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Surat Textile Mills Ltd.

BSE: 530185 Sector: Industrials
NSE: N.A. ISIN Code: INE936A01025
BSE 00:00 | 15 Feb 2.54 0.07






NSE 05:30 | 01 Jan Surat Textile Mills Ltd
OPEN 2.36
VOLUME 38118
52-Week high 5.21
52-Week low 2.25
P/E 7.47
Mkt Cap.(Rs cr) 56
Buy Price 2.47
Buy Qty 1036.00
Sell Price 2.54
Sell Qty 900.00
OPEN 2.36
CLOSE 2.47
VOLUME 38118
52-Week high 5.21
52-Week low 2.25
P/E 7.47
Mkt Cap.(Rs cr) 56
Buy Price 2.47
Buy Qty 1036.00
Sell Price 2.54
Sell Qty 900.00

Surat Textile Mills Ltd. (SURATTEXTILE) - Director Report

Company director report

Dear Members

Your Directors present the 72nd Annual Report together with the Audited FinancialStatements of the Company for the financial year ended 31st March 2018.

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 2018 as comparedto the previous financial year is summarised below:

Summarised Financial Results

(Rs. in Crore)
2017-18 2016-17
Gross Revenue from Operations 205.99 156.82
Earnings Before Interest Tax and Depreciation 16.44 16.56
Less: Finance Costs 0.98 0.39
Less: Depreciation 0.50 0.79
Profit before tax 14.96 15.38
Less: Tax Expense /(Credit) 6.78 (1.31)
Profit after tax 8.18 16.69

Review of Operations

Gross revenue from operations of the Company for the financial year 2017-18 increasedby about 31% to Rs.205.99 Crore as compared to Rs.156.82 Crore in the previous year.During the year your Company re-started manufacturing operations of its polyesterspinning division which contributed further to the gross revenue for FY18. Capacityutilization however remained low due to poor demand growth. Higher sales volume andimproved net sales realisation in chips segment also contributed to top-line growth.

Despite challenging and competitive business environment your Company achievedOperating EBITDA (earnings before interest tax and depreciation) at Rs.16.44 Crore ascompared to Rs. 16.56 Crore in the previous year.

Total sale of chips in volume was higher at 20803 MT for the year 2017-18 as comparedto 18817 MT in the previous year. In value terms also your Company achieved higher sale ofchips for FY18 at Rs.168.07 Crore as compared to Rs.156.14 Crore in the previous year.

We achieved higher production of Chips during 2017-18 at 22028 MT as compared to 18577MT in the previous year. Despite a highly competitive environment the Company was able torun its plants at good utilisation rates. Good efficiency levels were maintained.

Raw material consumption for FY18 was higher on account of chips component onproduction of Polyester Yarn. High energy costs continued to be matter of concern. Risingglobal prices of MEG and PTA during the year put pressure on operating margins. Theoverall manufacturing expenses for FY 17-18 increased primarily on account of higherconversion cost and the start up cost of polyester spinning division.

Under the present scenario your Company is focusing on optimum allocation of itsresources through cost reduction at manufacturing level. The operating margins howeverremained under pressure.

Increase in Finance costs during FY18 was on account of higher working capitalutilisation higher purchase of raw materials through usance L.C. route and otherincremental financial charges.

In view of the higher input costs coupled with lower demand growth in POY segment themanagement considered it appropriate to suspend its manafacturing operations of polysterspinning division in March 2018.


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 2017-18.

Transfer to Reserves

The Company does not propose to transfer amount 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

The Indian textile sector is a major contributor to the Indian economy in terms ofgross domestic products (GDP) industrial production and the country's total exportearnings. The Indian textile industry is currently passing through a turbulent phase. Withthe global downturned ravaging economies the textile sector is one of the worst hit.

During the year under review the market of Polyester Filament Yarn remained subdued.Higher raw material prices the slow pace of growth in demand and increase in supply werecontributing factors. The PFY Spinning industry has gone through a difficult period.Inflation continued to play a vital role in the economic growth. The increase in prices ofoil chemicals and stores has been the major cause.

Raw material prices of PTA and MEG during FY18 were low at around USD 637 and USD 690per metric ton respectively and reached a high of around USD 806 and USD 1023 per metricton.

