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Surat Textile Mills Ltd.

BSE: 530185 Sector: Industrials
NSE: N.A. ISIN Code: INE936A01025
BSE 00:00 | 07 Aug 2.62 0.01






NSE 05:30 | 01 Jan Surat Textile Mills Ltd
OPEN 2.69
VOLUME 153537
52-Week high 4.20
52-Week low 0.81
P/E 7.49
Mkt Cap.(Rs cr) 58
Buy Price 2.62
Buy Qty 250.00
Sell Price 2.63
Sell Qty 657.00
OPEN 2.69
CLOSE 2.61
VOLUME 153537
52-Week high 4.20
52-Week low 0.81
P/E 7.49
Mkt Cap.(Rs cr) 58
Buy Price 2.62
Buy Qty 250.00
Sell Price 2.63
Sell Qty 657.00

Surat Textile Mills Ltd. (SURATTEXTILE) - Director Report

Company director report


Dear Members

Your Directors present the 73rd Annual Report together with the Audited FinancialStatements of the Company for the financial year ended 31st March 2019.

The Management's Discussion and Analysis Report as required under the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is forming a part of this report.

Financial Results

The Company's performance during the financial year ended 31st March 2019 as comparedto the previous financial year is summarised below:

Summarised Financial Results

(Rs in Crore)
2018-19 2017-18
Gross Revenue from Operations 216.28 205.99
Earnings Before Interest Tax Depreciation and Amortization 12.18 16.44
Less: Finance Costs 1.08 0.98
Less: Depreciation 0.35 0.50
Profit before tax 10.75 14.96
Less: Tax Expense /(Credit) (1.40) 6.78
Profit after tax 12.15 8.18

Review of Operations

The Company achieved 5 per cent year-on-year (YoY) growth in gross operating revenue to' 216.28 Crore against ' 205.99 Crore in the previous fiscal. The increase in sales wasprimarily due to higher volume of sales of polyester chips. Net profit before tax declinedto ' 10.75 Crore as compared to ' 14.96 Crore in the previous year. The total sale ofchips in volume term for the year 2018-19 was higher at 22379 MT as compared to 20803 MTin the previous year.

Volatility in raw material prices and in availability resulted into higher input costwhich adversely affected the EBITDA of the Company. There was pressure on the operatingmargins across the board. However given the current slowdown in consumer demand nearterm volume growth seems challenging for the Company.

The production at polyester spinning division of the Company at Village Jolwa remainedsuspended for the major part of the year due to competitive pressure and marketconditions.

Close watch on raw material prices and strict inventory management has helped theCompany in securing continued raw material supplies (except in couple of months during theyear) and protected against adverse impact of raw material price volatility.

The Company continued its efforts for expanding customer base developing new productsand succeeded to make entry in exports. The focus will be on how the Company balancevolume growth pricing and profitability.

Your Company continues to be the product leader in its speciality chips segment. Itcontinues to be perceived in the market as a premium producer of quality chips.

The overall performance of the Company for FY2019 can be considered satisfactorydespite steep decline in raw material prices in the second half of the year.


In order to strengthen the reserves of the year your directors consider it prudent toplough back the profits and not to recommend any dividend for the financial year 2018-19.

Transfer to Reserves

The Company does not propose to transfer amounts to the general reserve out of theamount available for appropriation and considered it appropriate to retain the same in theprofit and loss account.

Nature of Business

The Company is engaged in the business of manufacturing polyester chips anddifferentiated partially oriented yarn (POY). During the year under review there was nochange in the nature of business of the Company.

Industry Scenario

During the year under review the market of Polyester Filament Yarn remained subdued.The slow pace of growth in demand and increase in supply were contributing factors. ThePFY Spinning industry has gone through a difficult period.

Excess capacity of POY and chips coming into operation in the domestic market duringlast couple of years coupled with competition arising out of cheap imports the domesticsupply position in the Polyester Yarn and Chips segment is likely to be competitive andmargins is expected to remain under pressure.

The global crude oil sector is hard to read due to complexity of factors influencingsupply and demand. Global growth is slowing. This will lead to softening demand and createdownside pressure on prices. The average price this fiscal is about $70 per barrel. That'smuch higher than in 2017-18 ($ 58).

