Saffron Industries Ltd Directors Report.
To the Members of SAFFRON INDUSTRIES LIMITED
Your Directors have pleasure in presenting their Twenty Third Annual Report and Audited Statement of Accounts for the year ended 31st March, 2016.
|SALES AND OTHER INCOME||36,89,71,487|
|Profit/(Loss) before Finance Cost &||2,73,43,905|
|Less : Finance Cost||31,727|
|Profit/(Loss) Before Tax and Exceptional||1,34,87,314|
|Less : Tax Expenses - Current Tax||NIL|
|Less : Prior Period Expenses||-23,27,318|
|Profit/(Loss) after Tax||1,11,59,996|
|Prior year adjustments -Income Tax||-22,273|
|Profit/(Loss) for the year||1,11,37,723|
|Add: Profit/(Loss) Balance brought forward|
|from pervious year Balance Sheet||(15,70,55,951)|
|Balance carried forward||(14,59,18,228)|
REVIEW OF OPERATIONS :
During the year under review the Sales Turnover of your company was Rs. 36.81 Crore as against Sales Turnover of Rs. 50.45 Crore in the previous financial year. The high cost and scarce availability of raw material in the market continued this year also, resulting into reduction in sales turnover during the period under review as compare to the last year. However, in absence of heavy finance cost the company has earned Rs. 1.13 Crore as profit for the year under review as compared to profit for the previous year Rs. 98.39 Lac.
Your company is using various efforts to reduce the overall cost by planning for better prospects of the company using various new avenues to avail the low cost raw material and by trying for better price gains for its products in the market.
In this scenario of high material cost market, you will appreciate the hardship the company is facing. The market factors like rough and uneven market conditions, high cost of raw materials and decline in profitability are not in favor of the Paper Industry. It is less expected that the market environment for the Industry to remain favorable in the year to come.
NO CHANGE IN NATURE OF BUSINESS:
There is no any change in the nature of business carried on by the company during the year under review.
Due to inadequate profits the Directors have not recommended any dividend for the year under review.
AMOUNTS TRANSFERRED TO RESERVES:
The Board of Directors of the Company has decided to carry Rs. 1,11,37,723/- to its reserves.
NO CHANGE IN SHARE CAPITAL :
There was no any change (i.e. increase or decrease) in the Authorised, Issued, Subscribed or Paid up Share Capital of the company during the year under review.
INFORMATION ABOUT SUBSIDIARY/JV/ASSOCIATE COMPANY:
Company does not have any Subsidiary, Joint Venture or Associate Company as defined under Companies Act, 2013.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND :
The provisions of Section 125 (2) of the Companies Act, 2013 do not apply as there was no dividend declared and paid last year.
MATERIAL CHANGES AND COMMITMENTS :
Except change in Directorship as mentioned in this Report, No material changes and commitments affecting the financial position of the Company occurred between 31st March, 2016 and the date of this Report.
EXTRACT OF ANNUAL RETURN:
The extracts of Annual Return pursuant to the provision of Section 134 (3) (a) of the Companies Act, 2013 is furnished in Annexure -B.
MEETINGS OF BOARD OF DIRECTORS :
During the financial year 2015-16, the company held 10 board meetings of Board of Directors as per Section 173 of the Companies act, 2013, which is summarized in Report on Corporate Governance below (Annexure-E to this Report).
DIRECTORS RESPONSIBILITY STATEMENT:
As required by section 134 (5) of the Companies Act, 2013 the Director hereby state :
i) That the preparation of the annual accounts for the financial year ended on 31st March 2016, the applicable accounting standards have been followed and that there were no material departures;
ii) That 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 31st March 2016 and of the profits of the Company for the year under review;
iii) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) That they had prepared the annual accounts for the year ended 31st March 2016 on a going concern basis;
v) That they had laid down internal financial controls to be followed by the Company and such internal financial control are adequate and were operating effectively;
vi) That they had devised proper systems to ensure compliance with the provision of all applicable laws and that systems were adequate and operating effectively.
STATUTORY AUDITORS AND THEIR REPORT :
M/s. Khatri & Iyer, Chartered Accountants, Nagpur retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment for a period commencing from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting in respect of Financial Year 2016-17.
