SUTLEJ TEXTILES AND INDUSTRIES LIMITED
Your Directors are pleased to present the Sixteenth Annual Reporttogether with the audited financial statements of your Company for the year ended 31stMarch 2021.
1. FINANCIAL RESULTS
The financial statements of the Company have been prepared inaccordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of theCompanies Act 2013 (the Act) read with The Companies (Accounts) Rules 2014. Thefinancial statements for the financial year ended 31st March 2021 as well ascomparative figures for the year ended 31st March 2020 are Ind AS compliant.
The financial highlights of your Company for the year ended 31stMarch 2021 are summarized as follows:
(Rs. in crore)
|Particulars ||Standalone ||Consolidated |
| ||Year ended 31st March 2021 ||Year ended 31st March 2020 ||Year ended 31st March 2021 ||Year ended 31st March 2020 |
|Total Income ||1892.19 ||2404.72 ||1915.15 ||2442.02 |
|EBITDA ||146.04 ||203.49 ||135.43 ||197.50 |
|Less: Depreciation ||94.07 ||99.53 ||95.58 ||101.10 |
|EBIT ||51.97 ||103.96 ||39.85 ||96.40 |
|Less: Finance Cost ||36.83 ||44.94 ||37.77 ||45.70 |
|Profit before Exceptional Items and ||15.14 ||59.02 ||2.08 ||50.70 |
|Tax || || || || |
|Less: Exceptional items ||0.00 ||4.36 ||0.00 ||4.36 |
|Profit Before Tax ||15.14 ||54.66 ||2.08 ||46.34 |
|Less: Tax ||5.63 ||18.54 ||5.74 ||18.64 |
|Profit after Tax ||9.51 ||36.12 ||(3.66) ||27.70 |
There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between end of the financial yearand the date of this report. There has been no change in the nature of business of thecompany.
The Company has not transferred any amount to the Reserves for the yearended 31st March 2021.
Your Directors are pleased to recommend a dividend of Rs. 0.30 pershare for the year ended 31st March 2021 subject to shareholders'approval at the forthcoming 16th Annual General Meeting (AGM) of theCompany. The total outgo on account of dividend to the shareholders will be Rs. 4.91 crore(subject to deduction of TDS as per Section 194 of the Income Tax Act 1961).
3. COVID - 19
The outbreak of COVID-19 and resultant lockdown by Government from themonth of March 2020 has significantly affected normal working of the Company due totemporary shutdown of all our manufacturing facilities as our products are classified asnon-essential.
Your Company commenced operating its manufacturing facilities in aphased manner from 3rd week of April 2020 with limited capacity utilizationwhich was gradually ramped up and is presently operating at 100% capacity.
All the manufacturing facilities are sanitized so that our people aresafe and secure. All safety protocols like temperature sensing wearing of safety gears(masks goggles face shields) social distancing sanitizing and washing of hands arebeing adhered to very stringently.
The second wave of COVID-19 threatens to impact normalcy that wasreturning after the initial wave. The second wave is spreading very quickly and has thepotential of impacting the economic growth predicted by economists. Many states havecommenced imposing partial to total lockdown to curb the spread of the virus. Thegovernment has also intensified its drive to vaccinate as many people as possible so thatimmunity is boosted and fatalities due to the virus can be minimised.
The ripple effect of the initial and subsequent shutdowns will have animpact on all economies of the world including India as most business sectors have beenaffected resulting in low revenue and profitability due to an eventual halt / slow down onthe purchase of products by consumers.
4.1 Your Company continues to focus on judicious management of itsworking capital. Receivables inventories and other working capital parameters were keptunder strict check through a process of continuous monitoring.
As at the end of the financial year your Company has been assigned arating of:
i. CARE A Outlook : Stable (Single A) for Long Term Bank Facilitiessignifying adequate degree of safety regarding timely servicing of financial obligations.Such facilities carry low credit risk.
ii. CARE A; Stable / CARE A1 (Single A; Outlook : Stable / A One) forfund based - long term / short term - cash credit / export packing credit / pre-shipmentforeign currency facilities signifying very strong degree of safety regarding timelypayment of financial obligations. Such facilities carry lowest credit risk.
iii. CARE A1 (A One) for Non-Fund based short term letters of credit /bank guarantee facilities and Commercial Paper signifying very strong degree of safetyregarding timely payment of financial obligations. Such facilities carry lowest creditrisk.
