To the members
SUTLEJ TEXTILES AND INDUSTRIES LIMITED
Your Directors are pleased to present the Fourteenth Annual Report together with theaudited financial statements of your Company for the year ended 31st March2019.
1. FINANCIAL RESULTS
The financial statements of the Company have been prepared in accordance with theIndian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act 2013(the Act) read with The Companies (Accounts) Rules 2014. The financial statements for thefinancial year ended 31st March 2018 as well as comparative figures for theyear ended 31st March 2019 are Ind AS compliant.
The financial highlights of your Company for the financial year ended 31stMarch 2019 are summarized as follows:
| || || || ||(Rs. in crore) |
|Particulars ||Standalone ||Consolidated |
| ||Year ended 31st March 2019 ||Year ended 31st March 2018 ||Year ended 31st March 2019 ||Year ended 31st March 2018 |
|Total Income ||2589.37 ||2487.53 ||2641.64 ||2510.44 |
|EBITDA ||246.97 ||280.75 ||239.85 ||281.11 |
|Less: Depreciation ||100.58 ||106.58 ||100.79 ||106.64 |
|EBIT ||146.39 ||174.17 ||139.06 ||174.47 |
|Less: Finance Cost ||56.54 ||59.12 ||56.54 ||59.12 |
|Profit before exceptional items and tax ||89.85 ||115.05 ||82.52 ||115.35 |
|Add: Exceptional items ||- ||41.83 ||- ||41.83 |
|Profit Before Tax ||89.85 ||156.88 ||82.52 ||157.18 |
|Less: Tax ||24.15 ||43.75 ||24.26 ||43.82 |
|Profit after Tax ||65.70 ||113.13 ||58.26 ||113.36 |
Your Directors are pleased to recommend a dividend of Rs. 0.65 per share for the yearended 31st March 2019 subject to shareholders' approval at the forthcoming14th Annual General Meeting (AGM) of the Company. The total outgo onaccount of dividend to the shareholders will be Rs. 12.84 crore (inclusive of dividenddistribution tax).
3.1 Your Company continues to focus on judicious management of its working capital.Receivables inventories and other working capital parameters were kept under strict checkthrough a process of continuous monitoring.
As at the end of the financial year your Company has been assigned a rating of:
i. CARE A+ (Single A Plus) for Long Term Bank Facilities (Term Loan and Fund Based)signifying adequate degree of safety regarding timely servicing of financial obligations.Such facilities carry low credit risk.
ii. CARE A1+ (A One Plus) for Short Term Bank Facilities (Non-Fund based) andCommercial Paper signifying very strong degree of safety regarding timely payment offinancial obligations. Such facilities carry lowest credit risk.
Your Company has discontinued its Fixed Deposit Scheme with effect from 31stMarch 2014 and has not accepted any public deposits during the year under review. As on31st March 2019 there were no unclaimed/ outstanding deposits or accruedinterest with respect to deposits.
3.4 Particulars of Loans Guarantees or Investments
Details of Loans Guarantees and Investments made by your Company and covered under theprovisions of Section 186 of the Companies Act 2013 are appended as notes to thefinancial statements.
4. ISSUANCE OF SECURITIES
Your Directors have approved raising of funds by way of one or a combination of issueof unsecured / secured redeemable non-convertible debentures / bonds issuance of equityshares / GDR's ADR's Foreign Currency Convertible bonds or by any other permitted mode;for long term working capital requirements growth plans etc. for an aggregate amount notexceeding Rs. 500.00 crore as permitted under applicable laws and subject to suchapprovals as may be required. This proposal is subject to approval by the members at theensuing 14th AGM and all statutory and regulatory compliances.
5. EXPANSION MODERNISATION AND OTHER CAPITAL PROJECTS
The financial year under review witnessed substantial expansion activities carried outby 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 to manufacturerecycled polyester staple fibre by recycling of pet bottles
Your Company has commenced work on the project for setting up of a Green Fibre projectto manufacture Raw White and Black Recycled Fibre with capacity of 120 MT/ Day which isbeing set up at an estimated cost of Rs. 189 crore excluding cost of land. The commercialproduction is expected to start in FY21.
5.1.2 Modernisation upgradation and de-bottlenecking projects
Your Company has invested an amount of Rs.38 crore on technology up-gradation andde-bottlenecking. This will result in further improvement in efficiency and sustainingplant utilization.