Raw material prices of PTA and MEG during FY19 were low at around USD 787 and USD 607per metric ton respectively and reached a high of around USD 1106 and USD 1022 per metricton.

The fate of the rupee is tied to crude. If crude prices stay high the rupee will beunder pressure. If crude prices fall the trade balance improves and the rupeestrengthens.

The current slowdown hinges around the shortage of liquidity in the rural and theinformal sector. This apparent stagnancy in income has resulted in reduction in lifestyleconsumption. This has impacted the production of intermediate goods such as yarn andfabrics which saw weakened demand growth during the year.

Overview of the economy

India continued to remain the fastest growing major economy in the world in 2018-19despite a slight moderation in its GDP growth from 7.2% in 2017-18 to 6.8% in 2018-19. Onthe other hand the world output growth declined from 3.8% in 2017 to 3.6% in 2018.

Indian's economy grew at the average of 7.4% during the last five years (2014-19). Theaverage growth rate of India was not only higher than China's between 2014-15 and 2017-18but was much higher than that of other top major economies as well.

The Indian situation cannot be seen in isolation from what is happening globally.Global growth which seemed to revive in 2017 and the first half of 2018 has slowed downfrom the second half of 2018 onwards. Volume of debt negative yields in several AdvancedEconomies (AEs) gets further compounded by trade tensions and the contraction in worldtrade volume. We are also facing all price volatility which is perennial issue for thecountry.

India's rupee is likely to be affected by China's estimated economic slowdown leadingto competitive devaluation. Rupee may come under stress due to global factors unless wehave positive legal macro head-winds in addition to a stable government. The Indian rupeewas at ' 69.17 to a US$ as on 31st March 2019 as compared to ' 65.17 to a US$ as on 31stMarch 2018.

Opportunities Challenges Threats Risks and Concerns

The global fibre consumption is dominated by man-made fibres having 70 per cent ofshare while natural fibre constitute only 30 per cent. Contrary to the global trendfibre consumption in India is skewed towards natural fibres especially cotton. The growthof cotton is limited owing to less availability of agricultural land and pricevolatility.

Domestic man-made fibre and yarn manufacturers might get a larger pie of the globalmarket at a time when China the world's largest producer of these products is cuttingproduction due to high labour cost. Moreover demand worries rising input costs toowill weigh on the Company's margins.

The Company is experiencing pressure on margins due to competition from other low-costcountries like China. Textiles being a labour intensive industry rising labour andskilled human resources costs can put pressure on margins. Besides this competitivepressure has increased driven by low priced yarn from China. The export market is notvery encouraging either.

Further any unforeseen slowdowns affecting the growth of the Indian economy mayadversely affect the investments in the textile sector.

Crude oil price is expected to be range-bound within about 15-20 per cent of currentprices. The Company covers its foreign currency exposures in forward market based on thebusiness cycle to minimise the impact of currency fluctuation.

Fall in crude oil prices during second half of FY 18-19 has come as a relief forman-made fibre and yarn manufacturers reeling under the pressure of demonetization and theGoods and Service Tax (GST).

The Company reviews its policies and practices to adjust the inventory levels of bothraw materials and finished goods in line with changing demand to reduce the impact ofvolatility in raw material prices while ensuring availability of enough stocks for optimumproduction plans and supply of finished goods.

The Company is exposed to risks attached to various statutes and regulations includingthe Competition Act 2002. The Company is mitigating these risks through regular reviewsof legal compliances through internal as well as external compliance audits.

The Indian economy provides a large opportunity to the Company to market its products.Slower growth of the Indian economy and stress in sectors such as textiles could impactthe performance of the Company.

Business Outlook

The year 2018-19 was a challenging year that saw an oil-price volatility resulting influctuations in raw material prices and weak market sentiments. Despite this our emphasison increased products differentiation along with improved operational efficiencies andcareful working capital management helped us to remain competitive.

The downstream industries in the man-made fibre textile value chainspinning andweaving-the largest employment generator in the value chain - are facing acute stressbecause of high prices of domestic staple fibre compared to imported material. Thisaffects the export competitiveness of the domestic downstream man-made fabrics (MMF)textile industry.

The global crude oil sector is hard to read due to the complexity of factorsinfluencing supply and demand. Global growth is slowing. This will/may lead to softeningdemand and create down side pressure on prices. The prospects of synthetic yarn industryin short term is linked with the movements of crude oil prices in international marketshowever the long term prospects seems good with the growing Indian economy and demandgrowth in end-use products.

