Your Directors have pleasure in presenting the 32nd Annual Report of yourCompany together with the Audited Statements of Accounts for the year ended March 312019.
| || ||(Rs. in lakhs) |
|Financial Results ||Year Ended 31.03.2019 ||Year Ended 31.03.2018 |
|Income ||3517.63 ||3439.11 |
|Profit/(Loss) before Tax & Extra-ordinary Items ||7.40 ||20.05 |
|Less/(Add) : Provision for Taxation (Including Deferred Tax) ||(8.48) ||31.55 |
|Less : Provision for Extra-Ordinary Items ||0.00 ||2.44 |
|Profit/(Loss) after Tax ||15.87 ||(13.94) |
|Changes due to conversion of accounts from GAAP to Ind AS ||0.73 ||(3.70) |
|Add : Profit/(Loss) brought forward from Previous Year ||(86.96) ||(69.32) |
|Balance carried forward ||(70.36) ||(86.96) |
Financial year 2018-19 (FY2019) began with an expectation of higher growth as theeconomy seemed to have overcome the teething troubles of the nation-wide roll out of theGoods and Services Tax (GST). However a rise in the current account deficit (CAD)concerns relating to rising non-performing assets (NPAs) and decline in liquidity coupledwith hardening interest rates contributed to uncertainties around a higher GDP growthrate.
The second advance estimates of national income for FY2019 released by the CentralStatistics Office (CSO) on 28 February 2019 showed that the economy could not continue theexpected growth momentum. GDP growth in the third quarter of FY2019 reduced to 6.6% afterclocking 8% and 7% growth in the first and second quarter of FY2019 respectively. The CSOestimates GDP growth in FY2019 at 7% compared to 7.2% in FY 2018.
Gross fixed capital formation (GFCF) provided a pleasant surprise with the share ofGFCF to GDP growing to 32.3% in FY2019 (second advance estimates) versus 31.4% in FY2018(first revised estimates). However it is perhaps too early to expect this recent uptickin the share of GFCF to GDP to provide a definite impetus to growth.
PERFORMANCE HIGHLIGHTS & OUTLOOK
The Textile Industry overall is going through tough times due to the structuraltransformation after GST and due to the weak market demand in the Domestic as well asOverseas markets. E-Commerce/On-line sales are growing with reputed brands retailers. Thatcoupled with low cotton production and increasing prices is putting pressure on pricesand margins.
Gross revenue from operations stood at Rs.3517.63 lakh in comparison to last years'sales of Rs.3439.11 lakh. In term of PAT the Company has earned a profit of Rs.15.87 lakhin comparison to last years' net loss of Rs.13.94 lakh.
The Company is into the business of manufacturing grey and finished cloth at its unitlocated at Murbad Dist. Thane Maharashtra.
The Company is facing serious problem of financing at this point of time due to stifferconditions and stricter banking norms as well as drying liquidity conditions in the moneymarket. Due to the tag of "Shell Company" given by SEBI it has become moredifficult for the Company to arrange for finance for the growth of its business.
As the Govt. has started to release the refund of GST the Company is hopeful ofrecovering from difficult phase and business will be as usual as the time progresses.
During the year the Company is into the business of fabric manufacturing i.e.manufacturing of Synthetic Fabric a part of textile products in accordance with theAccounting Standard 17 notified by Companies (Accounting Standards) Rules 2006.
OPPORTUNITIES AND THREATS
China's rising manufacturing cost and shifting of focus from exports to its own growingdomestic consumption will offer an opportunity for the Indian textiles sector to grab themarket share of China in the developed world especially the European countries and theUnited States which cumulatively comprise around 60 percent of the global export market.
Retaliatory tariffs between China and USA is bound to have a ripple effect on othernations' economies. With this move the USA's domestic market will become costlier and atthe same time Chinese Garment factories will lose business. But the competition will risein other markets. However this is a good opportunity for India to cater to the US market.The conclusion of the much-awaited Indo-EU FTA will open up new opportunities for exports.However its delay is certainly restricting export of textiles to the EU as competingnations like Pakistan and Bangladesh enjoy the duty benefit of 6% to 8% as against IndianProducts.
