumbanks for settling their outstanding dues at a One Time Settlement of Rs.252 Crores.However individual sanction for the individual consortium members is awaited. Once thesaid approval from the individual consortium is received the company debt burden willdrastically reduce and company shall concentrate more towards the core area of developingthe business into new heights.


The Directors are constantly assessing the business risks pertaining to the performanceof the Company. The following are the important risks perceptions:

• Volatility in gold and silver prices.

• Uncertain regulatory atmosphere.

• Current account deficit and more restrictions by the Government on import ofgold.

• Increased customs duty.

• Customers Default

• Inadequacy of Finance Arrangement

• Statutory Policies

• Restriction of importing of Gold

• Events Due to Unforeseen Circumstances

• Uncertainties of global economy impacting overall growth.

Your Directors are fully conscious of the various business risks and have takenadequate care to tackle any situation.

Statutory Departmental Enquiries:

During the financial year 2012-13 based on the complaints by MMTC Ltd CBI had seizedof around 400 Kgs of Gold during the search conducted on 20.06.2012. The main complaintsagainst the company by MMTC were an outstanding amount of around Rs. 29 crores due to themon Gold supply transactions entered into 2007-08 to 2010-11. In this regard the companyhad submitted to the investigating authorities that the alleged dues as claimed by theMMTC can never arise due to the fact that bullion is always supplied on payment of advancein full or at a margin of 110 % of the value. Consequently the investigatingauthority (CBI) had filed a charge sheet in August 2013 concluding that there was a totaldue of around Rs. 13.86 crore recoverable from MMTC from the company. These calculationwith the investigating agency are also bound to fall flat in the court of law as MMTCsubsequent to filing of the charge sheet has also filed a civil suit with the high courtof madras in which they have declared that the calculation by the CBI officer was wrongand the final working on the net amount payable and claimed in the civil suit is only 2.25crores. Further on 25th February 2015 the honourable CBI Court has closed the FIRrelating to 400 kgs of Gold Seizer. The Court in its order has pronounced that there is noprosecutable evidence against the company or it's Management.

In October 2015 based on the field information the DRI officers had come for searchto the company showroom. During the search the officers seized 2.339 Kgs of Gold valuedRs. 62.50 lacs alleging it to be non duty paid item. The company has produced all thenecessary documents confirming the genuinely of the gold to the department. On completionof the investigation the department has issued a show cause notice in April 2015whereby asking for the reason as to why penalty equivalent to the duty amount payable onthe said 2.339 Kgs gold be not levied on the company. The liability under the show causenotice is amounting to maximum of Rs. 62.50 Lacs.

Other than that DRI has also issued a show cause notice in the year 2013 relating tothe differential duty to be paid on import of Jewellery from Thailand by disputing thevalue addition certified by the country of origin. This show cause notice of DRI is a PANIndia phenomenal and has been issued to all the jewellers across the country who hasimported the gold jewellery from Thailand. The company has a prudent measure has alreadyprovided for Rs 15.81 crore Relating to the said related duties. At the same time thecompany is of the opinion that this liability may not be crystallized in view of therecent Delhi High court judgment whereby circular/ notification of the CBEC under whichthese show cause notices were issued has been quashed.


Your Directors are pleased to inform you that your Company has an adequate andsufficient internal controls as well as Internal Audit Systems manned by company officialscommensurate

with the size and nature of the Company's day to day operations. The Intemal policiesand Controls do ensure efficient use of Company's productive assets. These internalguidelines also help protection of the assets of the Company. They also ensure that theactivities of the Company are in accordance with the stated policies guidelines and otherstatutes and regulations in force. Independent audit functions and compliances of thevarious stipulations of the Statutory Authorities are strictly adhered to by the Companyand this aspect is monitored by the Audit Committee. The Internal Control Mechanism alsoprovides for well documented policies and approved procedures for guiding the company'soperations.


