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Surbhi Industries Ltd.

BSE: 514260 Sector: Industrials
NSE: N.A. ISIN Code: INE899E01019
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NSE 05:30 | 01 Jan Surbhi Industries Ltd
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P/E 0.40
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OPEN 1.80
CLOSE 1.80
VOLUME 1
52-Week high 1.80
52-Week low 1.25
P/E 0.40
Mkt Cap.(Rs cr) 1
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Surbhi Industries Ltd. (SURBHIINDUSTRIE) - Director Report

Company director report

To Dear Shareholders

The Directors of your Company have pleasure in submitting their Twenty Eighth AnnualReport together with the Audited Financial Statements for the year ended 31stMarch 2020.

FINANCIAL RESULTS

During the year under review the company had managed to record turnover of Rs. 2875.74lakh against the previous year turnover of Rs. 1942.92 lakh which shows approximately48.01% increase in comparison with the previous year. This is mainly due to effect of GSTimplementation. The company had occurred profit after tax of Rs. 280.420 Lakh during theyear compared to previous year's loss of Rs. 67.68 Lakh. Overall market was on improvingmode for the textile industry during the year 2019-20.

But due to COVID-19 market conditions are badly impacted and company is assessing theimpact of COVID-19 for current financial year 2020-21 as the first two quarters are deeplyimpacted on labour/workforce raw material transportation and individual as well ascommercial demands are heavily impacted. Company expect to normalise the market by the endof 4 quarter unless any foreseen event occurred.

DIVIDEND

In view of requirement of financial resources and considering the future requirementsof funds your Directors are unable to recommend any Dividend for the year ended 31stMarch 2020.

TRANSFER TO RESERVES

No amount has been transferred to General Reserve Account.

ANNUAL RETURN

Pursuant Section92 (3) Annual Return will be available on following web link:http://www.surbhi.com/pdf/annual-reports/annual-return-form-march-2020.pdf.

Company will upload the Annual Return as per the provisions of the Company's Act 2013.

BUSINESS

COVID -19 has effected overall business environment local as well as internationalmarket adversely effected. Efforts are being made to assess the situation and to providebetter result than earlier years. In view of the increased activities expansions andprograms to grab the emerging opportunities are under hold and after re-assessment of thesame further business expansion activities will be done.

DIRECTOR

Pursuant to Section 152 of the Companies Act 2013 Mr. Bipinbhai Jasmatbhai PatelDirector of the Company is liable to retire at the ensuing Annual General Meeting of theCompany and he being eligible offers himself for re-appointment. Your directorsrecommend for his appointment. None of the directors or KMP except Mr. Bipinbhai J . Patelbeing appointee and Mr. Ravjibhai being relative are interested in the said resolution. Abrief resume of director(s) retiring by rotation seeking appointment at the ensuing AnnualGeneral Meeting nature of their expertise in specific functional areas and name ofcompanies in which they hold directorship and/or membership/ Chairmanship of Committees ofBoard as stipulated under Regulations of LODR Regulation 2015 are given in the AnnualReport.

DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

INSURANCE

All the properties and the insurable interest of the company including building plantsand machinery and stocks wherever necessary and to the extent required have beenadequately insured.

AUDITORS

M/s VIKRANT B. GHAEL & CO. (FRN:122734W) was appointed as Statutory Auditor of thecompany from the conclusion of 26th AGM till the conclusion of 30thAGM at the 26th annual general meeting of the company on such remuneration asmay be agreed upon by the Audit Committee/Board of Directors in consultation with theStatutory Auditors. As required under the provisions of Section 139 of the Companies Act2013 the Company has obtained written confirmation from M/s. VIKRANT B. GHAEL & CO.confirming to the effect that their appointment would be accordance with the provision ofSection 141 of the Companies Act 2013.

Provision of Company (Amendment) Act 2017 become effective from 7th May 2018 and thusBoard has noted the appointment of auditor made for the period from the conclusion of 26thAnnual General Meeting to Conclusion of 30th Annual General Meeting and hencethere is no change in auditor formal resolution for ratification is not mentioned in thenotice.

AUDITORS' REPORT

In the opinion of the directors the notes to the accounts are self-explanatory andadequately explained the matters which are dealt with by the auditors.

