Your Directors are pleased to present their Fifty Sixth Annual Report on the businessand operations of the Company and the financial results for the year ended 31st March2019.
| || || || ||(Rs. in Lakhs) |
| ||2018-19 || ||2017-18 || |
|Gross Profit before Interest & Depreciation || ||4866.16 || ||6841.13 |
|Less : Interest ||3734.86 || ||3897.72 || |
|: Depreciation & Amortisation expense ||2576.08 ||6310.94 ||2887.73 ||6785.45 |
|Profit/(Loss) before prior year Adjustment || ||(1444.78) || ||55.68 |
|Exceptional Items * || ||19.05 || ||215.84 |
|Profit / (Loss) before tax for the year || ||(1425.73) || ||271.52 |
|LESS : Provision for Income Tax for the year || ||- || ||63.44 |
|LESS : Deferred tax liability || ||(581.90) || ||(306.97) |
|Profit / (Loss) after tax || ||(843.83) || ||515.05 |
|ADD : Profit brought forward from last year / retained earnings || ||12604.42 || ||12390.03 |
|LESS : opening stock Revaluation difference || ||(237.14) || ||- |
| || ||11523.45 || ||12905.08 |
|Dividend on Equity share capital || ||- || ||166.72 |
|Corporate Dividend Tax || ||- || ||33.94 |
|Transferred to General Reserve || ||- || ||100.00 |
|Profit transferred to balance sheet || ||11523.45 || ||12604.42 |
* Exceptional item of the current year includes Profit on sale of assets of Rs.42.51lakhs Loss on sale of assets Rs.15.45 lakhs Refund of Regulatory Liability chargesexcess charged by MSEDCL in previous year Rs.54.99 lakhs and Excess Provision of InterestIncome till December 2018 written back of Rs.63 lakhs.
(Previous year exceptional item includes GST transition input credit availed onfinished goods and work in process of Rs.153.39 lakhs profit on sale of assets 38.33lakhs and Excess Provision written back of Rs.24.12 lakhs).
During the year under review the Company registered a marginal decline in the turnoverat Rs.742 crores. The adversities that affected the denim industry continue to plague theindustry this year as well. This year the Company was additionally affected by theagitation for enhanced wages of the workers in Denim Division Ramtek from 2nd week ofFebruary leading to declaration of lock out by the Company.
The cumulative effect of these factors has been the loss of around Rs.8.44 crores. Theperformance of spinning division was relatively better because of an improved realization.There has been no improvement in the viability of the power plant.
The denim exports have been slightly better though the margins are under pressure dueto intense competition.
In view of the loss the Board regrets its inability to recommend a dividend for theyear 2018-19.
During the year under review the Company incurred capital expenditure of Rs.352.61Lakhs.
Thegrowthinexportsof14%invaluetermshasbeentheonly silver lining in the currentdepressed markets. The sluggish domestic markets has intensified the competitiveness inthe export markets thus putting the margins under pressure. In this trying scenario theCompany has been going all out to develop innovative fabrics with particular emphasis oncost optimization fabrics which consume less water chemicals and use of recycled fibre /yarn. The Company has been continuing its exports to international brands and is alsosupplying its fabric in North / South America / Africa / Asian markets. The lockout isexpected to be lifted soon and the Company is confident of focusing on the growth ofexports with renewed vigour.
The Company is confident of maintaining its market share. The Company plans to work outappropriate strategies to handle the new situation evolving in the international marketfrom the tariff wars. The Company is firmly of the opinion that the new threats and therisks in the denim industry ought to be converted to opportunities for further growth.
Sri Paritosh Agarwal Managing Director(DINNo.00008738) will retire at the ensuingAnnual General Meeting and being eligible offers himself for reappointment. Furtherdetails about the above Director are given in the Notice for the ensuing Annual GeneralMeeting being sent to the shareholders along with the Annual Report.
During the year Sri V.V.S.Ravindra (DIN : 01887879) has been appointed as NomineeDirector by IDBI Bank Limited in the place of Sri A.Mallikarjun (DIN : 02599532). TheBoard wishes to place on record its appreciation for the valuable services rendered by SriA.Mallikarjun.
During the year under review Sri R.Surender Reddy was reappointed as IndependentDirector for the second consecutive term of 5 years from 01/04/2019 through a PostalBallot. Also the necessary approvals for the continuation of the appointment of SriR.S.Agarwal and Sri Navrang Lal Tibrewal as Independent Directors from 01/04/2019 till theend of their current terms of appointment were secured from the members in the same postalballot.