The Management envisions trained and motivated employees as the backbone of theCompany. Special attention is given to recruit trained and experienced personnel not onlyin the production department but also in marketing finance and accounts. The Managementstrives to retain and improve employee morale. The Company has total staff strength ofabout 20 employees. The Company is in the process of revamping the employer employeeengagement program.


The Directors pay special attention to ensure that the guidelines given for thecorporate governance are strictly adhered to. All possible steps are taken to adhere tothe requirements set out by SEBI Guidelines on Corporate Governance.

A separate report on the Corporate Governance also forms part of the Annual Report.Requisite certificates from the Auditors of your Company regarding compliance of theconditions of the corporate governance as stipulated under Regulation 27(2) of the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 with the StockExchanges is also attached to the corporate governance report.


The Board of Directors has constituted a Corporate Social Responsibility and GovernanceCommittee (CSR&G Committee) in compliance with the provisions under the Companies Act2013. The committee comprises of Shri. Swaminathan Ganesh as the Chairman and Smt. AgnesRoselind Joseph and Shri. Devarajan.K.E as members.

The said Committee has been entrusted with the responsibility of formulating andrecommending to the Board a Corporate Social Responsibility Policy (CSR Policy)indicating the activities to be undertaken by the Company monitoring the implementationof the framework of the CSR Policy and recommending the amount to be spent on CSRactivities.

During the financial year 2014-15 2015-16 and 2016-17 the Company had achieved a NetLoss of Rs.287.06 Crores Rs.299.65 Crores and 319.27 Crores respectively. Due tosubsequent liquidity crunch faced by the Company the Company is not in a position tospend money pertaining to CSR activities. The Company during the last three financial yearhad an average net loss of Rs.302 Crores hence the submission of a report on CSRactivities does not apply.


The Board of Directors has constituted a Risk Management Committee and framed a RiskManagement Policy in compliance with the provisions under the Companies Act 2013 andRegulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The committee comprises of Shri. Swaminathan Ganesh as the Chairman and Smt. AgnesRoselind Joseph and Shri.Devarajan.K.E as members.


The Company had adopted the sexual harassment policy as recommended by the AuditCommittee of the Board of Directors; however the Company is in the process of constitutinga committee for the same.


The Company has entered into a Tripartite Agreement with both the Depositories viz.National Securities Depository Limited (NSDL) and Central Depository Services (I) Ltd(CSDL) along with Registrars M/s Cameo Corporate Service Ltd Chennai for providingelectronic connectivity for dematerialization on the Company's shares facilitating theinvestors to hold the shares in electronic form and trade in those shares. The shares ofyour Company are being traded now on the Bombay and National Stock Exchanges undercompulsory demat form. Further in accordance with provisions stipulated under CompaniesAct 2013 the facility of e-voting is also made available to all shareholders of theCompany. The instructions regarding e-voting are available in a separate section of theAnnual report. All shareholders are also requested to update their email ids with theCompany or our RTA M/s. Cameo Corporate Services Ltd.


Pursuant to the provisions of Companies Act 2013 and rules framed thereunder relevantamounts which remained unpaid or unclaimed for a period of seven years have beentransferred by the Company from time to time on due dates to the Investor Education andProtection Fund. The details of the same are covered under the Corporate GovernanceReport.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012 theCompany has uploaded the details of unpaid and unclaimed amounts lying with the Company ason 28th September 2016 (date of last Annual General Meeting) on the Company's website(www. as also on the Ministry of Corporate Affairs' website.


M/s. VDSR & Co Chartered Accountants Chennai having firm registration number001626S has been re-appointed as Statutory auditors of the Company from the conclusion ofthis Annual General Meeting till the conclusion of twenty ninth Annual General Meeting ofthe Company as set out in Item No.3 of the Notice of Annual General Meeting subject toratification of their appointment by shareholders in each Annual General Meeting.

M/s. VDSR & Co Chartered Accountant Chennai have conveyed their consent to beappointed as Statutory Auditors of the Company along with a confirmation that theirappointment if made by the members would be within the limits prescribed the CompaniesAct 2013.


