Polyspin Exports Ltd Directors Report.
To the Members,
Your Directors have pleasure in presenting the Thirty Fourth Annual Report on the working of the company and Audited Accounts for the year ended 31st March, 2019.
|Year ended 31.03.2019||Year ended 31.03.2018|
|Sales and oilier Income||214,88,07,539||181,44,49,955|
|(Profit Before interest, Depredation and Tax)||18,54,16,416||14,99,50,195|
|Profit before Depreciation and Tax||13,87,51,198||10,53,71,400|
|Profit before Tax||10,84,35,818||7,64,08,023|
|Add: Other comprehensive income||23,09,484||1,51,141|
|Less: Provision for Taxation - Current||3,19,00,000||2,26,00,000|
|Less: Provision for Taxation - Deferred||34,60,000||36,00,000|
Your Directors are pleased to recommend the payment of Dividend at Re.1.20 per share on the face value of Rs.10/- per share.
This Dividend is not taxable in the hands of the Members. However, Tax on the Dividend amounting to Rs. 9.79 Lakhs would be paid by the Company.
MANAGEMENT DISCUSSION AND ANALYSIS REVIEW OF THE OPERATION, CURRENT TRENDS AND FUTURE PROSPECTS:
During the year under review the performance of your company was good. The turnover has increased from Rs.181.44 Crores to Rs. 214.88 Crores which is 17.66% increase over the previous years turnover. The table below shows comparative quantitative figures of production and sales of the companys products. There has been a marked improvement in the quantity wise production and sales over the previous years figures.
PRODUCTION AND SALES
Quantity of Production and Sale of the Companys products i.e., FIBC bags and OE Spinning yam for the year ended 31.03.2018 and 31.03.2019 are as follows:
|Year ended||Year ended|
|1) FIBC Bags & PP Woven Bags||96,50,950||90,68,342|
|2) PP Woven Fabrics||1,44,204||2,08,361|
|3) PP Yarn||2,29,549||1,63,890|
|4) Paper Bags||35,552||55,853|
|5) Cotton Yarn||21,52,534||19,41,611|
|1) FIBC Bags &PP Woven Bags||95,98,414||91,32,972|
|2) PP Woven Fabrics||1,44,204||2,08,361|
|3) PP Yam||2,29,549||1,63,890|
|4) Paper Bags||35,552||55,853|
|5) Cotton Yarn||21,69,774||19,94,502|
Current Trend And Future Prospects - FIBC Bags
The global Flexible Intermediate Bulk Container (FIBC) market has been witnessing significant growth rate in recent years. The prime factor attributing to the growth of the market is rapidly increasing demand for flexible intermediate bulk containers (FIBCs) across industry verticals. The rising food & beverage and pharmaceuticals industries are expected to fuel the global FIBC market in the near future. Additionally, growing need to reduce the overall weight of bulk packaging is anticipated to drive the global FIBC market, especially in the construction industry, food & beverages, pharmaceuticals, agricultural, and chemical industries over the coming years.
However due to increasing tension between US and China and the implementation of tariff has indirect impact in the Indian and Global economics and is indirectly affecting the Indian FIBC market in general and to some extent our company during the last quarter.
As indicated above, there was a remarkable increase in the production of FIBC bags during the financial year ended 31.03.2019 from 90,68,342 Kgs to 96,50,950 Kgs and the sales had increased from 91,32,972 Kgs., to 95,98,414 Kgs an increase of 5.09%. There was about 15% to 20% drop in orders during the last quarter and the current trend in orders position is not as expected mainly due to trade war between US and China.
Current Trend and Future Prospects - Open End Spinning Division
There is always a tough competition in the Open End Spinning Yarn Market. Since we are manufacturing high quality yarn in the imported automatic OE Machine our product is always fetches better price in the market. We are exporting part of our yarn production through merchant exports and balance is sold in the local market. The growth trend is stagnant for the nearfuture.
We had added one new OE Machine during the financial year under review and there is a marginal increase in the production of OE Yarn during the financial year and we are yet to realise the full benefit from the new OE machine.
There was a remarkable increase in the production of Cotton Yam during the financial years ended 31.03.2019 from 19,41,611 Kgs to 21,52,534 Kgs and the sales had increased from 19,94,502 Kgs., to 21,69,774 Kgs an increase of 8.79%.
Overall future Prospects:-
Though the current year financial result and profitability will not be as promising as last year results, your directors are hopeful of moderate results during the current financial year barring any unforeseen circumstances.
Multifilament Yarn Project:-
As a backward integration policy, the company had constructed a separate building and installed machinery for Manufacture of Multifilament yam required for our captive consumption and also for domestic and export sales. The company was out sourcing the product till March, 2019 and production of Multifilament Yarn commenced in April, 2019. Also we have constructed new factory building to the extent of 52000 Sq. ft. for the housing of new machines and assembly line production. The cost of this project along with construction offactory building was for Rs. 12.60 Crores.
BOARD OF DIRECTORS
Smt. Durga Ramji, Director, retires by rotation at the forthcoming Annual General Meeting and being eligible offers herself for reappointment.