There is no qualification or adverse remarks in the Auditors Report which require any clarification/explanation. The Notes on financial statements are self-explanatory and needs no further explanation.
LOANS, GUARANTEES AND INVESTMENT:
There were no loans, guarantees or investment made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.
RELATED PARY TRANSACTIONS:
All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business (except transaction mentioned in the Form AOC-2 in Annexure-F). There are no materially significant related party transactions made by the Company with Promoters, Directors or other designated persons which may have a potential conflict with the interest of the Company at large and Approval of the Board of Directors was obtained wherever required. Further all the necessary details of tractions entered with the related parties are attached herewith in Form No. AOC-2 for your kind perusal and information.(Annexure-F)
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO :
The information and details relating to conservation of energy, technology absorption and foreign exchange outgo is mentioned in the Annexure-A to this Report.
RISK MANAGEMENT POLICY :
Periodic assessment to identify the risk areas are carried out and management is briefed on the risks in advance to enable the company to control risk through a properly defined plan. The risk are classified as financial risks, operational risks and market risks. The risks are taken into account while preparing the annual business plan for the year. The Board is also periodically informed of the business risks and the actions taken to manage them. The company has formulated a policy for Risk management with the following objective:
a) Provide an overview of the principles of risk management
b) Explain approach adopted by the Company for risk management
c) Define the organisational structure for effective risk management
d) Develop a risk culture that encourages all employees to identify risks and associated opportunities and to respond to them with effective actions.
e) Identify, assess and mange existing and new risks in a planned and coordinated manner with minimum disruption and cost, to protect and preserve Companys human, physical and financial assets.
Shri Vinod Maheshwari (DIN-00340953), who retires by rotation and being eligible, offer himself for re-appointment.
Shri Vinay Pansari (DIN- -01904296) and Shri Anantrai Rawell (DIN-02559329), Independent Directors of the company tendered their resignation from the Directorship with effect from 29th August, 2015.
Shri Nimish V. Maheshwari, Managing Director (DIN-00340881) has tendered his resignation and the Board of Directors has accepted in its meeting held on 20th July 2016 his resignation with effect from 15 th July, 2016.
Shri Manoj Rameshwar Sinha (DIN-07564967), President (Operations) of the company was appointed as Whole Time Director of the Company with effect from 12th July 2016 by the Board of Directors in its meeting held on 12th July 2016. The appointment of Shri Manoj Sinha is subject to approval of members in the 23rd annual general meeting.
Smt. Manjulika A. Bajpai (DIN-07143934) Woman Director of the company was appointed as Independent Director in the Board Meeting held on 9th November, 2015 to fill up the casual vacancy caused by the resignation of Independent Director Shri Vinay Pansari (DIN- -01904296). The tenure of office of Smt. Manjulika Bajpai, Independent Director shall be upto the conclusion of 26th Annual General Meeting of the company to be held in the calendar year 2019.
The company has not accepted deposits during the year.
CORPORATE SOCIAL RESPONSIBILITY:
The Company does not meet the criteria of Section 135 of Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) rules, 2014 so there is no requirement to constitute Corporate Social Responsibility Committee.
Pursuant to the provisions of the Companies Ac, 2013, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committee.
A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, Obligations and governance.
A separate exercise was carried out to evaluate the performance of individual Directors who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the company and its minority shareholder etc. the performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Director was carried out by the Independent Director who also reviewed the performance of the Secretarial Department.
INDEPENDENT DIRETORS AND DECLARATION:
Smt. Manjulika A. Bajpai (DIN-07143934) was appointed as Independent Director of the company to fill up the casual vacancy caused by the resignation of Shri Vinay Pansari (DIN- - 01904296) effective from 29th August, 2015 upto the conclusion of 26th Annual General Meeting
for the Financial Year 2018-19 to fulfil the requirements of Section 149 of the Companies Act, 2013 and applicable rules/schedules there under.
The Board of Directors of the Company hereby confirms that all the Independent director duly appointed by the Company have given the declaration and meets the criteria of independence as provided under section 149 (6) of the Companies Act, 2013.