In polyester chips the domestic supply has increased and outstrips demand largely.This has put considerable pressure on sale and margins. The raw material prices areexpected to go up and likely to put further pressure on margins. The Company hopes tocounter this effect by improved product mix.

On account of newer capacity of POY and chips coming into operation in the domesticmarket during last couple of years coupled with competition arising out of cheap importsthe domestic supply position in the Polyester Yarn and Chips segment is likely to becompetitive and margins will remain under pressure.

Overview of the economy

Gross domestic products rose a better than expected 7.7 per cent in the fourth quarterof FY18 retaining India's ranking as the world's fastest major economy outstrippingChina by nearly a percentage point.

The full year FY18 growth estimates was revised upward to 6.7 per cent from 6.6 percent. This is in line with the 6.75 per cent growth forecast by the economic survey anddown from 7.1 per cent to the FY17 with the slowdown being attributed to the lingeringeffect of demonetization and the role out of the goods and service tax (GST) in July lastyear.

The constant increasing trend of quarterly GDP numbers in the four quarters of 2017-18at 5.6% 6.3% 7% and 7.7% indicates that the structural measures of reforms undertaken bygovernment is bringing rich dividend in the form of higher GDP growth rate.

The rupee touched its record level of 65.29 a dollar during the year. The immediateconcern for the rupee is the sharp spike in crude oil prices. Considering China's presencein interconnected global trade if the country gets affected others will have a contagioneffect as well. According to Care Ratings the recent depreciation in the rupee istemporary but not alarming. This may not be alarming sign for the Indian currency whenviewed against the back ground of what is happening to other currencies.

Opportunities Challenges Threats Risks and Concerns

The Company is experiencing pressure on margins due to severe competition from otherlow-cost countries like China. There is also a threat of high inflation rate as the pricesof commodities have been increasing. Textiles being a labour intensive industry risinglabour and skilled human resources costs can put pressure on margins. The Company isfacing challenge in terms of higher production costs due to high power cost and otherinputs. The continuing demand sluggishness and oversupply situation does not indicate animmediate upswing in the performance of polyester industry.

In the medium term uncertain availability and volatility in prices of key rawmaterials is the major concerns. The industry is dependent on the international price ofcrude oil which directly impacts the price of both our key raw materials PTA and MEG. Anycrude supply shock could have an adverse impact on the performance of the Company. Furtherany unforeseen slowdowns affecting the growth of the Indian economy may adversely affectthe investments in the textile sector. The implementation of Goods and Service Tax (GST)with effect from July 2017 had mixed impact on trade & commerce during the lastfiscal. The impact of GST is particularly stark in the highly fragmented synthetic textileindustry which attracts different GST rates at different stages of production and sales.

Working capital cost has gone up as the businesses have to wait for tax refunds to comethrough. Pending tax refunds have slowed down fresh investment and resulted into liquidityconstraints. On the Customs front Anti-Dumping Duty on POY originating in China whichexpired in May 2017 was not extended by Ministry of Commerce after due investigation.This bodes badly for domestic producers of POY. The Company is exposed to risks attachedto various statutes and regulations including the Competition Act 2002. The Company ismitigating these risks through regular reviews of legal compliances through internal aswell as external compliance audits.

Business Outlook

The outlook for the domestic textile industry over the medium term is stable supportedby favourable demand both domestically and internationally.

Beyond the current year the growth outlook will be influenced by several factors.First GST implementation is stabilizing which augurs well for economic activity. Secondthere are earning sign of revival in investment activity as reflected in improving creditofftake large resource mobilisation from the primary capital market and improvingcapital goods production and imports. Third the process of recapitalization of publicsector banks has got underway. Fourth although export growth is expected to improvefurther on account of improving global demand elevated commodity prices especially ofoil may act as a drag on aggregate demand.

Domestic manufacturers of polyester yarn and chips have invested significantly inrecent past years in new capacities however with uncertain inputs price trends theindustry is now looking to consolidate operations by optimally utilising installedcapacities. RBI estimates project that the economy will grow by 7.4 per cent this fiscalas forecast in its April policy. GDP growth is projected at 7.5 – 7.6 per cent in thefirst half of the fiscal and at 7.3 – 7.4 per cent in the second half with risksevenly balanced. The RBI projects inflation at 4.8 – 4.9 per cent in the first halfof the current financial year. According to IMF India's forex reserve of $ 430 billionincluding forward position is good enough for both imports as well as covering short-termexternal debts.