The Board on the recommendation of Nomination and Remuneration Committee hasreappointed Sri L.N.Agarwal as Chairman & Managing Director and Smt. Padmini Agarwalas Executive Director respectively for a further period of 5 years subject to the approvalof the members in the ensuing Annual General Meeting.
EVALUATION OF THE BOARD'S PERFORMANCE
In compliance with the Companies Act 2013 and as per the latest Listing Regulationsthe annual performance evaluation of the Board its Committees and of Individual Directorswas carried out during the year under review. More details on the same are given in theCorporate Governance Report.
FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS
The Company has formulated a familiarisation program for the Independent Directors toprovide insights into the Company to enable the Independent Directors to understand itsbusiness in depth and contribute significantly to the Company. The details of such programare available in the Company's website www.suryalakshmi.com
DECLARATION BY INDEPENDENT DIRECTORS
The Company has obtained the declaration from the Independent Directors confirming thatthey meet the criteria of Independence laid down in Section 149(6) of the Companies Act2013.
MEETING OF INDEPENDENT DIRECTORS
A separate meeting of the Independent Directors was held under the Chairmanship of SriR.Surender Reddy Independent Director on February 112 019 inter-alia to discussevaluation of the performance of Non-Independent Directors the Board as a wholeevaluation of the performance of the Chairman taking into account the views of theExecutive and Non-Executive Directors and the evaluation of the quality content andtimeliness of flow of information between the management and the Board that is necessaryfor the Board to effectively and reasonably perform its duties.
The Independent Directors expressed satisfaction with the overall performance of theDirectors and the Board as a whole.
POLICY ON APPOINTMENT & REMUNERATION OF DIRECTORS
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.The Policy broadly lays down the guiding principles philosophy and the basis for paymentof remuneration to Executive and Non-executive Directors (by way of sitting fees andcommission) Key Managerial
Personnel Senior Management and other employees. The policy also provides the criteriafor determining qualifications positive attributes and Independence of Directors andcriteria for appointment of Key Managerial Personnel / Senior Management and performanceevaluation which are considered by the Nomination and Remuneration Committee and the Boardof Directors while making selection of the candidates. The above policy has been posted onthe website of the Company at www.suryalakshmi.com.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors state that:
(a) in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;
(c) the Directors had 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) the Directors had prepared the annual accounts on a going concern basis; and
(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.
(f) the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
DISCLOSURES UNDER THE COMPANIES ACT 2013
i) Annual Return:
The extract of Annual Return as per the provisions of Section 92 of the Companies Act2013 and Rule 12 of Companies (Management and Adminsitration) Rules 2014 in form MGT-9 isannexed to this Board's Report. (Annexure -5)
The Company's Annual Return has been hosted on Company's website and can be accessed atthe weblink www.suryalakshmi.com
ii) Number of Board Meetings:
The Board of Directors met four times during the year 2018-2019. The details of theboard meetings and the attendance of the Directors are provided in the CorporateGovernance Report.
iii) Changes in Share Capital:
There was no change in the share capital during the year under review.
iv) Audit Committee:
The Board has constituted the Audit Committee which comprises of Sri R. Surender Reddyas the Chairman and Sri R.S.Agarwal Sri Navrang Lal Tibrewal and Sri V.V.S.Ravindra asthe members. More details on the committee are given in the Corporate Governance Report.
v) Related Party Transactions:
All the related party transactions are entered into on arm's length basis and are incompliance with the applicable provisions of the Companies Act 2013 and the ListingRegulations.
There are no materially significant related party transactions made by the company withPromoters Directors or Key Managerial Personnel etc. which may have potential conflictwith the interest of the company at large. Thus disclosure in Form AOC-2 is not required.All Related Party Transactions are presented to the Audit Committee and the Board. Omnibusapproval is obtained for the transactions which are foreseeable and repetitive in nature.A statement of all related party transactions is presented before the Audit Committee andthe Board on a quarterly basis specifying the nature value and terms and conditions ofthe transactions. The Related Party Transactions Policy as approved by the Board isuploaded on the company's website at the web link: http://www.suryalakshmi.com/policyonrelated.html
vi) REPORTING OF FRAUDS
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and / or Board under Section 143(12)of Act and Rules framed thereunder.
vii) No Loans/Guarantees / Investments under Section 186 of the Companies Act 2013have been made during the year.
viii) There were no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its futureoperations.
MATERIAL CHANGES AND COMMITMENTS
The Denim unit has been under lock out and the suspension of operations at the DenimPlant has badly impacted the Company's profitability for financial year 2018-19 and alsothe results in the current financial year 2019-20.