Higher input costs falling demand from consumers and competitive pressures areexpected to impact the profitability of the Company. Continued slowdown in overall textileindustry and slowdown in economic growth in recent months can impact sale growth forcurrent year.

The prices of key raw materials which had increased significantly during the first halfof the year under review started declining in the later part of the fiscal. Barringunforeseen circumstances this trend is likely to continue during the initial months of thecurrent year.

Share Capital

The Paid-up Equity Share Capital of the Company as at 31st March 2019 stood at '2220.64 Lacs. There was no public issue rights issue bonus issue or preferential issueetc. during the year. The Company has not issued shares with differential voting rightssweat equity shares nor has it granted stock options. As on 31st March 2019 none of thedirectors of the Company hold instruments convertible into equity shares of the Company.

Disclosures in respect of voting rights not directly exercised by employees

No disclosure is required under Section 67(3)(c) of the Companies Act 2013 read withRule 16(4) of Companies (Share Capital and Debentures) Rules 2014 in respect of votingrights not exercised directly by the employees of the Company as the provisions of thesaid section are not applicable.

Indian Accounting Standard (Ind AS)

As mandated by the Ministry of Corporate Affairs the Company has adopted IndianAccounting Standards ('Ind AS') from 1st April 2017 with a transition date of 1st April2016. The financial results for the year 2018-19 have been prepared in accordance with IndAS prescribed under Section 133 of the Companies Act 2013 read with the relevant rulesissued thereunder and the other recognized accounting practices and policies to the extentapplicable.

Secretarial Standards

The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on Meetings of the Board of Directors and General Meetings.

Material changes and commitments

There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of financial year and the date of thisReport.

Subsidiaries and associates

The Company has no subsidiary / joint venture / associates for the financial year ended31st March 2019. Accordingly the requirements pursuant to Section 129(3) of theCompanies Act 2013 read with Rule 5 of the Companies (Accounts) Rules 2014 is notapplicable.

Business Responsibility Report

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is not applicable toyour Company for the financial year ended 31st March 2019.


Your Company has repaid Secured Rupee Term Loan from banks to the tune of ' 21.59 Lacsduring the financial year 2018-19. No fresh Term Loan was availed by the Company duringthe year. The Company availed working capital facility from Bank of Baroda during theyear.

Information Technology

Information Technology is the driving force of the business. The Company iscontinuously adopting and utilizing various information technology tools and is in processto implement new age technologies like Internet of Things (IOT) among other toimprove business process efficiency.

As a part of Digital Transformation journey your Company has implemented productionplanning and execution system which was otherwise manual process.

The system for adopting GST in Oracle EBS12 has been successfully implemented by theCompany. This project has been carried out entirely in house.

Directors and Key Managerial Personnel

The Board of Directors consists of five members of which three are IndependentDirectors. The Board also comprises of one woman Director.

As per the provisions of Section 152(6) of the Companies Act 2013 and the Company'sArticles of Association Shri Yogesh C. Papaiya (DIN: 00023985) Retire by Rotation at theensuing 73 rd Annual General Meeting and being eligible offers himself forre-appointment as a Director of the Company.

Smt. Anita Mandrekar (DIN: 00623327) a Non-Executive Independent Director on the Boardresigned from the directorship of the Company with effect from 31st March 2019 due to heradvanced age and other personal commitments. The Directors places on record the valuablecontributions made by Smt. Mandrekar during her tenure with the Company. The Company is inprocess to identify and appoint an appropriate woman director on the Board.

The Board of Directors of the Company at its meeting held on 14th May 2019 onrecommendation of Nomination and Remuneration Committee reappointed Shri Manikant R.Momaya as Managing Director of the Company for a period of three years with effect from1st June 2019 subject to approval of shareholders at the ensuing annual general meeting.The Board also reappointed Shri Yogesh C. Papaiya as Wholetime Director and CFO of theCompany for a period of three years with effect from 11th August 2019 subject to approvalof shareholders at the ensuing annual general meeting. The necessary resolutions have beenproposed in the notice of annual general meeting.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence prescribed under the Act and theListing Regulation.