Appointment of Independent Directors:-
The period of appointment of three Independent directors namely; Sri. K. Lakshminarayanan, Sri. A. Thiruppathy Raja andSri.S.Sankarendson 31stAugust, 2019.
Further the Board places on record the valuable services rendered by the Independent Directors during their tenure. Their valuable services, advices provided and their participation have helped the company to achieve better results.
Your Directors recommend for the appointment of the following three Independent Directors
1. Sri. S. R. Venkatanarayana Raja
2. Sri. V. S. Jagdish
3. Sri.R. Sundaram.
The profile of the above three Independent Directors are given in the explanatory statement attached to the Notice.
All three Directors are well experience in their respective fields and your directors are hopeful of their contribution and advice will be of very immence help for the development of the company.
Declaration by Independent Directors:- The Independent Directors of the company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in their status of Independence.
Policy of Directors Appointment and remuneration: - In
accordance with Section 178(3) of the Companies Act, 2013 and based upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors have approved a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and Other Employees. The objective of the Nomination and Remuneration Policy is to ensure that the level and composition of remuneration is reasonable, the relationship of remuneration to performance is clear and appropriate to the long term goals of the Company. The policy also envisages and takes into account the total involvement with dedication and human touch.
None of the Director is disqualified under Section 164 of the Companies Act, 2013.
Pursuant to Section 134(3) (p) of the Companies Act, 2013, and Regulation 25(4) of LODR, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters. Pursuant to Schedule II Part D of LODR, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Directors at the Board Meeting, which shall be taken into account at the time of re-appointment of Independent Director.
During the year Four Board Meetings were held. The details of the Meetings of the Board and its various Committees are given in the Corporate Governance Report.
As required under clause 9 of secretarial standards, the Board of Directors of the company confirm that the company has complied with the applicable secretarial standards.
ORDERS PASSED BY REGULATORS
Pursuant to Rule 8(5) (vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, which would impact the going concern status of the company.
INTERNAL FINANCIAL CONTROLS
The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding
of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company.
Sri. P. Ramadoss FCA (MRN 201506) the Internal Auditor, submits Quarterly reports to the audit committee which are reviewed periodically by Audit Committee as well as by the Board. Further, the Board annually reviews the effectiveness of the Companys internal control and audit system.
PARTICULARS OF LOANS, GUARANTEES ORINVESTMENTS
Pursuant to Section 186(4) of the Companies Act, 2013, it is reported that the Company has not given any loans, guarantees and no investments has been made in bodies corporate or firm during the financial year.
REPORT ON CORPORATE GOVERNANCE:
The Company has complied with the requirements of Corporate Governance as stipulated in Listing obligations and Disclosure Requirements. A report on Corporate Governance is annexed herewith and it forms part of the Directors Report as perAnnexure-1 as required under Schedule V (C) of LODR. A certificate from the Secretarial Auditor confirming compliance is also attached as Annexure - II, as required under Schedule V (E) of LODR. The code of conduct as approved by the board is provided in the above annexure and website.
CORPORATE SOCIAL RESPONSIBILITY
Company has taken corporate social responsibility initiatives. The Committee comprising one Independent Director and two directors has been constituted as CSR Committee to develop CSR policy and implement the CSR initiatives whenever it is applicable to the Company.
The company has contributed Rs.5,52,162/- to health care and education projects during the financial year. There are certain other projects which have been identified and depending upon their implementation and fulfillment, balance contribution will be made in due course. The material disclosure is made in Annexure - III.
M/S. SRITHAR AND ASSOCIATES (Firm Registration No. 015896S), Chartered Accountants, Chennai, who have been appointed as Statutory Auditors of the Company at the 33rd Annual General Meeting till the conclusion of 37th Annual General Meeting. Accordingly seeking ratification for the appointment of Statutory Auditors at every Annual General Meeting is dispensed with.
As per provisions of Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, the Government has not notified the products of our company to which the Cost Audit would be applicable. Flence, the Cost
Audit was not conducted for your company for the financial year 2018-19.
Pursuant to Provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, Your Company has appointed Mr. B. Subramanian, Company Secretary in Practice, Chennai to conduct the Secretarial Audit of the Company for the financial year ended 31 " March, 2019.
The Secretarial Audit Report (in Form MR - 3) is attached as Annexure - IV to this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo are given in Annexure - V to this report.
EXTRACT OF ANNUAL RETURN
The Annual Return for the financial year ended 31st March, 2019 in Form No: MGT-9 pursuant to Section 92 of Companies Act, 2013 and Rule 12 (2) of the Companies (Management and Administration) Rules, 2014, is annexed herewith as Annexure-VI.
DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATES:
There are no Subsidiaries or Joint Ventures and there is an associate company viz., M/s. Lankaspin Private Limited, Srilanka. The particulars of the Associate Company are given in Form AOC1 as perAnnexure VII.