The increase in export benefits announced in March 2019 in Made-ups will give reliefto exporters in times to come.
The World including the advanced countries are becoming increasingly inward-lookingand resorting to protectionist measures thereby putting multilateral system of tradingat risk. This could pose a serious challenge in the export markets.
The duty free import of fabrics from China into Bangladesh and in return the Garmentsare being imported duty free into India from Bangladesh is hitting hard the Indian TextileIndustry.
DIVIDEND AND RESERVES
In view of carried forward losses and in order to meet future challenges and financialrequirements your Directors do not propose any dividend for the year under review.
During the year under review no amount has been transferred to General Reserves.
The paid up Equity Share Capital as on March 31 2019 was of Rs.13.17925 Crore. Duringthe year under review the Company has not issued any share with differential votingrights nor granted stock options nor sweat equity. As on March 31 2019 none of theDirectors and/or Key Managerial Person of the Company hold instruments convertible in toEquity Shares of the Company.
FINANCE AND ACCOUNTS
As mandated by the Ministry of Corporate Affairs the financial statements for the yearended on March 31 2019 has been prepared in accordance with the Indian AccountingStandards (IND AS) notified under Section 133 of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014. The estimates and judgements relating to the FinancialStatements are made on a prudent basis so as to reflect in a true and fair manner theform and substance of transactions and reasonably present the Company's state of affairsprofits and cash flows for the year ended March 31 2019.
The Company continues to focus on judicious management of its working capitalreceivables inventories and other working capital parameters were kept under strict checkthrough continuous monitoring.
There is no audit qualification in the standalone financial statements by the statutoryauditors for the year under review.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments if any covered under the provisions ofSection 186 of the Companies Act 2013 are given in the notes to the Financial Statements.
The Company does not have any material subsidiary as defined under the ListingRegulations. However it has formulated a policy for determining its 'Material'Subsidiaries and the same is available on the website of the Company viz.www.tunitextiles.com
RELATED PARTY TRANSACTIONS
All transactions entered into with related parties as defined under the Companies Act2013 during the financial year were in the ordinary course of business and on an arm'slength pricing basis and do not attract the provisions of Section 188 of the CompaniesAct 2013. There were no materially significant transactions with the related partiesduring the financial year which were in conflict with the interest of the Company andhence enclosing of Form AOC-2 is not required. Suitable disclosure as required by theAccounting Standard (Ind-AS 24) has been made in the notes to the Financial Statements.
All Related Party Transactions are placed before the Audit Committee for approval.Omnibus approval was obtained on a yearly basis for transactions which are of repetitivenature. A statement giving details of all Related Party Transactions are placed before theAudit Committee and the Board for review and approval on a quarterly basis.
None of the Directors has any pecuniary relationships or transactions vis-a-vis theCompany.
The Company has put in place a mechanism for certifying the Related Party TransactionsStatements placed before the Audit Committee and the Board of Directors from anIndependent Chartered Accountant Firm.
The Policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company. None of the Directors has any pecuniaryrelationship or transactions vis-a-vis the Company except remuneration and sitting fees.
MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion and Analysis on the operations of the Company as prescribedunder Part B of Schedule V read with regulation 34(3) of the Listing Regulations 2015 isprovided in a separate section and forms part of the Directors' Report.
CHANGE IN NATURE OF BUSINESS IF ANY
There are no changes in the nature of business in the financial year 2018-19.
The Board of Directors have laid down the manner for carrying out an annual evaluationof its own performance its various Committees and individual directors pursuant to theprovisions of the Act and relevant Rules and the Corporate Governance requirements are incompliance with Regulation 17 of Listing Regulations 2015. The performance of the Boardwas evaluated by the Board after seeking inputs from all the Directors on the basis ofvarious criteria such as Board Composition process dynamics quality of deliberationsstrategic discussions effective reviews committee participation governance reviews etc.The performance of the Committees was evaluated by the Board after seeking inputs from theCommittee members on the basis of criteria such as Committee composition processdynamics deliberation strategic discussions effective reviews etc. The Nomination andRemuneration Committee reviewed the performance of the individual Directors on the basisof the criteria such as transparency analytical capabilities performance leadershipethics and ability to take balanced decisions regarding stakeholders etc.