While there are some concerns related to fiscal slippages partly attributable to thegoods and service tax implementation and rising crude prices growth is picking up.

The prospects of synthetic yarn industry in short term is linked with the movements ofcrude oil prices in international markets however the long term prospects seems good withthe growing Indian economy and demand growth in end-use products.

Share Capital

The Paid-up Equity Share Capital of the Company as at 31st March 2018 stood atRs.2220.64 Lacs. There was no public issue rights issue bonus issue or preferentialissue etc. during the year. The Company has not issued shares with differential votingrights sweat equity shares nor has it granted stock options. As on 31st March 2018none of the directors of the Company hold instruments convertible into equity shares ofthe 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 1stApril 2016. The financial results for the year 2017-18 have been prepared in accordancewith Ind AS prescribed under Section 133 of the Companies Act 2013 read with therelevant rules issued thereunder and the other recognized accounting practices andpolicies to the extent applicable. The Financial Results for all the periods of 2017-18presented have been prepared in accordance with Ind AS.

Secretarial Standards

Pursuant to the approval given on 10th April 2015 by the Central Government to theSecretarial Standards specified by the Institute of Company Secretaries of India theSecretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings(SS-2) came into effect from 1st July 2015. The said standards were further amendedw.e.f. 1st October 2017. The Company is in compliance with the same.

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 the financial year and the date ofthis Report.

Subsidiaries and associates

The Company has no subsidiary / joint venture / associates for the financial year ended31st March 2018. 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 2018.


Your Company has repaid Secured Rupee Term Loan from banks to the tune of Rs.29.58 Lacsduring the financial year 2017-18. 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) amongother to improve business process efficiency. As a part of Digital Transformationjourney your Company has implemented production planning and execution system which wasotherwise 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 Manikant R. Momaya (DIN: 00023993) shall retire by rotationat the ensuing Annual General Meeting and being eligible has offered himself forre-appointment as a Director of the Company.

The term of office of Shri Harishchandra Bharucha as an Independent Director willexpire on 31st March 2019. The Board of Directors on recommendation of the Nominationand Remuneration Committee has recommended re-appointment of Shri Harishchandra Bharuchaas an Independent Director of the Company for a second term of 5 (five) consecutive yearson the expiry of his current term of office. The Company has received declarations fromall the Independent Directors of the Company confirming that they meet the criteria ofindependence prescribed under the Act and the Listing Regulation. As per the provisions ofSection 203 of the Companies Act 2013 read with the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 Shri Manikant R. Momaya ManagingDirector Shri Yogesh C. Papaiya Wholetime Director and CFO and Ms. Hanisha AroraCompany 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 in Annexure C attached to this Report.

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

As per Regulation 34(3) read with Schedule V(c) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a report on Corporate Governance inaccordance with Listing Regulations along with a certificate from M/s Sharp and TannanChartered Accountants Statutory Auditors of the Company are annexed hereto and formspart of the Report. The auditor's certificate for the year 2017-18 does not contain anyqualification reservation adverse remark or disclaimer.

All Board members and Senior Management personnel have affirmed compliance with theCode of Conduct for the year 2017-18. 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 may be accessed on the Company'swebsite

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 this Report.

Audit Committee

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

Vigil Mechanism / Whistle Blower Policy

Your Company believes in promoting a fair transparent ethical and professional workenvironment. The Company pursuant to the provisions of Section 177 of the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 hasestablished a vigil mechanism for Directors and employees and the same has beencommunicated to the Directors and employees of the Company and the same is also posted onthe website of the Company.

Prevention of Sexual Harassment of women at workplace

The Company has formulated a policy in respect of Sexual Harassment of women atworkplace as per the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013. There was no complaint received bythe Company during the financial year 2017-18 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

Pursuant to the provisions of section 139 of the Companies Act 2013 the members ofthe Company at the 71st Annual General Meeting held on 2nd August 2017 appointed M/s.Sharp & Tannan Associates Chartered Accountants (Firm Registration No.109983W) asstatutory auditors of the Company from the conclusion of 71st Annual General Meeting tillthe conclusion of 76th Annual General Meeting covering one term of five consecutiveyears subject to ratification by the members at each intervening Annual General Meeting.