WOMEN AT WORK PLACE
The company has constituted an Anti-Sexual Harassment Policy in line with the requirements of the sexual harassment of Women at the work place (Prevention, Prohibition and Redressal) Act, 2013. Internal complaints committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the year, the company has not received any complaints of harassment.
The company has not accepted any fixed deposit from the public during the year under section 73 of the Act.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of the LODR, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The policy is available at the Companys website.
A forum to enable the concerned personnel of the Company to report any deviation or other acts which are against the general code of conduct of personnel, business and other activities has been created.
RISK MANAGEMENT POLICY
Company has developed and Implemented a risk management policy, as required under Regulation 17(9) of LODR and Pursuant to Section 134(3)(n) of the Companies Act, 2013. A committee of the Board named as Risk Management Committee has been formed by the Board to address and evaluate various risks impacting the Company, in practice with reference to the forex and interest rate. At present the board has not identified any element of risk which may threaten the existence and development of the company.
The Company has laid down a Risk Management Policy and Procedure to inform the Board Members about the Risk assessment and minimization process, which is a vigorous and active process for identification and mitigation of risks. Necessary inputs are provided to the Audit Committee on a monthly basis. The production and sales are monitored and any deviation from the projected is identified, solution found and necessary rectifications are done periodically.
Audit Committee as well as the Board of Directors have adopted the Risk Management Policy and the Audit Committee reviews the risk management and mitigation plan from time to time.
FIRE ACCIDENT AND PRESENT CLAIM STATUS:
There was a fire accident in the PP Fabrics and PP Slings storage premises on Monday, 4th June, 2018 at about 6.30 A.M. Fire tenders were called immediately to extinguish the fire and the fire was brought to control at about 1.30 P.M. The entire PP Fabrics were completely destroyed by the fire and entire PP Slings kept in the adjacent premises were also damaged due to fire induction from the PP Fabrics premises. We have appointed M/s. Armour Management Consultants Private Limited, Coimbatore, as consultant to assist the company for filing claim documents and other required papers to be submitted to the Insurance Company.
Due to the fire accident the factory was closed for two days on 4th and 5th June, 2018. Though the production was affected due to want of fabrics, we were able to get the fabrics materials from the group companies who have whole heartedly supported with their available production facilities. Hence the company could make good the delivery schedules to the overseas supplier with a back log of one week.
The cost of loss of stocks and book value of Buildings and Machinery was estimated at about Rs. 621.21 Lakhs. The book value of loss was absorbed in the profit and loss account for the financial year ended SI^March^OlQ.
The Insurance Company has appointed M/s Professional Insurance Surveyors and Loss Assessors Private Limited, to assess the claim and they had already visited fire accident site for assessment of loss. The surveyors had submitted their Final Report and a forensic investigation was also appointed who have stated that the cause of fire accident was due to electrical fire generated consequent to damage caused to MCB switches. The Company is pursuing the Insurance Company to settle the claim amount as early as possible.
MATERIAL CHANGES AND COMMITMENTS
No Material changes and commitments, affecting the financial position of the Company has occurred between the end of the financial year2018-19andtillthe date of this report.
The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors are annexed as Annexure - VIII and forms part of this Report.
RELATED PARTY TRANSACTIONS:
There were no materially significant related party transactions which could have potential conflict with the interests of the Company. Transactions with related parties are in the ordinary course of business on arms length basis and are periodically placed before the Audit Committee and Board for its approvals and Form AOC-2 is enclosed as Annexure- IX.
Your company treats its "human resources" as one of its most important assets. Your company enjoys a very cordial relationship with workers and employees at all levels.
Your company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused attention are currently underway. Your Companys thrust is on the promotion of talent internally, through job rotation and job enlargement.
TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of the Investor Education Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the company, as on the date of last AGM13th August, 2018 with the Ministry of Corporate Affairs. An amount of Rs. 4,04,878/- unclaimed dividend pertaining to the year 2012 will be transferred to the IEP Fund before 15.10.2019.
CODE OF CONDUCT
The Board has laid down the code of conduct for Directors of the company and senior management personnel.
The Directors shall follow in letter and spirit the provisions as contained in section 166 of the Companies Act, 2013. They shall also follow general principles of pillars of character. The same with certain variation involving their nature of work applies to the senior management personnel. All the directors of the board and senior management personnel have confirmed the compliance with the code.
The company has formulated and implemented the code of conduct for prevention of insider trading with regard to the securities by directors and designated person of the company as per SEBI (Prohibition of Insider Trading) Regulations, 2015 and the Code of Conduct is posted on the website of the company.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) they had prepared the annual accounts on a going concern basis;
(e) they had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively
Your Directors wish to take this opportunity to place on record their gratitude and sincere appreciation for the timely and valuable assistance and support received from Bankers - City Union Bank, Share Transfer Agents, Customers, Suppliers, Share Holders and Regulatory Authorities.
The Board also expresses and records its appreciation for the hard and dedicated efforts of the employees as a team at all levels.
|On Behalf of the Board,|
|For POLYSPIN EXPORTS LIMITED,|
(DIN : 00121742)
|Managing Director & CEO (DIN : 00109393)|
Date : 18.05.2019