NUMBER OF MEETINGS OF THE BOARD
The details of the Board Meetings and other Committee Meetings held during thefinancial year 2018-19 are given in the separate section of Corporate Governance Report.
All Committees of the Board of Directors are constituted in line with the provisions ofthe Companies Act 2013 and applicable regulations of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
There is no change in management of the Company during the year under review.
During the current financial year Mr. Aditya P Khaitan and Mr. Parag s. Ambavane (bothare Independent Directors) has resigned from the Board and in their place the Board hasappointed
Mr. Alakh V Deora and Mr. Mahendra S Agarwal as Independent Directors of the Company.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Further none of the Directors of the Company are disqualified under sub-section (2) ofSection 164 of the Companies Act 2013.
As per provisions of Section 149 of the 2013 Act independent directors shall holdoffice for a term up to five consecutive years on the board of a company but shall beeligible for re-appointment for another term up to five years on passing of a specialresolution by the company and disclosure of such appointment in Board's Report. FurtherSection 152 of the Act provides that the independent directors shall not be liable toretire by rotation in the Annual General Meeting ('AGM') of the Company.
As per requirements of Regulation 25 of Listing Regulations a person shall not serveas an independent director in more than seven listed entities: provided that any personwho is serving as a whole time director in any listed entity shall serve as an independentdirector in not more than three listed entities. Further independent directors of thelisted entity shall hold at least one meeting in a year without the presence ofnon-independent directors and members of the management and all the independent directorsshall strive to be present at such meeting.
DETAILS OF DIRECTORS/KMP APPOINTED AND RESIGNED DURING THE YEAR
|Sl. No. ||Name ||Designation ||Date of Appointment ||Date of Resignation |
|1. ||Aditya P Khaitan ||Independent Director ||13th February 2015 ||14th August 2018 |
|2. ||Parag S. Ambavane ||Independent Director ||11th January 2016 ||14th August 2018 |
|3. ||Alakh V Deora ||Independent Director ||14th August 2018 ||- |
|4. ||Mahendra S Agarwal ||Independent Director ||14th August 2018 ||- |
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS TRIBUNALS OR COURTS
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status of the Company and its future operations.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THEFINANCIAL YEAR AND DATE OF REPORT
There have been no material changes and commitments affecting the financial position ofthe Company between the end of Financial Year and date of the report.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of knowledge and belief and according to the information and explanationsobtained your Directors make the following statement in terms of Section 134(3)(c) of theCompanies Act 2013:
1. that in the preparation of the Annual Accounts for the year ended March 31 2019the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
2. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2019 and of theprofit/(loss) of the Company for the year ended on that date;
3. that the Directors have 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;
4. the annual accounts have been prepared on a going concern basis;
5. that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
6. that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
BUSINESS RISK MANAGEMENT
Due to the cash crunch and weak demand in the Indian and Export markets it isdifficult to pass on the cost to end customers hence the margins are under pressure.Further globally consumer shifting preference from cotton fiber to manmade fiber whichare available at lower prices is also putting pressure on prices.
Risk management is embedded in your Company's operating framework. Your Companybelieves that managing risks helps in maximizing returns. The Company's approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee.
However the Company is not required to constitute Risk Management Committee underListing Regulations 2015.
INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
Your Company has an Internal Control System which is commensurate with the sizescale scope and complexity of its operations. To maintain its objectivity andindependence an independent firm of Chartered accountants has been appointed as theInternal Auditors who report to the Chairman of the Audit Committee of the Board.
The Internal Auditors monitor and evaluate the efficacy and adequacy of internalcontrol system in your Company its compliance with operating systems accountingprocedures and policies of your Company. Based on the report of the Internal Auditorsplaced before the Audit Committee process owners undertake corrective action in theirrespective areas and thereby strengthen the controls. The internal controls have beenreported by the Auditors to be adequate and effective during the year.