The Auditors have emphasized certain matters in their report as mentioned below and themanagement has given their respective response on the same.



The Company has not provided for interest and penal interest on certain borrowings forthe year ended March 31 2017 which is estimated at Rs. 4697 Lakhs.


The Management has not provided for interest on certain borrowings as the lenders havedeclared the accounts as Non-Performing assets and have not charged the interest in theirloan books.


The company has considered trade receivables outstanding for more than 6 months of Rs.249.36 Crores and long term trade receivables of Rs. 358.92 Crores as good andrecoverable. However we were unable to confirm or verify by alternative means balancesof such trade receivables.

Had provision been made with respect to the above interest and receivables in the booksof the company the loss would have been increased by Rs. 655.25 Crores and consequentlynetworth have been reduced by Rs. 655.25 Crores.


The Company has treated the long receivables of Rs. 358.92 Crores which is net ofprovisioning as good and recoverable due to fact that the said receivables are coveredunder the Memorandum of Understanding consisting of definitive repayment schedule and someof the assets belonging to the said parties are collateralized to the consortium on behalfof the company. Further trade receivables outstanding for more than six months of Rs.249.36 Crores are considered good and fully recoverable.


The carrying values of the financial assets as at March 31 2017 are not measured inaccordance with the Ind-AS 39 and we are unable to comment on the adjustments that may berequired to the carrying values of the financial assets.


The Company has implemented Ind-AS 39 and as all the necessary provisions on thefinancial assets and financial liabilities have been recognized the company is of theview that financial assets and financial liabilities of the company are represented atfair market value. Further there are no financial assets held by the company. Similarly asall the financial liabilities of the company is payable on demand due to the fact that theloans have become Non-Performing Assets and the banks have initiated recovery suit thesefinancial liabilities are disclosed in the books as per the claims made by the lenders andaccordingly the management is of the view that there might not be any adjustments requiredin carrying value of financial assets and liabilities.


We draw attention to Note no 4 to the statement which indicates that the company hasincurred net loss of Rs. 200.68 Crores and Rs.319.26 Crores during the half year ended andyear ended March 31 2017 respectively and as on that date the Company's currentliabilities exceeded its current assets by Rs. 1229.80 Crores and the company'saccumulated losses aggregate to Rs. 838.63 Crores resulting in erosion of its networth.These conditions along with other matters as set forth in the aforesaid note indicates theexistence of a material uncertainty that may cast

significant doubt about the company's ability to continue as a going concem. Howeverthe financial statements have been prepared under the assumptions of going concernconsidering the outcome of the consortium meeting dated December 14 2016 and May 082017 whereby the company has offered One Time Settlement of its liabilities with theconsortium members which has been considered by them for further approval. The ability ofthe company to continue as a going concern is significantly dependent on the furtherapproval by consortium of lenders on the one time settlement offered by the company.


The Company would like to submit that vide the consortium meeting dated December 142016 and May 08 2017 the company's offer for one time settlement of its liabilities withthe consortium members has been considered and forwarded to necessary authorities forapproval. Consequently the company is well within its capacity to repay the consortiumliabilities and accordingly the book of accounts has been prepared on on-going concernbasis.


Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Lakshmmi Subramanian & Associates Practising Company SecretariesChennai to undertake the Secretarial Audit of the Company. The report of the SecretarialAudit Report is annexed herewith as "Annexure A".


1. The Company received a sum of Rs. 352773330 from its promoter's consequent torestructuring of loans and advances by financial institutions and banks as per the termsof the restructure under Corporate Debt Restructuring Scheme. Further during the yearunder review consequent to decision taken by the Board to not allot shares to thepromoter the said sum was partially returned. The balance sum of Rs. 146887050 wasreclassified as unsecured loan as per the instruction of subscriber to the shares whichis not in compliance of the Companies (Acceptance of Deposit) Rules 2014.