Your Company has discontinued its Fixed Deposit Scheme with effect from31st March 2014 and has not accepted any public deposits during the year underreview. As on 31st March 2021 there were no unclaimed / outstanding depositsor accrued interest with respect to deposits.
4.4 Particulars of Loans Guarantees or Investments
Details of Loans Guarantees and Investments made by your Company andcovered under the provisions of Section 186 of the Act are appended as notes to thefinancial statements.
5. EXPANSION MODERNIZATION AND OTHER CAPITAL PROJECTS
The financial year under review witnessed substantial expansionactivities carried out by your Company through organic means.
5.1 Expansion Projects
The details of the expansion projects undertaken are given below:
5.1.1 Greenfield project Setting up of a Green Fibre project tomanufacture Polyester Staple Fibre (PSF) by recycling of pet bottles
Green Fibre project to manufacture Raw White Black and Dope DyedRecycled PSF with capacity of 120 mt/ day commenced commercial production from 1stMarch 2021. This will reduce the dependence of the Company on external sources forrecycled staple fibre help in traceability of the fibre and also give a boost tosustainable fibre manufactured by the Company. The Green Fibre Unit will operate as aseparate Strategic Business Unit.
5.1.2 Modernization up-gradation and de-bottlenecking projects
Your Company has invested an amount of Rs. 38.73 crore on technologyup-gradation and de-bottlenecking. This will result in further improvement in efficiencyand sustaining plant utilization.
Your Company has invested an amount of Rs. 12.31 crore on modernizationproject under implementation at its Home Textiles manufacturing facility at Damanganga.This will result in value addition and improvement in quality.
The Company has a wholly owned subsidiary in the USA viz. SutlejHoldings Inc. which in turn has a wholly owned subsidiary viz. American Silk Mills LLC.Pursuant to the provisions of Indian Accounting Standards-110 (Ind AS - 110) prescribedunder the Companies (Accounting Standards) Rules 2006 the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations 2015) and as prescribed by the Securities and Exchange Board of Indiaconsolidated financial statements presented by the Company include financial informationof subsidiary companies which forms part of the Annual Report. The highlights offinancial performance of the Company's subsidiaries for the financial year 2020 - 21are disclosed in Form AOC - 1. Your Company has also formulated a policy for determiningmaterial subsidiaries which is available on the website of the Company at the web link:http://sutlejtextiles.com/pdf/Policies%20&%20Codes/ Material%20Subsidiary%20Policy.pdf
7. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The detailed review of the operations state of affairs performanceand outlook of the Company is given separately in the Management Discussion and AnalysisReport as required under Regulation 34 of the Listing Regulations 2015 by way of"Annexure I" to this report.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL
8.1 Change in Directors and Key Managerial Personnel
a) Mr. Bipeen Valame (DIN: 07702511) Wholetime Director & CFO ofthe Company was re-appointed as the Wholetime Director of the Company by the members atthe AGM of the Company held on 16th September 2020 w.e.f. 09thFebruary 2020 for a period of three years.
b) Mr. S. K. Khandelia ceased to be the President & Chief ExecutiveOfficer (KMP) of the Company with effect from end of day on 31st March 2021consequent upon his retirement from the services of the Company.
c) Mr. Updeep Singh Chatrath was appointed as the President & ChiefExecutive Officer (KMP) of the Company w.e.f. 01st April 2021.
The Board places on record its appreciation for the valuable servicesrendered by Mr. Khandelia during his tenure as President and Chief Executive Officer ofthe Company.
8.2 Re-appointment of Directors a) Mr. Ashok Mittal (DIN: 00016275)
a Director of the Company retires by rotation and being eligible offershimself for re-appointment.
b) Mr. C. S. Nopany (DIN: 00014587) Executive Chairman of the Companyhas been re-appointed as the Executive Chairman of the Company with effect from 01stJuly 2021 for a period of three years.
Necessary resolutions seeking approval of the members for Directorsproposed to be appointed / re-appointed along with their respective brief profiles havebeen incorporated in the Notice of the ensuing AGM.
8.3 Independent Directors
All the Independent Directors of the Company have been appointed for afixed term of 5 (five) consecutive years from the date of their respective appointment/regularization in the AGM and they are not liable to retire by rotation. All IndependentDirectors have given declarations that they meet the criteria of independence as laid downunder Section 149(6) of the Act and Listing Regulations 2015. The Independent Directorshave also confirmed that they have complied with Schedule IV of the Act and theCompany's Code of Conduct.