As per the latest Listing Regulations on Corporate Governance Management Discussionand Analysis Report forms part of the Annual Report (Annexure - 6). The Company hascomplied with the corporate governance requirements under the Companies Act 2013 and asstipulated under the Listing Regulations. A separate section on corporate governance underthe Listing Regulations along with a certificate from the auditors confirming thecompliance is annexed and forms part of the Annual Report (Annexure - 1).
CORPORATE SOCIAL RESPONSIBILITY POLICY
At Suryalakshmi a major concern has been the sincere effort by the Company torecognize the role played by the Society at large the environment and its human resourcesin its sustainability and growth and to strive to discharge its social responsility as acorporate citizen. To this end the Company has always tried to strike a fine balance ofeconomic environmental and social commitments.
The sustainable stewardship mantra is not limited to philanthropy but encompassesholistic community development and other initiatives to strengthen businesssustainability. The core areas for Suryalakshmi's Corporate Social Responsibility (CSR)Programmes for this year have been health care environment and education. Details of theprojects / activities implemented by the Company are furnished in a separate Annexure-2to this report. The Company constituted a Committee of CSR consisting of Sri L.N.AgarwalSri Paritosh K. Agarwal and Sri R.Surender Reddy with Sri L.N.Agarwal as Chairman.
The Company could not spend the planned amounts on the CSR activities in view ofcertain pending approvals from the local authorities. Steps are being taken to obtain thesame at the earliest and complete the commitments.
You will be happy to know that the Garment Division of the Company was recipient of SustainableOrganisation of The Year 2019 award in the manufacturing sector.
STAKEHOLDERS RELATIONSHIP COMMITTEE
The reconstituted Stakeholders Relationship Committee consists of following Directors.
Mr. Navrang Lal Tibrewal Chairman (Independent Director) Sri L.N. Agarwal memberSri Paritosh Agarwal (member) and Sri E.V.S.V. Sarma Compliance Officer & CompanySecretary.
During the financial year stakeholders relationship committee meeting was held on12/11/2018.
The Company has instituted a proper mechanism for identifying and establishing controlsto effectively manage different kinds of risks viz. Trend Related Risks Raw MaterialRisks Brand / Technology Risks Operational Quality Risks Human Resources RisksRegulatory Risks and Financial Risks. A Committee headed by Sri Paritosh Agarwal ManagingDirector periodically reviews the risks and takes steps to mitigate identified risks.
WHISTLE BLOWER POLICY
The Company has in place a Whistle Blower policy for vigil mechanism for Directors andemployees to report to the management about unethical behaviour fraud violation ofCompany's Code of Conduct which also ensures safeguards against victimization of thoseemployees who seek to make use of the free access to the Audit Committee for this purpose.None of the Personnel has been denied access to the audit committee. The Whistle BlowerPolicy has been posted on the website of the Company at www.suryalakshmi.com.
DECLARATION ABOUT COMPLIANCE WITH THE CODE OF CONDUCT BY MEMBERS OF THE BOARD AND SR.MANAGEMENT PERSONNEL.
The Company has complied with the requirements of Code of Conduct for Board members andSr. Management Personnel.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary and trained)are covered under the Policy. The following is a summary of sexual harassment complaintsreceived and disposed off during each Calender year:
|a) No. of Complaints received ||- NIL |
|b) No. of Complaints disposed off during the year ||- NIL |
|c) No. of cases pending as at end of the Financial Year ||- NIL |
I. Statutory Auditors and their Report:-
M/s.K.S.Rao & Co. Chartered Accountants (ICAI Firm Regn.No.003109S) were appointedas Statutory Auditors of the Company for a period of five consecutive years at the AnnualGeneral Meeting (AGM) of the members held on 28/08/2017 on a remuneration mutually agreedupon by the Board of Directors and the Statutory Auditors. Their appointment was subjectto ratification by the members at every subsequent AGM held after the AGM held on28/08/2017. Pursuant to the amendments made to Section 139 of the Companies Act 2013 bythe Companies (Amendment) Act 2017 effective from May 7 2018 such ratification is nolonger necessary.
The Company has received the prescribed certificate from the Auditor regarding thecontinuance and the necessary consent for his appointment as Auditor.
The Auditors' Report to the shareholders for the year under review does not contain anyqualification reservation or adverse remark.
II. Cost Auditor and Cost Audit Report
As per the requirements of the Section 148 of the Act read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time your Company is required tomaintain cost records and accordingly such accounts are made and records have beenmaintained relating to Textile Divisions every year.