NOMINATION REMUNERATION AND BOARD DIVERSITY POLICY
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 policyalso provides the criteria for determining qualifications positive attributes andIndependence of Director and criteria for appointment of Key Managerial Personnel/SeniorManagement and performance evaluation which are considered by the Nomination andRemuneration Committee and the Board of Directors while making selection of thecandidates. The above policy has been posted on the website of the Company.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has a Whistle Blower Policy to report genuine concerns or grievances. TheWhistle Blower Policy has been posted on the website of the Company i.e.www.tunitextiles.com
Innovation and Technology are synonymous with the Company. The investment in technologyacts as a catalyst and enables the Company to be innovative.
RESEARCH & DEVELOPMENT
The Company believes that technological obsolescence is a reality. Only progressiveresearch and development will help us to measure up to future challenges andopportunities. We invest in and encourage continuous innovation. During the year underreview expenditure on research and development is not significant in relation to thenature size of operations of your Company.
M/s. Mehta Kothari & Associates Chartered Accountants Mumbai (FRN : 106247W) whoare the Statutory Auditors of the Company were appointed as the Statutory Auditors for aterm of five years effective from 13th December 2017 by way of Postal BallotRules 2014 subject to ratification of their appointment by the Members at everyintervening Annual General Meeting held thereafter.
Further Mehta Kothari & Associates Chartered Accountants Mumbai (FRN - 106247W)have expressed their unwillingness to appoint themselves as Statutory Auditors of theCompany after the conclusion of 32nd Annual General Meeting due to their othercommitments resulting into a casual vacancy in the office of Statutory Auditors of theCompany as envisaged by section 139(8) of the Companies Act 2013.
Further the Company has approached M/s DBS & Associates Chartered AccountantsMumbai (FRN - 018627N) to look after the Statutory Audit of the Company and in reply theyhave consented to be appointed themselves as Statutory Auditors of the Company after theconclusion of 32nd Annual General Meeting.
The Audit Report given by Mehta Kothari & Associates Chartered Accountants Mumbai(FRN : 106247W) (erstwhile Statutory Auditors) for the financial year 2018-19 formingpart of this Annual Report.
The Auditors' Report to the Shareholders does not contain any reservationqualification or adverse remark.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s G. S. Bhide & Associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Reportin the form of MR-3 is annexed in this Annual Report as Annexure II.
Your Company has an effective internal control and risk-mitigation system which areconstantly assessed and strengthened with new/revised standard operating procedures. TheCompany's internal control system is commensurate with its size scale and complexities ofits operations. The internal and operational audit is entrusted to M/s D. Thakkar &Associates Chartered Accountants Mumbai (FRN 132824W). The main thrust of internal auditis to test and review controls appraisal of risks and business processes besidesbenchmarking controls with best practices in the industry.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. The Company has a robust Management Information System which is an integral part ofthe control mechanism.
The Audit Committee of the Board of Directors Statutory Auditors and the BusinessHeads are periodically apprised of the internal audit findings and corrective actionstaken. Audit plays a key role in providing assurance to the Board of Directors.Significant audit observations and corrective actions taken by the management arepresented to the Audit Committee of the Board. To maintain its objectivity andindependence the Internal Audit function reports to the Chairman of the Audit Committee.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 extract ofthe Annual Return for the financial year ended 31st March 2019 made under theprovisions of Section 92(3) of the Act is attached as Annexure III to this report.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197(12) read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company is as under -
|i the ratio of the remuneration of each director to the median remuneration of the employees of the company for the ||Directors & KMP ||Ratio |
| ||Narendra Kumar Sureka ||2.40:1 |
| ||Pradeep Sureka ||2.40:1 |
| ||Archit Sureka ||1.77:1 |
| ||Mamta Jain ||0.70:1 |
| ||1. The median remuneration of employees of the Company was Rs.351000/- |
| ||2. Figures has been rounded off wherever necessary |
|ii The percentage increase in remuneration of each director Chief Financial Officer Chief Executive Manager if any in the financial year; ||Name ||Designation ||Increase % |
| ||Narendra Kumar Sureka ||Managing director whole time director ||16.13 |