As per the provisions of Section 203 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Shri Manikant R.Momaya Managing Director Shri Yogesh C. Papaiya Wholetime Director and CFO and Ms.Hanisha Arora Company Secretary are the key managerial personnel of the Company.

Disclosure Relating to Remuneration of Directors and Key Managerial Personnel

The remuneration paid to the Directors is in accordance with the Remuneration Policyformulated in accordance with Section 178 of the Companies Act 2013.

Disclosures of the ratio of the remuneration of each director to the median employee'sremuneration and other details as required pursuant to Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are provided as 'Annexure C'.

The details of remuneration paid to the Directors including Executive Directors of theCompany are given in Form MGT-9 forming part of the Directors Report.

Corporate Governance

Your Company reaffirms its commitment to good Corporate Governance practices. A reporton Corporate Governance pursuant to Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of the Annual Report.

All Board members and Senior Management personnel have affirmed compliance with theCode of Conduct for the year 2018-19. A declaration to this effect signed by the ManagingDirector of the Company is contained in this Annual Report. The Managing Director and CFOhave certified to the Board with regard to the financial statements and other matters asrequired under regulation 17(8) of the SEBI Listing Regulations 2015.

Corporate Social Responsibility Committee

As required under Section 135 of the Companies Act 2013 the CSR committee comprisingShri Ketan Jariwala Independent Director as the Chairman of the Committee ShriHarishchandra Bharucha Independent Director and Shri Yogesh C. Papaiya Whole-timeDirector as its members.

The CSR committee has formulated and recommended to the Board a Corporate SocialResponsibility Policy (CSR) indicating the activities to be undertaken by the Companywhich has been approved by the Board. The CSR Policy is available on the Company's websiteat http://

The Company has been contributing in the development of the surrounding areas of itsplant and office. The Company supports and contributes in activities relating to promotionof education sports medical and healthcare vocational skill development and livelihoodenhancement and programmes and activities relating to environment sustainability etc.

The CSR Committee will further identify the project which can be covered under the CSRguidelines in compliance with the CSR objectives and policy of the Company.

The report as per Section 135 of the Companies Act 2013 read with Companies (CorporateSocial Responsibility Policy) Rules 2014 is attached as 'Annexure B' to thisReport.

Audit Committee

The Audit Committee comprises of Directors namely Shri Harishchandra Bharucha(Chairman) Shri Ketan Jariwala and Shri Yogesh Papaiya as other member. All therecommendations made by the Audit Committee during the year were accepted by the Board.

Whistleblower Policy and Vigil Mechanism

Your Company has adopted a Whistleblower Policy and Vigil Mechanism to provide a formalmechanism to the Directors employees and its Stakeholders to report their concern aboutunethical behavior actual or suspected fraud or violation of the Company's Code ofConduct. Protected disclosures can be made by a whistleblower through several channels.

The policy provides for adequate safeguards against victimization of employees whoavail of the mechanism and also provides for direct access to the Chairman of the AuditCommittee.

It is affirmed that no personnel of the Company has been denied access to the AuditCommittee. The details of the Policy are given in the Corporate Governance Report and thePolicy is also posted on the website of the Company at policies.aspx.

Prevention of Sexual Harassment ('POSH')

The Company is an equal opportunity employer and consciously strives to build a workculture that promotes the dignity of all employees. The Company has zero tolerance forsexual harassment at workplace and has adopted a Policy on prevention prohibition andredressal of sexual harassment at workplace. This is in line with the provisions of theSexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013and the Rules made thereunder. There was no complaint of sexual harassment was received bythe Company during the financial year 2018-19 under the aforesaid Act.

Risk Management

Your Company recognizes that the risk is an integral part of business and is committedto managing the risks in proactive and efficient manner. Your Company periodicallyassesses the risks in the internal and external environment along with treating the risksand incorporates risk management plans in its strategy business and operational plans.

The business plan for the future are devised and approved by the Board keeping in mindthe risk factors which can significantly impact the performance of the particularbusiness. All major capital expenditures commitments are subject to scrutiny by the Boardand investments are permitted only on being satisfied about its returns or utility to theCompany. There are no risks which in the opinion of the Board threaten the existence ofthe Company.


The Company has taken all the necessary steps to insure its properties and insurableinterests as deemed appropriate and also as required under the various legislativeenactments.