Pursuant to Section 148 of the Companies Act 2013 the Board of Directors on therecommendation of the Audit Committee has appointed M/s. Aruna Prasad & Co. CostAccountants (Firm Registration No. 100883) as the Cost Auditors for the Financial Year2019-20 and has recommended their remuneration to the shareholders for their ratificationat the ensuing Annual General Meeting. M/s. Aruna Prasad Co. Cost Accountants haveconfirmed their appointment is within the prescribed limits and also certified that theyare free from any disqualification.
III. Secretarial Auditor and Secretarial Audit Report
The Board had appointed Mr.K.V.Chalama Reddy Company Secretary in Whole-time Practice(M.No. F9268) to carry out Secretarial Audit under the provisions of Section 204 ofthe Companies Act 2013 for the financial year 2019-20. The report of the SecretarialAuditor does not contain any qualifications reservation or adverse remarks and is annexedto this report as Annexure -3.
INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
Your Company has an effective and adequate internal control systems in placecommensurate with the size and complexity of the organisation. Internal and operationalaudit is carried by M/s.K.Vijaya Raghavan & Associates LLP a reputed firm ofChartered Accountants. The Internal Audit system is designed to meet the statutoryrequirements as well as ensure proper implementation of management and accountingcontrols. The internal auditors submit their report to the Managing Director and also tothe Audit Committee which reviews the report and ensures that the Audit observations areattended to by the Management.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy technology absorption foreign exchange earningsand out go as required to be given pursuant to provision of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 is annexed here to marked Annexure-4and forms part of this report.
The Company has not accepted any deposits from the public during the year under review.
COMPLIANCE WITH SECRETARIAL STANDARDS.
The Company has complied with the Secretarial Standards issued by the Institute ofCompany Secretaries of India.
Periodic Training programmes for developing a skilled workforce personalitydevelopment programmes yoga camps etc. encouragement of employee participation indistrict / state level sports events are regularly undertaken. An integrated woman focusedprogram trains unskilled women to undertake skilled jobs at its units. Disclosurepertaining to the remuneration and other details as required under Section 134 &197(12) of the Act and the Rules framed thereunder is enclosed as Annexure-7 tothe Board's Report.
The Board of Directors are pleased to place on record their appreciation of thecooperation and support extended by Banks and various State and Central GovernmentAgencies. The Board also wishes to place on record its appreciation of the valuableservices rendered by the employees of the Company.
| ||for and on behalf of the Board |
|Date : 30th May 2019. ||L.N.AGARWAL |
|Place : Secunderabad ||Chairman & Managing Director |
Details as required under Companies (Accounts) Rules 2014.
A. CONSERVATION OF ENERGY
|(i) the steps taken or impact on conservation of energy; ||1. Arresting compressed air leakages in various machines / pipelines. |
| ||2. Further replacement of normal lamps by LED lights. |
|(ii) the steps taken by the company for utilising alternate sources of energy; ||3. Installation of PFD on softener pumps. |
| ||4. Installation of new PLC and new cooling tower. |
|(iii) the capital investment on energy conservation equipments; ||5. Utilisation of rice husk instead of coal in process boilers. |
B. TECHNOLOGY ABSORPTION
|(i) the efforts made towards technology absorption; ||NOT APPLICABLE |
|(ii) the benefits derived like product improvement cost reduction product development or import substitution; ||NOT APPLICABLE |
|(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- || |
|(a) the details of technology imported; ||NIL |
|(b) the year of import; ||NOT APPLICABLE |
|(c) whether the technology been fully absorbed; ||NOT APPLICABLE |
|(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; and ||NOT APPLICABLE |
|(iv) the expenditure incurred on Research and Development. ||Rs.10.08 lakhs |
C. Foreign Exchange Earnings and Outgo :
The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.
| || ||(Figures Rs. in Lakhs) |
| ||2018-19 ||2017-18 |
|Foreign Exchange Earned || || |
|FOB Value of Exports ||18090.19 ||15656.37 |
|CIF Value of Exports ||18278.23 ||15878.27 |
|Foreign Exchange Used || || |
|(a) Commission on export sales ||245.84 ||233.89 |
|(b) Foreign Travel Expenses ||26.29 ||19.87 |
|(c) Raw material ||1831.68 ||778.46 |
|(d) Plant / Machinery & Others || ||1.18 |
|(e) Stores & Spares ||2345.39 ||1707.75 |
|(f) Repayment of loans || ||349.84 |
|(g) Interest || ||17.60 |
|(h) Foreign Technical and Consultancy Services and ||0.97 ||21.01 |
|(i) Others ||9.78 ||41.94 |
Statement of particulars as per Rule 5(1) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014
(i) The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year 31ST March 2019;
|Sl.No. ||Name of the Director ||Ratio of the remuneration to the median remuneration of the employees |
|1. ||Sri L.N.Agarwal ||106.91 |
|2. ||Sri Paritosh K. Agarwal ||93.88 |
|3. ||Smt. Padmini Agarwal ||62.39 |
(ii) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year.