The Board is of the opinion that the Independent Directors of theCompany possess requisite qualifications experience and expertise in the fields ofstrategy planning and execution management and leadership functional and managerialexperience legal and risk management corporate governance systems and practicesfinance banking and accounts and they hold highest standards of integrity.
8.4 Board Effectiveness 8.4.1 Familiarization Policy
Pursuant to Regulation 25(7) of Listing Regulations 2015 the Boardhas framed a policy to familiarize the Independent Directors about the Company. The policyis available on the website of the Company at the weblink:http://sutlejtextiles.com/pdf/Policies%20&%20Codes/ Familiarisation%20Programe.pdf.
The Familiarization Policy of the Company seeks to familiarize theIndependent Directors with the working of the Company their roles rights andresponsibilities vis a vis the Company the industry in which the Company operatesbusiness model etc.
8.4.2 Board Evaluation
Pursuant to the provisions of the Act and Listing Regulations 2015the Board has carried out an evaluation of its own performance and that of the Directorsindividually as well as the evaluation of the working of the Board Committees. The mannerof evaluation has been explained in the Corporate Governance Report.
8.5 Criteria for selection of Directors KMPs and Senior leadershippositions and their remuneration
The Board on the recommendation of the Nomination and RemunerationCommittee has framed a policy for selection and appointment of Directors SeniorManagement Personnel and their remuneration. The policy is available on the Company'swebsite at the weblink: http://sutlejtextiles.com/pdf/Policies%20&%20Codes/Remuneration%20Policy.pdf.
The policy contains inter-alia principles governing Directors'appointment and remuneration including criteria for determining qualifications positiveattributes independence of Directors etc.
8.6 Key Managerial Personnel
Pursuant to the provisions of Sections 2(51) and 203 of the Act readwith The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thefollowing are the Key Managerial Personnel of the Company:
Mr. S. K. Khandelia President & Chief Executive Officer(upto 31st March 2021);
Mr. Updeep Singh Chatrath President & Chief ExecutiveOfficer (w.e.f. 1st April 2021);
Mr. Bipeen Valame Wholetime Director & CFO; and
Mr. Manoj Contractor Company Secretary & ComplianceOfficer.
9. MEETINGS OF THE BOARD
A calendar of prospective meetings is prepared and circulated inadvance to the Directors. During the year seven meetings of the Board were convened. Thedetails of Board and Committee meetings held during the year under review are given inthe Corporate Governance Report forming part of this Annual Report. The gap between thesemeetings was within the prescribed period under the Act and Listing Regulations 2015.
10. RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during thefinancial year were on an arm's length basis and were in the ordinary course ofbusiness. Your Company did not enter into any material related party transactions withPromoters Directors Key Managerial Personnel or other designated persons.
All Related Party Transactions are placed before the Audit Committeeand also the Board for approval. Prior omnibus approval of the Audit Committee is obtainedon an annual basis for transactions which are of a foreseeable and repetitive nature. Adetailed statement of such Related Party Transactions entered into pursuant to the omnibusapproval so granted are placed before the Audit Committee for their review on a quarterlybasis. Suitable disclosures as required by the Indian Accounting Standards-24 (Ind AS-24)have been made in the notes to Financial Statements.
The Company has formulated a Related Party Transactions Policy for thepurpose of identification and monitoring of such transactions. The policy on Related PartyTransactions as approved by the Board is uploaded on the Company's website and isavailable at the weblink: http://sutlejtextiles.com/pdf/Policies%20&%20Codes/Policy%20on%20Related%20Party%20Transactions.pdf.
11. INTERNAL FINANCIAL CONTROL SYSTEMS
Your Company's Internal Financial Control Systems are robustcomprehensive and commensurate with the nature of its business size scale and complexityof its operations. The system covers all major processes including operations to ensurereliability of financial reporting compliance with policies procedures laws andregulations safeguarding of assets and economical and efficient use of resources.
The Internal Auditors continuously monitor the efficacy of internalcontrols with the objective of providing to the Audit Committee and the Board ofDirectors an independent objective and reasonable assurance on the adequacy andeffectiveness of the organisation's risk management with regard to internal controlframework.
The policies and procedures adopted by the Company ensures orderly andefficient conduct of its business and adherence to the Company's policies preventionand detection of frauds and errors accuracy and completeness of the records and thetimely preparation of reliable financial information.