| ||Pradeep Sureka || ||16.13 |
| ||Archit Sureka ||CFO ||58.13 |
| ||Mamta Jain ||CS ||10.00 |
|iii the percentage increase in the median remuneration of employees in the financial year; ||6.84% |
|iv the number of permanent employees or the rolls of Company ||89 employees as on 31.03.2019 |
|v the explanation on the relationship between average increase in remuneration and company performance; ||The profit before tax for the financial year ended March 31 2019 decreased by 63.11% whereas the increase in median remuneration was 6.84% in line with industry standard and the performance of the company |
|vi comparison of the remuneration of the Key Managerial Personnel against the performance of the company; ||The total remuneration of key Managerial Personnel increased by 23.48% from Rs.2729000/- in 2018-19 to Rs.2210000/- in 2017-18 whereas the Profit before Tax decreased by 63.11% to Rs.739779/- in 2018-19 ('2005113/- in 2017-18) |
|vii variations in the market capitalisation of the company price earnings ratio as at ||Particulars ||31st March 2019 ||31st March 2018 |
|the closing date of the current financial ||Market Capitalization ||640 Lakhs ||640 Lakhs |
|year and previous financial year and percentage increase over decrease in ||Price Earnings Ratio ||40.83% ||44.55% |
|the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies and in case of unlisted companies the variations in the net worth of the company as at the close of the current financial year and previous financial year; ||Networth of the Company ||124756638/- ||123096021/- |
| || |
The Company has not made any public issue during the year
|viii Average percentile increase in salaries of employees other than managerial personnel ||46.97% |
|ix Comparison of each remuneration of key managerial personnel against the performance of the company ||Particulars ||31st March 2019 ||Reason against performance of the company |
| ||Narendra Kumar Sureka ||900000/- ||Profit before tax decreased by 63.11% and profit after tax increased by 213.88% in FY 2018-19 |
| ||Pradeep Sureka ||900000/- || |
| ||Archit Sureka ||665000/- || |
| ||Mamta Jain ||264000/- || |
|x The key parameters for any variable component of remuneration availed by the directors; ||None |
|xi The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year; ||None |
|xii Affirmation that the remuneration is as per the remuneration policy of the company. ||Remuneration paid to all Employees is in accordance with the Remuneration Policy |
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013 READ WITH RULES
Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 read with Rules thereunder the Companyhas not received any complaint of sexual harassment during the year under review.
The Company is engaged in the business of manufacturing Synthetic Fabric. Theinformation regarding Conservation of Energy Technology Absorption Adoption andInnovation and the information required under section 134(3)(m) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 are reported to be as under:
|murbad unit- electricity ||2018-2019 ||2017-2018 |
|Electricity Purchased [Units (KWH)] ||1272166 ||1402439 |
|Total Amount (?) ||4920923 ||4380200 |
|Average Rate (?) ||3.87 ||3.12 |
|Consumption Per Unit of Production || || |
|Cloth Production (Mtrs.) ||2960185 ||1623422 |
|Cost of Electricity Consumption (?)/Mtrs. ||1.66 ||2.70 |
BUSINESS RESPONSIBILITY REPORT
As the Company is not among top 500 or 1000 Companies by turnover on Stock Exchangesthe disclosure of Report under of Regulation 34(2) of the Listing Regulations is notapplicable to the Company for the year under review.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has earned sum of Rs.9857861/- (Equivalent to USD 142256.02) during thecurrent financial year while outgo in foreign currency was Nil.
During the year under review your Company has not accepted any deposits from thepublic within the meaning of section 73 of the Companies Act 2013 and the rules thereunder.
REPORT ON CORPORATE GOVERNANCE
As per Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on corporate governancepractices followed by the Company together with a certificate from the Company's Auditorsconfirming compliance forms an integral part of this Report.
Statements in this Directors' Report and Management Discussion and Analysis describingthe Company's objectives projections estimates expectations or predictions may be"forward-looking statements" within the meaning of applicable securities lawsand regulations. Actual results could differ materially from those expressed or implied.
Your Directors wish to place on record their appreciation towards the contribution ofall the employees of the Company and their gratitude to the Company's valued customersbankers vendors and members for their continued support and confidence in the Company.
| ||By order of the Board |
|Mumbai May 30 2019 ||For TUNI TEXTILE MILLS LIMITED |
|Registered Office: ||Narendra Kumar Sureka |
|63/71 Dadiseth Agiary Lane ||DIN : 01963265 |
|3rd Floor Kalbadevi Road Mumbai-400002. ||Managing Director |
| || |