There is no adverse remarks in the report and hence nothing to report thereon.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm:

1. That in the preparation of the annual accounts the applicable accounting standardshave been followed and there are no material departures.

2. That such accounting policies have been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year ended on 31stMarch 2020 and of the Profit & Loss of the Company for that period.

3. That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

4. That the annual accounts have been prepared on a going concern basis

5. That internal financial controls have been laid down to be followed by the Companyand that such internal financial controls are adequate and operating effectively.

6. That proper system has been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants and the reviews performed by management andthe relevant board committees including the audit committee the board is of the opinionthat the Company's internal financial controls were adequate and effective during thefinancial year 2019-20.

RISK MANAGEMENT

Details of risk management committee is given under the Corporate Governance reportwhich is forming part of this report.

NUMBER OF MEETINGS OF THE BOARD& COMMITTEES

For details of the meetings of the board please refer to the corporate governancereport which forms part of this report.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Company's policy on directors' appointment and remuneration and other mattersprovided in Section

178(3) of the Act has been disclosed in the corporate governance report which isforming part of the directors' report.

DECLARATION OF INDEPENDENT DIRECTORS

Pursuant to the provisions of Section 149 of the Act which came into effect from April1 2014 Mr. Satish Narandas Patel (DIN: 08168748) and Mrs. Sheetal Harsh Patel (DIN:06858676) were appointed as independent directors at the annual general meeting of theCompany held on 30th June 2018. The terms and conditions of appointment ofindependent directors are as per Schedule IV of the Act. They have submitted a declarationthat each of them meets the criteria of independence as provided in Section 149(6) of theAct and there has been no change in the circumstances which may affect their status asindependent director during the year.

SECRETARIAL AUDIT AND OBSERVATIONS

Pursuant to the provisions of Section 204 of Companies Act 2013 and rules made thereunder the Company has appointed Mr. Kunal Bajaj Practicing Company Secretary toundertake the Secretarial Audit of the Company.

Report of the secretarial auditor is given as an Annexure-A2 which forms part of thisreport. There is no adverse remarks on the Secretarial Audit report and other details areself-explanatory.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

The loans if any made by the Company are within the limits prescribed u/s 186 of theCompanies Act 2013 and no guarantee or security is provided by the company.

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

TRANSACTIONS WITH RELATED PARTIES

None of the transactions with related parties falls under the scope of section 188(1)of the Act. Information on transactions with related parties pursuant to section 134(3)(h)of the Act read with rule 8(2) of the Companies(Accounts) Rules 2014 are given inAnnexure A1 in Form AOC-2 and the same forms part of this report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

CONSERVATION OF ENERGY:

Company's knitting and twisting plants are running with electricity which is suppliedby the Dakshin Gujarat Vij Company Limited. The plants are periodically checked as ameasure of periodical maintenance to minimal break down and energy conservation. Howevercompany' production facilities do not offer much scope for energy conservation.

a) Steps taken or Impact on conservation of energy: Company has installed windmills to conserve the natural resources and to promote green energy.

During the year total 9.21 lakh units were generated through wind mill and credit ofthese units were given by DGVCL against its electricity consumption by the unit.

b) Steps taken by the company for utilizing alternate source of energy: Companyis using wind energy as alternate source of energy and the electricity generated by thewind mill was given as credit in the electricity bills raised by the DGVCL.

c) Capital investment on energy conservation equipment: Company has madeinvestment in wind mill only.

A. Power and Fuel Consumption:
Sr. Particulars 2019-20 2018-19
1 Electricity
(a.) Purchased
Total Units (In lacs kw) 31.68 26.38
Total Amount (In lacs Rs.) 216.26 175.61
Rate / unit (In Rs.) 6.83 6.66
(b) Own Generation
Wind Mill (units in lacs) 9.21 11.72
(Credit was given in Electric Bill of Rs 54.62 lacs which amounts to Rs. 5.93 per unit)
2 Diesel N.a. N.a.
3 Furnace Oil N.a. N.a.
4 Others N.a. N.a.