Auditors and Auditors' Report

In accordance with the provisions of the Companies Act 2013 M/s. Sharp & TannanAssociates Chartered Accountants (Firm Registration No.109983W) have been appointed asthe statutory auditors of the Company for a period of five years i.e. up to the conclusionof 76th AGM to be held for the adoption of the accounts for the year ending 31st March2022. In view of the amendment to the said section 139 through the Companies (Amendment)Act 2017 notified on 7th May 2018 ratification of auditor's appointment is no longerrequired.

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Statutory Auditors' Reportfor the year 2018-19 does not contain any qualification reservation adverse remark ordisclaimer made by Statutory Auditor.

Cost Auditor and Cost Audit Report

M/s P. M. Nanabhoy & Co. Cost Accountants (Firm Registration Number 000012) wereappointed as the Cost Auditor for the financial year 2018-19 to conduct the audit of thecost records of the Company. M/s P. M. Nanabhoy & Co. Cost Accountants have beenreappointed as the Cost Auditor for the financial year 2019-20.

In terms of the provisions of Section 148(3) of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014 as amended the remuneration payable tothe Cost Auditors has to be ratified by the Members of the Company. Accordingly at theensuing AGM the Board seeks ratification of the remuneration payable to the Cost Auditorsfor the financial year 2019-20.

Secretarial Auditor and Secretarial Audit Report

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 of Directorsof the Company have re-appointed Jigar Vyas of Jigar Vyas & Associates PracticingCompany Secretaries (CP No.8019) Surat to undertake the Secretarial Audit of theCompany. The Report of the Secretarial Auditor in the prescribed form MR-3 is attached as 'AnnexureD' There is no qualification or adverse remark in their Report.

Reporting of Fraud

During the year under review the Statutory Auditors Cost Auditors and SecretarialAuditors have not reported any instances of frauds committed in the Company by itsOfficers or Employees to the Audit Committee under Section 143(12) of the Companies Act2013 details of which needs to be mentioned in this Report.

Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act 2013 the Board ofDirectors of the Company have appointed M/s Aadil Aibada & Associates CharteredAccountant as Internal Auditors of the Company for the financial year 2018-19.

The audit committee of the Board of Directors in consultation with the Internal Auditorformulates the scope functioning periodicity and methodology for conducting the internalaudit.

Directors' Responsibility Statement

Pursuant to the requirements of Section 134(1)(c) read with Section 134(5) of theCompanies Act 2013 and on the basis of explanation and compliance certificate given bythe executives of the Company and subject to disclosures in the Annual Accounts and alsoon the basis of discussions with the Statutory Auditors of the Company from time to timewe state as under:

a) that in the preparation of the annual accounts for the year ended 31st March 2019the applicable accounting standards read with requirements set out under Schedule III tothe Act have been followed and there are no material departures from the same;

b) that the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31st March 2019and of the profit of the Company for the year ended on that date;

c) that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d) that the directors have prepared the annual accounts on a going concern basis;

e) that the Board has laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

f) that the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

Number of meetings of the Board

Five meetings of the Board of Directors of the Company were held during the year. TheDirectors actively participated in the meetings and contributed valuable inputs on thematters brought before the Board from time to time. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013. For furtherdetails please refer to Corporate Governance section of this Annual Report.

Board evaluation

Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) the Boardhas devised a policy on evaluation of performance of Board of Directors Committees andIndividual directors. The policy is also in compliance to Regulation 19 read with ScheduleII Part D of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.

The Nomination and Remuneration Committee has defined the evaluation criteria for thePerformance Evaluation of the Board its Committees and individual Directors.

The Board has carried out the annual evaluation of its own performance and that of itsCommittees and individual Directors for the year pursuant to the provisions of theCompanies Act 2013 and the corporate governance requirements prescribed under the ListingRegulations. The performance of the Board and individual Directors was evaluated by theBoard after seeking inputs from all the Directors.

The criteria for performance evaluation of the Board was based on the Guidance Noteissued by SEBI on Board Evaluation which included aspects such as Board composition andstructure effectiveness of Board processes contribution in the long term strategicplanning etc. The result of the evaluation is satisfactory and adequate and meets therequirements of the Company.