In view of the amendment to the said section 139 through the Companies (Amendment) Act2017 notified on 7th May 2018 ratification of auditor's appointment is no longerrequired. However as required under section 142 of the Companies Act 2013 resolution atitem No.3 of the Notice of AGM is proposed for approval of members for authorising theBoard of Directors of the Company to fix Auditors' remuneration for the year 2018-19 andthereafter. The members are requested to approve the same.

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 2017-18 does not contain any qualification reservation adverse remark ordisclaimer made by Statutory Auditor. There is no incident of fraud requiring reporting bythe auditors under Section 143(12) of the Companies Act 2013.

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 2017-18 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 2018-19.

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 the Boardseeks ratification at the ensuing AGM of the remuneration payable to the Cost Auditors forthe financial year 2018-19.

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 conduct the Secretarial Audit for thefinancial year 2017-18. The Secretarial Audit Report for the year 2017-18 issued by him inthe prescribed form MR-3 is attached as Annexure D to this Report. The saidSecretarial Audit Report does not contain any qualification reservation adverse remarkor disclaimer made by the Secretarial Auditor.

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 2017-18.

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 ended31st March 2018 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame; 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 2018and of the profit of the Company for the year ended on that date; c) that the directorshave taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act 2013 for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities; d) thatthe directors have prepared the annual accounts on a going concern basis; e) that theBoard has laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and are operating effectively; and f) thatthe directors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

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. Detailedinformation is given in the Corporate Governance Report.

Performance 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.

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out a formal annualevaluation of its performance and that of its Committees and individual Directors. Theevaluation of each of the directors was done inter-alia on the basis of their advisoryrole and contribution in the decision making. Further the evaluation of the Board as awhole and all the Committees of the Directors was done inter-alia on the basis of theoverall directions and guidance provided to the senior executives and supervision overtheir performance. 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 28th March 2018 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 on8th May 2018.

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 Control System and their Adequacy

The Company has an adequate internal control system commensurate with the size andscale of its business operations. The Company has appointed Internal Auditors whoperiodically audit the adequacy and effectiveness of the internal controls laid down bythe management and suggest improvements. The Audit Committee of the Board of Directorsapproves the annual internal audit plan periodically reviews the progress of audits asper approved audit plans critical internal audit findings presented by internal auditorsstatus of implementation of audit recommendations if any and adequacy of internalcontrols.

The Audit Committee takes due cognizance of the observations made by the auditors andgives their suggestions for improvement. The suggestions of the Audit Committee are alsotaken into account for further strengthening of the control systems.

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 which could havepotential conflict with interest of the Company at large. The policy on related partytransactions as approved by the Board is uploaded on the Company's website. The Company'smanagement ensures total adherence to the approved Policy on Related Party Transactions toestablish Arm's Length Basis without any compromise. Pursuant to section 134 of theCompanies Act 2013 and Rules made thereunder particulars of transactions with relatedparties as required under section 188(1) of the Companies Act 2013 read with Rule 8(2)of Companies (Accounts) Rules 2014 is annexed with this Report in Form AOC-2 as AnnexureE.

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 2017-18 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 thePolicy are to lay down the criteria for appointment and remuneration of Directors KeyManagerial Personnel and Executives at Senior Management level and recommend to the Boardtheir appointment and also to formulate criteria for evaluation of performance ofIndependent Directors and the Board and to devise a policy on Board 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 attending meetings of Board and Committeeswithin the limits prescribed in the Companies Act 2013. The Nomination and RemunerationPolicy is available on the Company's website.

Fixed Deposits

During the year under review your Company has not accepted or renewed any Depositwithin the meaning of Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 and as such there are no outstanding deposits interms of the Companies (Acceptance of Deposits) Rules 2014. Hence the requirement offurnishing details of deposits which are not in compliance of Chapter V of the Act is notapplicable.

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.

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 2017-18 and the Notice of the 72nd 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 support this green initiative we hereby once again appeal to all those members whohave not registered their e-mail addresses so far are requested to register their e-mailaddress in respect of electronic holding with their concerned Depository Participantsand/or with the 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 environmentas one of its highest priority and every effort is made to conserve and protect theenvironment.

During the year your Company continued its focus in creating an aestheticenvironment-friendly industrial habitat in its factory units mobilizing support andgenerating interest among staff 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 fromconcerned Government Department / Pollution Control Board and all required environmentclearances / safety clearances / stipulations are complied with at Plant facilities of theCompany. The Company continues to focus on maintenance and performance improvement ofrelated pollution control facility at 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 2018 was 88 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

Manikant R. Momaya

Managing Director Surat 8th May 2018 DIN: 00023993


Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

The information under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 (3)of the Companies (Accounts) Rules 2014 for the year ended 31st March 2018 is given belowand forms part of the Directors' Report.