Technology absorption

The Company's plant is running satisfactorily. No other technology is involved inCompany's facility other than windmill power generation. No amount was used in research& development

Foreign exchange inflow / out flow Year Year
2019-20 2018-19
Foreign Exchange inflow nil nil
Foreign Exchange outflow Rs. 478699 Rs. 200460

CORPORATE SOCIAL RESPONSIBILITY:

Our company does not fall under the purview of Section 135 of companies Act 2013.Hence no Corporate Social Responsibility initiatives have been taken during the year.

BOARD EVALUATION

The board of directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations").

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.

In a separate meeting of independent Directors performance of non-independentdirectors performance of the board as a whole and performance of the Chairman wasevaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting of theindependent Directors at which the performance of the Board its committees andindividual directors was also discussed.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included inthe management discussion & analysis which forms part of this report.

CORPORATE GOVERNANCE

As per Regulation 15 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the company is not required to comply with the provisions of Regulations17 to 27 and Clauses (b) to (i) of sub regulation (2) of Regulation 46 and para C D and Eof Schedule V respectively but for better governance the Company had voluntarilycomplied the same to the extent possible.

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the report of the Corporate Governance and the Certificate of the Auditors of the Companyin respect of compliance thereof are appended hereto and forming part of this report.

COST AUDIT:

Applicable provisions of Cost Audit compliance if any were dealt separately. Duringthe year under review cost audit was not applicable to company and pursuant to Section 148(1) company had maintained the applicable cost records.

LISITNG

At present your Company's securities are listed on the BSE Limited. Necessary steps andapplication for revocation of suspension of trading is in process.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow: a. The ratio of the remuneration of each director to the median remuneration ofthe employees of the

Company for the financial year*:

Executive directors/ Non-executive director Ratio to median
Ravjibhai Parbatbhai Patel 23.73 :1
Bipinbhai Jasmatbhai Patel 20.53 :1

Note: Generally more than 85% of employees are of daily wage earner or of blue collarworkers and hence statistical date of median remuneration are not comparable in this typeof industries. b. The percentage increase in remuneration of each director chiefexecutive officer chief financial officer company secretary in the financial year *

Directors Chief Executive Officer Chief Financial Officer and % increase in remuneration in the
Company Secretary financial year
Ravjibhai Parbatbhai Patel NIL
Bipinbhai Jasmatbhai Patel NIL

c. The percentage increase in the median remuneration of employees in the financialyear*- approx.

10.69 %

* Company operates in the field of textile where in most of the employees are ondaily wages basis most of them are of operator helper and cleaner category and due tohigh attrition and irregular presence the salary of average employees are aroundapproximate Rs. 360-410 per day. In our case comparison of median salary of employee andKMP is not comparable.

d. The number of permanent employees on the rolls of Company-

124 employees.

e. The explanation on the relationship between average increase in remuneration andCompany performance

On an average there is approximate 8-15 % rise in the remuneration of the employees.

The increase in remuneration is in line with the market trends in the respectiveindustries. Generally market rates are decided on the availability of the worker in thesurrounding areas sometimes during festive season daily wages workers travelled to theirhome location and during that period considering the requirement of organization and needof productions higher rates were also required to be paid. In order to ensure thatremuneration reflects Company performance the performance pay is also linked toorganization performance apart from an individual's performance.

f. Comparison of the remuneration of the key managerial personnel against theperformance of the

Company

Aggregate remuneration of key managerial personnel (KMP) in FY19-20 4476000
Revenue 287574593
Remuneration of KMPs (as % of revenue) 1.56%
Profit before Tax (PBT) 30977342
Remuneration of KMP (as % of PBT) 14.45%

During the previous year under review company had made expansion and cost ofdepreciation was higher the time and contribution given by the KMP can not only measuredin terms of percentages. g. Variations in the market capitalisation of the Companyprice earnings ratio as at the closing date of the current financial year and previousfinancial year:*

Particular March 31 2020 March 31 2019 % Change
Market Capitalisation - - -
Price Earnings Ratio - - -

As on date status of company is suspended for trading and hence no trading dataavailable on BSE Ltd. In absence of trading value and market capitalization the above datacould not be comparable. h. Percentage increase over decrease in the market quotationsof the shares of the Company in comparison to the rate at which the Company came out withthe last public offer