|Sl.No. ||Name of the Director ||Percentage increase in the remuneration |
|1. ||Sri L.N.Agarwal ||NIL |
|2. ||Sri Paritosh K. Agarwal ||NIL |
|3. ||Smt. Padmini Agarwal ||NIL |
|4. ||Sri Siddhant Sharma ||NIL |
|5. ||Sri E.V.S.V.Sarma ||NIL |
|6. ||Sri P.S.Subramanyam ||NIL |
(iii) The percentage increase in the median remuneration of employees in the financialyear;
(iv) The number of permanent employees on the rolls of company;
There are 3873 employees on the rolls of the Company.
(viii) average percentile increase already made in the salaries of employees other thanthe managerial 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;
(xii) Affirmation that the remuneration is as per the remuneration policy of theCompany.
The remuneration paid to the Key Managerial Personnel is as per the Remuneration Policyof the Company.
| ||On behalf of the Board |
|Place : Secunderabad ||L.N.Agarwal |
|Date : 30th May 2019. ||Chairman & Managing Director |
STATEMENT OF PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134 OF THE COMPANIES ACT2013 READ WITH RULE 5(2) OF THE COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014
List of Top 10 salaried employees for the financial year ended 31st March 2019.
|S. No ||Name of the employee ||Designation ||Remuneration received (INR) in Lakhs ||Nature of the employment ||Qualification ||Experience in years ||Organisation worked for before Suryalakshmi ||Date of commencement of the employment ||Date of Birth ||Age of the employee ||% of the equity shares held by the company ||Wether the employee is relative of any Director or Manager |
|1 ||Mr. L N Agarwal ||Chairman & Managing Director ||80.20 ||Regular ||Undergraduate ||57 ||NIL ||22/6/1994 ||8/9/1933 ||86 ||8.18 ||Yes |
|2 ||Mr. P K Agarwal ||Managing Director ||70.42 ||Regular ||Graduate ||24 ||Suryavanshi Spinning Mills Limited ||6/9/1994 ||18/3/1973 ||46 ||8.87 ||Yes |
|3 ||Mrs. Padmini Agarwal ||Wholetime Director ||46.8 ||Regular ||Graduate ||9 ||Suryakiran International Limited ||15/5/2010 ||1/1/1975 ||44 ||5.83 ||Yes |
|4 ||Mr. Siddhant Sharma ||CEO-Denim Division ||39.55 ||Regular ||B.Tech (Textile) ||30 ||ETCO Denim ||27/2/2017 ||8/7/1964 ||55 ||Nil ||No |
|5 ||Mr. Goutam Dhang ||President ||23.76 ||Regular ||B.Sc. (Technology) || ||RSWM Ltd. ||10/9/2016 ||2/1/1967 ||52 ||Nil ||No |
|6 ||Mr. M Haragopal ||Vice President - Garment Division ||20.88 ||Regular ||B.A. (MES) Master of Financial Management ||21 ||Sai Lakshmi Industries ||4/5/2007 ||9/8/1975 ||44 ||Nil ||No |
|7 ||Mr. E V S V Sarma ||Company Secretary ||26.02 ||Regular ||B.Sc ACMA ACS LLM ||47 ||Transport Corporation of India ||3/5/1995 ||11/2/1951 ||68 ||0.03 ||No |
|8 ||Mr. Prabal Kumar ||G M - Exports ||20.16 ||Regular ||Masters in Management; Masters Diploma in International Trade ||24 ||RSWM Ltd ||18/4/2014 ||1/8/1969 ||50 ||Nil ||No |
|9 ||Mr. Vasudeo Tipre ||G M - Exports ||19.85 ||Regular ||BSc Statistics MBA Marketing ||25 ||Mafatlal Industries Ltd-Denim Division ||25/9/2014 ||28/6/1969 ||50 ||Nil ||No |
|10 ||Mr. P Siva Subramanyam ||President (Finance) ||19.14 ||Regular ||BSc. ACA ||31 ||Andhra Cements Ltd ||1/9/1992 ||15/12/1961 ||57 ||0 ||No |