Independent Directors' Meeting

In compliance with the requirements of Schedule IV of the Companies Act 2013 ameeting of the Independent Directors was held on 23rd March 2019 without theparticipation of the Executive Directors or Management personnel.

The Independent Directors carried out performance evaluation of Non-IndependentDirectors and the Board of Directors as a whole performance of Chairman of the Companythe quality contents and timelines of flow of information between the Management andBoard based on the performance evaluation framework of the Company.

Declaration of Independent Directors

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(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and there is no change in their status of independence. As required under Section 149(7)of the Companies Act 2013 the said declaration was placed in the Board Meeting held on14th May 2019.

Familiarisation Programme

The Company has put in place an induction and familiarisation programme for all itsDirectors including the Independent Directors so as to associate themselves with thenature of the industry in which the Company operates. Directors are periodically advisedabout the changes effected in the Corporate Laws Listing Regulations with regard to theirroles rights and responsibilities as Director of the Company. The familiarisationprogramme for Independent Directors in terms of the provisions of Regulation 46(2)(i) ofListing Regulations is uploaded on the website of the Company.

Internal Financial Control System and their Adequacy

The Company is having in place Internal Financial Control System. The InternalFinancial Control Systems with reference to the financial statements were adequate andoperating effectively.

The Company has appointed Internal Auditors who periodically audit the adequacy andeffectiveness of the internal controls laid down by the management and suggestimprovements. The Audit Committee of the Board of Directors approves the annual internalaudit plan periodically reviews the progress of audits as per approved audit planscritical internal audit findings presented by internal auditors status of implementationof audit recommendations if any and adequacy of internal controls.

Significant / Material Orders passed by the Regulators

There are no significant / material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its operation in future.

Contracts or Arrangement with Related Parties

All contracts / arrangements / transactions entered by the Company during the financialyear with Related Parties were in its Ordinary Course of Business and on arms' lengthbasis.

Pursuant to section 177 of the Companies Act 2013 and regulation 23 of SEBI ListingRegulations 2015 all Related Party Transactions were placed before the Audit Committeefor its approval. There were no materially significant related party transactions whichcould have potential conflict with interest of the Company at large.

The policy on related party transactions as approved by the Board is uploaded on theCompany's website. The Company's management ensures total adherence to the approved Policyon Related Party Transactions to establish Arm's Length Basis without any compromise.

Disclosure of related party transactions with the promoter(s) / promoter(s) group whichindividually hold 10% or more shareholding of the Company as per Indian AccountingStandards are set out in Note No. 32 of the Financial Statements of the company.

Pursuant to section 134 of the Companies Act 2013 and Rules made thereunderparticulars of transactions with related parties as required under section 188(1) of theCompanies Act 2013 read with Rule 8(2) of Companies (Accounts) Rules 2014 is annexedwith this Report in Form AOC-2 as 'Annexure E'. The weblink for the Policy forRelated Party Transaction is placed on the Company's website http://www

Your Directors draw attention of the members to Note No. 32 to the financial statementswhich sets out related party disclosures.

Particulars of Employees and Related Disclosures

During the financial year 2016-17 none of the employee of the Company was in receiptof remuneration prescribed in terms of the provision of Section 197(12) of the CompaniesAct 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rule 2014.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

Particulars in respect of conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134(3) (m) of the Companies Act2013 read with Companies (Accounts) Rules 2014 are set out in a separate statementattached hereto and forming part of the report as 'Annexure A'.

Nomination and Remuneration Policy

On recommendation of Nomination and Remuneration Committee the Board of Directors haveapproved a Nomination and Remuneration Policy for the appointment and remuneration of thedirector key managerial personnel (KMP) and other employees.

The key objectives of the Policy are to lay down the criteria for appointment andremuneration of Directors Key Managerial Personnel and Executives at Senior Managementlevel and recommend to the Board their appointment and also to formulate criteria forevaluation of performance of Independent Directors and the Board and to devise a policy onBoard diversity.

The Policy inter-alia includes criteria for determining qualifications positiveattributes independence of a director and expertise and experience required forappointment of Directors KMP and Senior Management.

As per the Policy the remuneration / compensation to the Whole-time Directors shall berecommended by the Nomination and Remuneration Committee to the Board for its approval.However the remuneration compensation to Whole-time Directors shall be subject to theapproval of the shareholders of the Company and Central Government wherever required.