As the CDR was declared as failure and exited by the consortium of banks furtherprocessing of converting the promoter contribution into share capital could not happen andaccordingly it was reclassified as unsecured loan.

2. The Company has not fully complied with the provisions of Secretarial Standards 1and 2.

The Company is in the process of fully complying with the provisions of SecretarialStandards 1 and Secretarial Standards 2.

3. The Company has not filed any forms with the Registrar of Companies during theFinancial Year.

The company is already into the system of filing forms with Registrar of Companies onregular basis.

4. The Company has not appointed Company Secretary (CS) and Chief Financial Officer(CFO) as required under section 203 of the Companies Act 2013 during the Financial Year.

The Company is in the process of identifying the suitable candidate for the post ofCompany Secretary and ChiefFinancial Officer. The Company is taking all necessary steps tocomply with the provisions of Section 203 of Companies Act 2013.

5. The Company has not updated its website as per the Securities Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulation 2015.

The Company is already in the process of updating the website as per the saidprovisions.


The Board has appointed CA. R. Gopinath Proprietor Chartered Accountants Chennai asthe Internal Auditors of the Company pursuant to Section 138 of Companies Act 2013 andRule No. 13 of The Companies (Accounts of Companies) Rules 2014 for the financial year2017-18.

The Internal Auditors of the Company has a qualified team of Internal Auditprofessionals who shall be reporting directly to the Audit Committee of the Company. TheInternal Audit would ensure that strong internal control mechanism is put in place in theCompany as per the recommendations and guidance of Audit Committee.


All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(b) of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.


The following changes have occurred in the Board of Directors during the financial year2016-17:


Smt. Soundharya Panchapakesam has resigned from the position of Director with effectfrom 02nd September 2016; The Board had placed on record the appreciation forthe outstanding contributions made by Smt. Soundharya Panchapakesan during her tenure ofoffice with the Company.


Smt. Agnes Roselind was appointed as an Independent Director of the Company with effectfrom May 26 2016.

During the Financial Year the company had informed the consortium about theresignation of Shri.Vijayraj Surana. However the consortium is yet to provide itsconfirmation in this regard.


In accordance with the provisions of the Companies Act 2013 and in terms of theMemorandum & Articles of Association of the Company at the ensuing 26thAnnual General Meeting Shri. K.E.Devarajan Non- Executive Director of the Company isliable to retire by rotation and being eligible offer himself for re-appointment. TheBoard recommends his re-appointment.


Pursuant to the provisions of Regulation 27(2) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board shall monitor and review the Boardevaluation

framework. The Companies Act 2013 States that a rmal annual evaluation needs to bemade by the Board of its own performance and that of its committees and individualdirectors. Schedule IV of the Companies Act 2013 states that the performance evaluationof independent directors shall be done by the entire Board of Directors excluding thedirector being evaluated. The Board has carried out an annual performance evaluation ofits own performance the directors individually as well as the evaluation of the workingof its Audit Nomination & Remuneration and Compliance Committees.


Every new independent director of the Board attends an orientation program. Tofamiliarize the new inductees with the strategy operations and functions of our Companythe executive directors/senior managerial personnel make presentations to the inducteesabout the Company's strategy operations product and service offerings marketsorganization structure finance human resources technology quality facilities and riskmanagement.


The Board on recommendation of the Nomination & Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.


To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement in terms ofSection 134 (3) (c) of the Companies Act 2013:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.


A statement containing the particulars relating to conservation of energy research anddevelopment and technology absorption as required under Section 134(3)(m) of the CompaniesAct 2013

and Rule 8(3)(A) (3)(B) and 3(A)(C) of The Companies (Accounts) Rules 2014 are givenin "Annexure B"


Details of Loan Guarantees and Investments covered under the provisions of Section 186of the Companies Act 2013 are given in the notes to financial statements.


The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014in respect of the employees of the company will be provided upon request. In terms ofSection 136 of the Act the Report and Accounts are being sent to the Members and othersentitled thereto excluding the information on employees' particulars which is availablefor inspection by the Members at the Registered Office of the Company during businesshours on working days of the Company up to the date of the ensuing Annual General Meeting.If any Member is interested in obtaining a copy thereof such Member may write to theCompany Secretary in this regard.