The Audit Committee actively reviews adequacy and effectiveness ofinternal control systems and suggests improvements for strengthening them in accordancewith the business dynamics if necessary. The Audit Committee also meets theCompany's Statutory Auditors to ascertain their views on the financial statementsincluding the financial reporting system and compliance to accounting policies andprocedures followed by the Company.
12.1 Statutory Auditor
The Company's Auditors M/s. B S R & Co. LLP CharteredAccountants (ICAI Firm Registration Number: 101248W/ W-100022) were appointed as theStatutory Auditors of the Company for a period of five years commencing from the financialyear 2017-18 to hold office from the conclusion of the 12th AGM of the Companytill the conclusion of the 17th AGM to be held in the year 2022. As requiredunder Regulation 33 of the Listing Regulations 2015 the Auditors have also confirmedthat they hold a valid certificate issued by the Peer Review Board of the Institute ofChartered Accountants of India.
The Report given by the Auditors on the financial statements of theCompany is part of this Report. There has been no qualification reservation adverseremark reporting of any fraud or disclaimer by the Auditors in their Report.
12.2 Internal Auditors
The Board of Directors upon the recommendation of the Audit Committeeof the Board has appointed M/s. Singhi & Co. Chartered Accountants (Firm RegistrationNumber: 302049E) as Internal Auditors of the Company. M/s. Singhi & Co. have confirmedtheir eligibility and have granted their consent to act as Internal Auditors of theCompany for the financial year 2021 - 22.
12.3 Cost Auditors
In conformity with the provisions of Section 148 of the Act read withThe Companies (Cost Records and Audit) Amendment Rules 2014 the Board on therecommendation of the Audit Committee has appointed M/s. K. G. Goyal & AssociatesJaipur Cost Accountants (Firm Registration Number: 000024) to audit the cost recordsrelating to the Company's units for the financial year ending on 31stMarch 2022 at a remuneration as specified in the Notice convening the 16thAGM.
As required under the Act the remuneration payable to the Cost Auditoris required to be placed before the members in a general meeting for their ratification.Accordingly a resolution seeking member's ratification for the remuneration payableto M/s. K. G. Goyal & Associates Cost Accountants is included in the Notice conveningthe 16th AGM.
12.4 Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed M/s. R. Chouhan & Associates Company Secretary in Practice to undertakethe Secretarial Audit of the Company for the year under review. The Secretarial AuditReport does not contain any qualification reservation adverse remark or disclaimer andis annexed to this Report.
In addition to the above and pursuant to SEBI circular dated 8thFebruary 2019 a report on Secretarial Compliance for the financial year 2020 - 21 hasbeen submitted to stock exchanges.
13. BUSINESS RISK MANAGEMENT
Pursuant to Regulation 17(9) of the Listing Regulations 2015 theCompany has laid down a robust risk management framework to inform the Board about therisk assessment and minimization procedures undertaken by the Company. Your Company hasformed a Risk Management Committee for timely identification and mitigation of risks as abetter corporate governance practice.
The risk management framework is designed to identify evaluate andassess business risks and their impact on Company's business. The risk assessment andminimization procedures are reviewed by the Board periodically to ensure that executivemanagement controls risk through the mechanism of a properly defined framework. Theframework is aimed at creating and protecting stakeholder value by minimizing threats andlosses and identifying and maximizing opportunities.
14. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The requisite information with regard to conservation of energytechnology absorption and foreign exchange earnings and outgo as required to be disclosedpursuant to Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts)Rules 2014 is given to the extent applicable in "Annexure II" to this report.
15. CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of ethicsand governance resulting in enhanced transparency for the benefit of all stakeholders.Your Company has implemented all the stipulations enshrined in the Listing Regulations2015 and the requirements set out by the Securities and Exchange Board of India. TheReport on Corporate Governance as stipulated under Regulation 27 of the ListingRegulations 2015 forms part of this report as "Annexure III". The requisiteCertificate from M/s. R. Chouhan & Associates Company Secretary in Practiceconfirming compliance with the conditions of Corporate Governance stipulated underRegulation 27 of the Listing Regulations 2015 is annexed to the Report on CorporateGovernance which forms part of this report.