Further the Non-Executive Directors shall be entitled to the fees for attendingmeetings of Board and Committees within the limits prescribed in the Companies Act 2013.The Nomination and Remuneration Policy is available on the company's website.

Fixed Deposits

Your Company has not accepted any fixed deposits from the public during the financialyear ended 31st March 2019 and there are no outstanding deposits in terms of theCompanies (Acceptance of Deposits) Rules 2014.

Annual Return

Pursuant to Section 134(3)(s) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return isannexed herewith and forming part of the report as 'Annexure F' The weblink for theAnnual Return placed on the Company's website is

Loans Investments and Guarantees by the Company

There are no loans given investments made guarantees given or securities provided bythe Company to any entity under Section 186 of the Companies Act 2013.

Green Initiative

Electronic copy of the Annual Report 2018-19 and the Notice of the 73rd Annual GeneralMeeting are sent to all members whose email addresses are registered with the Company /depository participant(s). For members who have not registered their email addressesphysical copies are sent in the permitted mode.

Your Directors would like to draw your attention to Section 20 of the Companies Act2013 read with the Companies (Management and Administration) Rules 2014 as may beamended from time to time which permits paperless compliances and also service of notice /documents (including annual report) through electronic mode to its members. To supportthis green initiative we hereby once again appeal to all those members who have notregistered their e-mail addresses so far are requested to register their e-mail address inrespect of electronic holding with their concerned Depository Participants and/ or withthe Company.

Financial Performance

Discussion on financial performance with preference to operational performance has beendealt with in this Report in the relevant para which should be treated as forming part ofthe Management Discussion and Analysis Report.

Health safety and environment

The Company gives foremost importance to Safety Health and Environment and strivesrelentlessly on cultivating and improving safe work culture health awareness andenvironment protection.

Your Company recognizes protection and management of environment as one of its highestpriority and every effort is made to conserve and protect the environment. During theyear your Company continued its focus in creating an aesthetic environment-friendlyindustrial habitat in its factory units mobilizing support and generating interest amongstaff and labour for maintaining hygienic and green surrounding.

Periodical health check-up are conducted for the employees at the work place. Moreemphasis is given to cleanliness workplace hygiene and good house-keeping.

The Company is continuously working on possibility of using appropriate technology toreduce the hazardous waste generation.

The Company obtained necessary approvals from concerned Government Department /Pollution Control Board and all required environment clearances / safety clearances /stipulations are complied with at Plant facilities of the Company. The Company continuesto focus on maintenance and performance improvement of related pollution control facilityat its manufacturing locations.

Industrial Relations / Human Resources

Your Company maintained healthy cordial and harmonious industrial relations at alllevels during the year under review.

The Company continuously works to nurture this environment to keep its employees highlymotivated result oriented and adaptable to changing business environment. Your Company'svalue proposition is based on providing value to our customer through innovation and byconsistently improving efficiency at all levels.

Your Directors wish to place on record their appreciation for the dedicated andcommendable services rendered by the employees of the Company. The strength of permanentemployees as on 31st March 2019 was 47 Nos.


Statements in this Directors' Report and Management Discussion and Analysis describingthe Company's objectives projections estimates expectations or predictions may be'forward-looking statements' within the meaning of applicable securities laws andregulations. Actual results could differ materially from those express or implied.

Important factors that could make difference to the Company's operations include rawmaterial availability and its prices cyclical demand and pricing in the Company'sprinciple markets changes in Government regulations Tax regimes economic developmentswithin India and the countries in which the Company conducts business and other ancillaryfactors. The Company assumes no responsibility to publicly amend modify or revise anysuch statements on the basis of subsequent developments information or events. TheCompany disclaims any obligation to update these forward-looking statements except as maybe required by law.


Your Directors wish to acknowledge the co-operation and assistance extended to theCompany by the Company's Bankers and State & Central Government agencies. YourDirectors also wish to place on record their appreciation of the contribution made byemployees at all levels.

Your Directors also acknowledge with gratitude the support of the shareholders otherinvestors customers dealers agents and suppliers for their continued faith and supportwhich has helped the Company to sustain its growth even during these challenging times.

For and on behalf of the Board of Directors
Manikant R. Momaya
Managing Director
Surat 14th May 2019 DIN:00023993