Your Company has not accepted any deposits from the public during the year underreview.


During the year 5 (Five) Board Meetings and 4 (Four) Audit Committee Meetings wereconvened and held. The details of which are given in the Corporate Governance Report. Theintervening gap between the meetings was within the period as prescribed under theCompanies Act 2013.


Currently the Board of Directors of the Company pursuant to the mandatory provisionsof Companies Act 2013 has the following committees namely:

a) Audit Committee

b) Nomination & Remuneration Committee

c) Stakeholders Relationship Committee

d) CSR Committee

e) Risk Management Committee

f) Share Transfer & Transmission Committee

A detailed note on the Board and its committees along with the composition of thecommittees and compliances is provided under the Corporate Governance Report section inthis Annual Report.


Currently the Company has an independent and qualified Audit Committee as per theprovisions of Section 177(8) of the Companies Act 2013 and Rule 7 of The Companies(Meetings of Board and its Powers) Rules 2014 and The SEBI (LODR) Regulations 2015 thefollowing is the current composition of Audit Committee:

Name of the Director



Shri. Swaminathan Ganesh

Non-Executive Independent Director


Shri. Agnes Roselind Joseph

Non-Executive Independent Director


Shri. Devarajan.K.E

Non-Executive Director


The Board has accepted all the recommendations provided by the Audit Committee.


The Company has a vigil mechanism/whistle blower Policy to deal with instance of fraudand mismanagement if any. The details of the vigil mechanism Policy is explained in theCorporate Governance Report and also posted on the website of the Company.


All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. All Related Party Transactions are placed before theAudit Committee as also the Board for approval. The Company is in the process ofdeveloping a Related Party Transactions Manual Standard Operating Procedures for purposeof identification and monitoring of such transactions. None of the Directors has anypecuniary relationships or transactions vis--vis the Company. Particulars of Contractsor arrangement with related parties referred to in Section 188(1) of the Companies Act2013 in the prescribed Form AOC-2 is appended as "Annexure C" to theBoard's Report.


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


Your Company believes that its Members are among its most important stakeholders.Accordingly your company's operations are committed to the pursuit of achieving highlevels of operating performance and cost competitiveness consolidating and building forgrowth enhancing the productive asset and resource base and nurturing overall corporatereputation. Your company is also committed to creating value for its other stakeholders byensuring its corporate actions positively impact the socio-economic and environmentaldimensions and contribute to sustainable growth and development.


During fiscal 2015-16 we started a sustainability init.iat.ive with the aim ofgoinggreen and minimizing our impact on the environment. This year we are publishing only thestatutory disclosures in the print version of the Annual Report. Additional information isavailable on our website www.suranacorp . com.

Electronic copies of the Annual Report 2016-17 and Notice of the 26th AnnualGeneral Meeting are sent to all the members whose email addresses are registered with theCompany/Depository Participant(s). For members who have not registered their emailaddresses physical copies of the Annual Report 2016-17 and the Notice of 26thAnnual General Meeting are sent in the permitted mode. Members requiring physical copiescan send a request to the Company.


The Board of Directors of the Company wishes to express their deep sense ofappreciation and offer their sincere thanks to all the Shareholders of the Company fortheir unstinted support to the Company.

The Board also wishes to express their sincere thanks to all the esteemed Customers fortheir support to the Company's products.

The Board would also like to place on record their deep sense of gratitude to thevarious Central and State Government Departments Organizations Banks FinancialInstitutions and Agencies for the continued help and co-operation extended by them.

In the end the Board would like to place on record their deep sense of appreciation toall the executives officers employees staff members and workers at the factories.

Date : 02nd September 2017

For and on behalf of the Board of Director

Place: Chennai

Agnes Roselind Joseph




(DIN: 00007313)

(DIN: 07228715)