The Company is engaged in the continuous process of energy conservation throughimproved operational and maintenance practices:

I. Steps taken or impact on conservation of energy.

- The Company makes an ongoing study to identify and implement energy saving system toreduce energy consumption and cost of production.

- Energy conservation is an ongoing process in our organisation. Continuous monitoringplanning development and modifications for energy conservation are done at the plants.

- The Company continued efforts for improving energy efficiency through innovativemeasures to reduce wastage and optimize consumption.

- Replacement of inefficient motors with energy efficient motors.

- Energy Audit is also being carried out by external agencies.

- Maintenance of the machines as per schedule.

II. The steps taken by the company for utilising alternate sources of energy.

The Company is exploring options for utilizing alternate sources of energy in order toreduce the electricity cost with consequent reduction in the cost of production.

III. The Capital investment on energy conservation equipment.

The Company has not incurred major capital investment on energy conservation equipmentsbut focused on optimum utilisation of available resources.


I. The efforts made by the Company towards technology absorption

The Company made required efforts for productivity enhancement and development of newproducts in polyester chips segment.

II. The benefits derived like product improvement cost reduction product developmentor import substitution.

1. Reduce maintenance and operating cost at manufacturing level in chips segment.

2. Improvement in quality customer satisfaction and enlargement of market base.

3. New product developments.

III. Information regarding imported technology

(Imported during the last three years reckoned from the beginning of the financialyear)

1. Technology imported : NIL

2. Year of Import : Not applicable.

3. Has the technology : Not applicable. been fully absorbed

IV. The expenditure incurred on Research and Development.

During the year under review there were no major expenses pertaining to Research andDevelopment incurred by the Company.


Particulars 2017-18 2016-17
Foreign Exchange Earned Nil Nil
Foreign Exchange Used Nil Nil

Annual Report on Corporate Social Responsibility activities

1 A brief outline of the Company's CSR policy including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs. Pursuant to the provisions of Section 135 of the Companies Act 2013 the Companies (Corporate Social Responsibility) Rules 2014 and the various notifications / circulars issued by the Ministry of Corporate Affairs the Company has contributed an amount of Rs.10.53 Lacs as mentioned hereunder towards activities specified in Schedule VII of the Companies Act 2013. The Company has also adopted a CSR policy in compliance with the aforesaid provisions and the same is placed on the Company's website at
2 Composition of CSR Committee The CSR Committee comprises the following members:
a. Shri Ketan Jariwala Independent Director - Chairman
b. Shri Harishchandra Bharucha Independent Director - Member
c. Shri Yogesh C. Papaiya Wholetime Director & CFO - Member
3 Average Net Profit of the Company for last three financial years (as per Section 198 of the Companies Act 2013) Rs.754.45 Lacs
4 Prescribed CSR Expenditure (two per cent of the amount as in item 3 above) Rs.15.09 Lacs
5 Details of CSR spent during the financial year
(a) Total amount spent for the financial year. Rs.10.53 Lacs
(b) Amount unspent if any. Rs.4.56 Lacs
(c) Manner in which the amount spent during the financial year. The Company has spent an aggregate amount of Rs.10.53 Lacs for social welfare and education program.
6 Reasons for failure to spend the two per cent of the average net profit of the last three financial years or any part thereof: The CSR activities carried / to be carried out by the Company is driven by the expertise of the management. Additionally the Company gives preference to the local area(s) of its operations for CSR activities. The Company believes that the CSR should be in the field(s) which have substantial social impact and which co-relate with the philosophy of the Company to improve the quality of life. The CSR Committee will further identify the project which can be covered under the CSR guidelines in compliance with the CSR objectives and policy of the Company.

Responsibility statement:

The CSR Committee hereby confirms that the implementation and monitoring of CSR policyhas been carried out with all reasonable care and diligence and the same is in compliancewith the CSR objectives and the policy of the Company.

For and on behalf of the CSR Committee
Ketan Jariwala
Chairman of the Committee
Surat 0 8 / 0 5 / 2 0 1 8 DIN: 02095540