The Company has a wholly owned subsidiary in the USA viz. Sutlej Holdings Inc. whichin turn has a wholly owned subsidiary viz. American Silk Mills LLC. The acquired businessof American Silk Mills is housed in American Silk Mills LLC. Further pursuant to theprovisions of Indian Accounting Standard 110 (Ind AS - 110) prescribed under the Companies(Accounting Standards) Rules 2006 the Securities Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations 2015) andas prescribed by the Securities and Exchange Board of India consolidated financialstatements presented by the Company include financial information of subsidiary companieswhich forms a part of the Annual Report. The highlights of financial performance of theCompany's subsidiaries for the financial year 2018-19 are disclosed in form AOC-1. YourCompany has also formulated a policy for determining material subsidiaries which isuploaded 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 performance and outlook of the Company is givenseparately in the Management Discussion and Analysis Report as required under Regulation34 of the Listing Regulations by way of "Annexure I" to this report.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL
8.1 Change in Directors and Key Managerial Personnel
Mr. Ashok Mittal was appointed by the Board as an Additional Director (Non - Executive)w.e.f. 05th February 2019.
8.2 Re-appointment of Directors
a) Mr. Bipeen Valame Wholetime Director and CFO retires by rotation and being eligibleoffers himself for re-appointment.
b) Mr. Ashok Mittal was appointed by the Board as an Additional Director (Non -Executive) w.e.f. 05th February 2019. The Company has received a noticefrom a member with a deposit of Rs. 1 lakh proposing his candidature as a Non - ExecutiveDirector at the forthcoming AGM.
c) The term of office of Mr. U. K. Khaitan Mr. Rajan Dalal Mr. Amit Dalal and Mr.Rajiv Podar as Independent Directors will expire on 22nd August 2019. The termof office of Ms. Sonu Bhasin as an Independent Director will expire on 6th May2020. The Board of Directors on the recommendation of the Nomination and RemunerationCommittee has recommended their re-appointment as Independent Directors of the Company fora second term of 5 (five) consecutive years on the expiry of their current term of officesubject to approval by the members.
Necessary resolutions seeking approval of the members for appointment of directorsproposed to be appointed / re-appointed along with the respective brief profile of theDirectors have been incorporated in the Notice of the ensuing AGM.
8.3 Independent Directors
All the Independent Directors of the Company have been appointed for a fixed term of 5(five) consecutive years from the date of their respective appointment/ regularization inthe AGM and they are not liable to retire by rotation. All Independent Directors havegiven declarations that they meet the criteria of independence as laid down under Section149(6) of the Companies Act 2013 and Listing Regulations 2015.
8.4 Board Effectiveness
8.4.1 Familiarization Policy
Pursuant to Regulation 25(7) of Listing Regulations 2015 the Board has framed apolicy to familiarize the Independent Directors about the Company. The policy is availableon 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 the IndependentDirectors with the working of the Company their roles rights and responsibilities vis avis the Company the industry in which the Company operates business model etc.
8.4.2 Board Evaluation
Pursuant to the provisions of the Act and Listing Regulations 2015 the Board hascarried out an evaluation of its own performance and of the directors individually aswell as the evaluation of the working of the Board Committees. The manner of evaluationhas been explained in the Corporate Governance Report.
8.5 Criteria for selection of Directors KMPs and Senior leadership positions and theirremuneration
The Board on the recommendation of the Nomination and Remuneration Committee has frameda policy for selection and appointment of Directors Senior Management Personnel and theirremuneration. The policy is available on the Company's website at the weblink:http://sutlejtextiles.com/pdf/Policies%20&%20 Codes/Remuneration%20Policy.pdf.
The policy contains inter-alia principles governing directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of directors etc.
8.6 Key Managerial Personnel
Pursuant to the provisions of Sections 2(51) and 203 of the Act read with The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the following are theKey Managerial Personnel of the Company:
Mr. S. K. Khandelia President & CEO;
Mr. Bipeen Valame Wholetime Director & CFO; and
Mr. Manoj Contractor Company Secretary & Compliance Officer.
9. MEETINGS OF THE BOARD
A calendar of prospective meetings is prepared and circulated in advance to theDirectors. The details of Board and Committee meetings held during the year under revieware given in the Corporate Governance Report forming part of this Annual Report. The gapbetween these meetings was within the prescribed period under the Act and ListingRegulations 2015.
10. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. Your Company did notenter into any material related party transactions with Promoters Directors KeyManagerial Personnel or other designated persons.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on an annual basisfor transactions which are of a foreseeable and repetitive nature. A detailed statement ofsuch Related Party Transactions entered into pursuant to the omnibus approval so grantedare placed before the Audit Committee and the Board of Directors for their review on aquarterly basis. Suitable disclosures as required by the Indian Accounting Standards (IndAS 24) have been made in the notes to Financial Statements.
The Company has formulated a Related Party Transactions Policy for the purpose ofidentification 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 robust comprehensive andcommensurate with the nature of its business and size scale and complexity of itsoperations. 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 internal controls with theobjective of providing to the Audit Committee and the Board of Directors an independentobjective and reasonable assurance on the adequacy and effectiveness of the organisation'srisk management with regard to internal control framework. The policies and proceduresadopted by the Company ensures orderly and efficient conduct of its business and adherenceto the Company's policies prevention and detection of frauds and errors accuracy andcompleteness of the records and the timely preparation of reliable financial information.
The Audit Committee actively reviews adequacy and effectiveness of internal controlsystems and suggests improvements for strengthening them in accordance with the businessdynamics if necessary. The Audit Committee also meets the Company's Statutory Auditors toascertain their views on the financial statements including the financial reportingsystem and compliance to accounting policies and procedures followed by the Company.
12.1 Statutory Auditor
The Company's Auditors M/s. BSR & Co. LLP Chartered Accountants (ICAI FirmRegistration Number : 101248W/ W-100022) were appointed as the Statutory Auditors of theCompany for a period of five years commencing from the financial year 2017-18 to holdoffice from the conclusion of the 12th AGM of the Company till the conclusionof the 17th AGM to be held in the year 2022. As required under Regulation 33 ofthe Listing Regulations 2015 the Auditors have also confirmed that they hold a validcertificate issued by the Peer Review Board of the Institute of Chartered Accountants ofIndia.
The Report given by the Auditors on the financial statements of the Company is part ofthis Report. There has been no qualification reservation adverse remark or disclaimergiven by the Auditors in their Report.
12.2 Internal Auditors
The Board of Directors upon the recommendation of the Audit Committee of the Board hasappointed M/s. Singhi & Co. Chartered Accountants (Firm Registration Number:302049E) as Internal Auditors of the Company. M/s. Singhi & Co. have confirmed theireligibility and have granted their consent to act as Internal Auditors of the Company forthe financial year 2019-20.
12.3 Cost Auditors
In conformity with the provisions of Section 148 of the Act read with The Companies(Cost Records and Audit) Amendment Rules 2014 the Board on the recommendation of theAudit Committee has appointed M/s. K. G. Goyal & Associates Jaipur Cost Accountants(Firm Registration Number: 000024) to audit the cost records relating to the Company'sunits for the financial year ending on 31st March 2020 at a remuneration asspecified in the Notice convening the 14th AGM.
As required under the Act the remuneration payable to the Cost Auditor is required tobe placed before the members in a general meeting for their ratification. Accordingly aresolution seeking member's ratification for the remuneration payable to M/s. K. G. Goyal& Associates Cost Accountants is included in the Notice convening the 14thAGM.
12.4 Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board had appointed M/s. R. Chouhan& Associates Company Secretary in Practice to undertake the Secretarial Audit of theCompany for the year under review. The Report of the Secretarial Auditor annexed to thisReport is self-explanatory and does not call for any further clarification. In addition tothe above and pursuant to SEBI circular dated 8th February 2019 a report onSecretarial Compliance for the F.Y. 2018-19 has been submitted with stock exchanges. Thereare no observations reservations or qualifications in the said report.
13. BUSINESS RISK MANAGEMENT
Pursuant to Regulation 17(9) of the Listing Regulation 2015 the Company has laid downa robust risk management framework to inform the Board about the risk assessment andminimization procedures undertaken by the Company. Your Company has formed a RiskManagement Committee for timely identification and mitigation of risks as a bettercorporate governance practice.
The risk management framework is designed to identify evaluate and assess businessrisks and their impact on Company's business. The risk assessment and minimizationprocedures are reviewed by the Board annually to ensure that executive management controlsrisk through the mechanism of a properly defined framework. The framework is aimed atcreating and protecting stakeholder value by minimizing threats and losses and identifyingand maximizing opportunities.
14. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The requisite information with regard to conservation of energy technology absorptionand foreign exchange earnings and outgo as required to be disclosed pursuant to Section134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules 2014 is given tothe extent applicable in "Annexure II" to this report.
15. CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of ethics and governanceresulting in enhanced transparency for the benefit of all stakeholders. Your Company hasimplemented all the stipulations enshrined in the Listing Regulations 2015 and therequirements set out by the Securities and Exchange Board of India. The Report onCorporate Governance as stipulated under Regulation 27 of the Listing Regulations 2015forms part of this report as "Annexure III". The requisite Certificate from M/s.R. Chouhan & Associates Company Secretary in Practice confirming compliance with theconditions of Corporate Governance stipulated under Regulation 27 of the ListingRegulations 2015 is annexed to the Report on Corporate Governance which forms part ofthis report.
16. CORPORATE SOCIAL RESPONSIBILITY
In conformity with Section 135 of the Act and Rules made thereunder your Company hasformed a Corporate Social Responsibility (CSR) Committee to oversee the CSR activitiesinitiated by the Company during the financial year under review. The details of theCommittee and its terms of reference are set out in the Corporate Governance Reportforming part of the Board's Report. Your Company has adopted a CSR Policy for the Companywhich provides a broad framework with regard to implementation of CSR activities carriedout by the Company in accordance with Schedule VII of the Act. The CSR Policy may beaccessed on the Company's website at the weblink:http://sutlejtextiles.com/pdf/Policies%20 &%20Codes/CSR%20Policy.pdf. During thefinancial year 2018-19 your Company has spent Rs. 2.44 crore towards CSR activities. YourCompany's key objective is to make a difference to the lives of the underprivileged andlocal communities and is committed to CSR engagement. The activities undertaken by yourCompany have been duly acknowledged and appreciated by the concerned State Governments andcommunities. A report on CSR activities as prescribed under the Act and Rules madethereunder is annexed herewith as "Annexure IV".
17. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has in place a vigil mechanism for directors and employees to reportconcerns about unethical behaviour actual or suspected fraud or violation of yourCompany's Code of Conduct.
Under the vigil mechanism of the Company which also incorporates a whistle blowerpolicy in terms of Regulation 22 of the Listing Regulations 2015 protected disclosurescan be made by a whistle blower through an e-mail or dedicated telephone line or a letterto the Chairman of the Audit Committee. Adequate safeguards are provided againstvictimization to those who avail of the vigil mechanism.
The policy on vigil mechanism and whistle blower policy may be accessed on theCompany's website at the weblink:http://sutlejtextiles.com/pdf/Policies%20&%20Codes/Whistle%20Blower%20Policy.pdf
18. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As required under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and Rules framed thereunder the Company has implemented a policyon prevention prohibition and redressal of sexual harassment at the workplace. This hasbeen widely communicated internally. Your Company has constituted an Internal ComplaintsCommittees as per the requirement of the Act to redress complaints relating to sexualharassment at its workplaces.
19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS
There are no significant or material orders passed by any Regulators / Courts whichwould impact the going concern status of the Company and its future operations.
20. EXTRACT OF ANNUAL RETURN
In terms of the provisions of Section 92(3) of the Act read with the Companies(Management and Administration) Rules 2014 the extract of the Annual Return in Form MGT 9 for the financial year ended 31st March 2019 is provided herewith as"Annexure V" and forms part of this Report.
21. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other required information pursuant toSection 197(12) of the Act read with Rule 5 of The Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 in respect of employees of the Company is providedherewith as "Annexure VI" and forms part of this Report.
22. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained your Directors make the following statements in terms of Section134(3)(c) of the Act: a. that in the preparation of the annual financial statements forthe year ended 31st March 2019 the applicable accounting standards have beenfollowed alongwith proper explanation relating to material departures if any; b. thatsuch accounting policies have been selected and applied consistently and judgment andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2019 and of theprofit of the Company for the year ended on that date; c. that proper and sufficient carehas been taken for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; d. that the annual financialstatements have been prepared on a going concern basis; e. that proper internal financialcontrols were in place and that the financial controls were adequate and were operatingeffectively; 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 the assistance andco-operation received from various stakeholders including financial institutions andbanks Government authorities and other business associates who have extended theirvaluable support and encouragement during the year under review.
Your Directors take this opportunity to place on record their deep appreciation for thecommitted services rendered by the employees of the Company at all levels who havecontributed significantly towards the Company's performance and for enhancing its inherentstrength. Your Directors also acknowledge with gratitude the encouragement and supportextended by our valued shareholders.
| ||For and on behalf of the Board |
| ||(C. S. Nopany) |
|Place: Mumbai ||Executive Chairman |
|Dated: 09th May 2019 ||DIN: 00014587 |