Market Price (BSE) As per note given below
- -

As on date status of company is suspended for trading and hence no trading dataavailable on BSE Ltd. In absence of trading value and market capitalization the above datacould not be comparable. The shares of company's are thinly traded and there is no suchvolumes of trading in the scrip of the company. Company had issued shares before twodecades and thereafter company was not in a good financial condition and the shares of thecompany were delisted and thereafter company made efforts to revoke the trading and sincethen price of the company's scrip is showing thin trading. Hence the data pertain to aboveis not comparable.

i. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

j. Comparison of each remuneration of the key managerial personnel against theperformance of the

Company:

Name of KMP Name of KMP
Ravjibhai Parbatbhai Patel Bipinbhai Jasmatbhai Patel
Remuneration in FY 2019-20 2400000 2076000
Revenue

287574593

Remuneration as % of 0.83% 0.73%
Revenue
Profit before Tax

30977342

Remuneration as % of PBT 7.75% 6.70%

k. The key parameters for any variable component of remuneration availed by thedirectors: N.A. l. The ratio of the remuneration of the highest paid director tothat of the employees who are not directors but receive remuneration in excess of thehighest paid director during the year: None m. Affirmation that the remuneration isas per the remuneration policy of the Company:

The Directors of Company affirms remuneration is as per the remuneration policy of theCompany. n. Percentage increase over decrease in the market quotations of the shares ofthe Company in comparison to the rate at which the Company came out with the last publicoffer

Market Price (BSE) As per note given below
- -

The shares of company are thinly traded on off market {as status of company issuspended for trading} and there is no such volume of trading in the scrip of the company.Company had issued shares before two decades and thereafter company was not in a goodfinancial condition and the shares of the company were delisted and thereafter companymade efforts to revoke the trading and since then price of the company's scrip is showingthin trading. Hence the data pertain to above is not comparable.

TAXES:

Company is regularly paying Income tax Sales Tax and other statutory dues likeProvident Fund ESIC as applicable. As regard to Service Tax appropriate provision andtreatments have been made as per law. Details of the payment refund and appeals anddisputed amount have been adequately provided in audit report and the same areself-explanatory and the amount of dispute is being dealt with various authorities andawaiting for final outcome.

INDUSTRIAL RELATIONS

Your Company's relations with its employees remained cordial throughout the year. TheDirectors wish to place on record their deep appreciation for the services rendered bystaff members and executives of the company. Your company has taken adequate steps for thehealth and safety of its employees.

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

MATERIAL CHANGES AFFECTING FINANCIAL POISTION OF THE COMPANY

No material changes or commitments affecting the financial position of the Companyhave occurred between the end of the financial year of the company to which the financialstatements relate i.e. 31st March 2020 and the date of Board Report. Companyis assessing impact of GST in the textile industry and the same is seen as majorchallenges to the industry. Year 2020 become year of challenges COVID-19 pandemic changethe life of industry and market. Government of India and local authority had imposed lockdown as and when necessary and due to the same industry is facing lots of problems withrespect to labor raw material transportation working hours etc. First Quarter of theyear 2020-21 was heavily impacted and second quarter show some sign of recovery in market.However company expects to normalize the market condition by end of fourth quarter unlesscontrary event occurred.

ORDERS PASSED BY REGULATORY BODIES OR COURTS

No regulatory body or court or tribunal has passed any significant and material ordersimpacting the going concern status and operations of the company. During the year BSE Ltd.had passed order for delisting of securities of company and after appropriaterepresentation with various authorities BSE Ltd vide its letter dated 31stAugust 2019 revoked the order of delisting. BSE vide its letter dated October 3 2019given in principle approval for revocation of suspension of trading of equity shares.Company is in process of complying with the same.

COVID -19 Pandemic

In accordance with the third proviso to Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone financial statements andall other documents required to be attached thereto has been hosted on its websitewww.surbhi.com.

Considering the relaxations provided by Ministry of Corporate Affairs on account ofCOVID-19 and difficulties involved in dispatch of physical copies of financial statementsthe Company has not printed Annual Report for the financial year 2019-20. The members arerequested to take note of the same. Further please note that the said financialstatements along with other necessary documents/ registers will be available forinspection by the Members of the Company at the Registered Office of the Company duringbusiness hours from 10.00 a.m. to 12.30 p.m. on all working days except SaturdaysSundays Bank Holidays and National Holidays. However the members are requested toprovide prior intimation of the same.

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