16. CORPORATE SOCIAL RESPONSIBILITY
In conformity with Section 135 of the Act and Rules made thereunderyour Company has formed a Corporate Social Responsibility (CSR) Committee to oversee theCSR activities initiated by the Company during the financial year under review. Thedetails of the Committee and its terms of reference are set out in the CorporateGovernance Report forming part of the Board's Report. Your Company has adopted a CSRPolicy for the Company which provides a broad framework with regard to implementation ofCSR activities carried out by the Company in accordance with Schedule VII of the Act. TheCSR Policy is available on the Company's website at the weblink:http://sutlejtextiles.com/pdf/Policies%20&%20Codes/ CSR%20Policy.pdf.
During the financial year 2020-21 your Company has spent Rs. 1.92crore towards CSR activities. Your
Company's key objective is to make a difference to the lives ofthe underprivileged and local communities and is committed to CSR engagement. Theactivities undertaken by your Company have been duly acknowledged and appreciated by theconcerned State Governments and communities. A report on CSR activities as prescribedunder the Act and Rules made thereunder is annexed herewith as "Annexure IV".
17. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has in place a vigil mechanism for directors and employeesto report concerns about unethical behaviour actual or suspected fraud or violation ofyour Company's Code of Conduct.
Under the vigil mechanism of the Company which also incorporates aWhistle Blower Policy in terms of Regulation 22 of the Listing Regulations 2015protected disclosures can be made by a whistle blower through an e-mail or dedicatedtelephone line or a letter to the Chairman of the Audit Committee. Adequate safeguards areprovided against victimization to those who avail of the vigil mechanism.
The policy on vigil mechanism and Whistle Blower Policy is available onthe Company's website at the weblink :http://sutlejtextiles.com/pdf/Policies%20&%20Codes/ Whistle%20Blower%20Policy.pdf
18. BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as required by Regulation 34(2) ofthe Listing Regulations 2015 is annexed as "Annexure V" and forms part of thisReport.
19. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As required under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunder the Companyhas implemented a policy on prevention prohibition and redressal of sexual harassment atworkplace. This has been widely communicated internally. Your Company has constituted anInternal Complaints Committee as per the requirement of the Act to redress complaintsrelating to sexual harassment at its workplaces. One complaint was received by theInternal Complaints Committee which was redressed and appropriate action was taken.
20. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS
There are no significant or material orders passed by any Regulators /Courts which would impact the going concern status of the Company and its futureoperations.
21. ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) and Section 92(3) ofthe Act read with Rule 12 of the Companies (Management and Administration) Rules 2014 acopy of the Annual Return of the Company for the financial year ended 31stMarch 2021 is uploaded on the website of the Company and can be accessed atwww.sutlejtextiles.com.
22. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other required informationpursuant to Section 197(12) of the Act read with Rule 5 of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 in respect of employees of the Companyis provided herewith as "Annexure VI" and forms part of this Report.
As per requirements of the Listing Regulations 2015 and applicableAccounting Standards your Company has made proper disclosures in the financialstatements. The applicable Accounting Standards have been duly adopted pursuant to theprovisions of Sections 129 and 133 of the Act.
24. COMPLIANCE OF SECRETARIAL STANDARDS
Your Company has complied with the Secretarial Standards issued by theInstitute of Company Secretaries of India and forming part of the Act on meetings of theBoard of Directors and General Meetings.
25. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to theinformation and explanations obtained your Directors make the following statements interms of Section 134(3)(c) of the Act:
a. that in the preparation of the annual financial statements for theyear ended 31st March 2021 the applicable accounting standards have beenfollowed alongwith proper explanation relating to material departures if any;
b. that such accounting policies have been selected and appliedconsistently and judgment and estimates have been made that are reasonable and prudent soas to give a true and fair view of the state of affairs of the Company as at 31stMarch 2021 and of the profit of the Company for the year ended on that date;
c. that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. that the annual financial statements have been prepared on a goingconcern basis;
e. that proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively; and
f. that systems to ensure compliance with the provisions of allapplicable laws were in place and were adequate and operating effectively.
Your Directors would like to express their sincere appreciation for theassistance and co-operation received from various stakeholders including financialinstitutions and banks Government authorities and other business associates who haveextended their valuable support and encouragement during the year under review.
Your Directors take this opportunity to place on record theirappreciation for the committed services rendered by the employees of the Company at alllevels who have contributed significantly towards the Company's performance and forenhancing its inherent strength. Your Directors also acknowledge with gratitude theencouragement and support extended by our valued shareholders.
|For and on behalf of the Board |
|(C. S. Nopany) |
|Executive Chairman |
|DIN: 00014587 |
|Place: New York |
|Dated: 07th May 2021 |