NOMINATION AND REMUNERATION COMMITTEE AND POLICY :
As per Section 178(1) of the Companies Act, 2013 the Companys Nomination and Remuneration Committee. The Composition and meeting details of the Committee are included in the Annexure-E to this Report
The companys approved policy relating to appointment of Directors, qualifications, Independent Directors and matter related there with as provided under Section 178 (3) and (4) of the Companies Act 2013, is attached herewith in Annexure-D.
The Company has already constituted an Audit Committee of its Board of Directors with specified terms of reference. Smt. Manjulika Bajpai is the Chairman of the Audit Committee. Shri Vinod Maheshwari and Shri Manoj Sinha are the other members of the Audit Committee.
The composition and meeting details of the Audit Committee are mentioned and included in the Annexure- E to this Report.
As provided in Section 177 of the Companies Act, 2013, additional powers were vested with the Audit Committee at the Board Meeting held on 10th August, 2015.
M/s Siddharth Sipani & Associates, Practicing Company Secretaries, Nagpur, were appointed as Secretarial Auditor and their report on Secretarial Audit in Form MR 3 under Section 204 of the Companies Act, 2013 for the financial year 2015-16 is attached as Annexure-C and forms part of this report.
The clarifications/explanation on the qualifications/adverse remarks in the Secretarial Auditors Report is as under :
1) The company is trying to appoint suitable personnel shortly as the Key Managerial Personnel as applicable under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
2) More than half of the Promoters shareholding is in Dematerialized form, the company is taking steps to dematerialize the rest of physical shareholding of Promoters shortly.
3) The company is arranging to pay the NSDL and CDSL annual fees/charges shortly.
4) The company is taking steps to file the required eforms soon with the Registrar of Comapanies.
5) The company has filed the EPF return and paid the EPF dues regularly during the year under review. The notices received from EPF department under section 7A and 14B of the relevant Act are being heard and answered/replied by the company by following appropriate procedures.
6) Due to continuous heavy losses incurred during last few years the company has been declared as Sick Company by Board for Industrial and Financial Reconstruction under the provision of Sick Industrial Companies (Special Provisions) Act, 1985. The company is putting its efforts to come over the past losses, although adverse, high cost conditions prevailing in the market.
The relevant provisions of new Companies Act, 2013 in respect of appointment of Cost Auditors were not applicable to the company; hence no appointment of Cost Auditor was made for the Financial Year 2015-16.
As per Section 177(9) and (10) of the Companies Act, 2013, and as per the Clause 49 of the Listing Agreement, the company has established Vigil Mechanism for directors and employees to report genuine concerns and made provision of direct aces to the chairperson of the Audit Committee. Company has formulated the resent policy for establishing the vigil mechanism/Whistle Blower Policy to safeguard the interest of its stakeholders, Directors and employees, to freely communicate and address to the company their genuine concerns in relation to any illegal or unethical practice being carried out in the company. The Vigil Mechanism or Whistle Blower Policy is mentioned as Annexure-G to this report.
a. Buy back of Securities
The company has not bought back any of its securities during the year under review.
b. Sweat Equity
The company has not issued any Sweat Equity Shares during the year under review.
c. Bonus Shares
No Bonus Shares were issued during the year under review.
d. Employees Stock Option Plan
The company has not provided any Stock Option Scheme to the employees.
ORDER OF COURT:
There is no any Order from Court, Regulators, Tribunals passed during the year under review impacting the going concern status and companys operation in further. However, the Hon. BIFR has declared the company as Sick under the provisions of the Sick Industrial Company (Special Provisions) Act, 1985 vide its order dated 13/09/2013.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
During the period under review, there was adequate internal control procedure commensurate with the size of the company and nature of the business.
DEMATERIALISATION OF SHAREHOLDING:
The Company has already established electronic connectivity with both the depositories viz. National Depository Securities Limited (NSDL) and Central Depository Services (India) Limited (CDSL) through its Registrar and Transfer Agent, M/s. Adroit Corporate Services Pvt. Ltd. As such, the shares of the Company are available for dematerialisation with both the Depositories.
LISTING OF SECURITIES:
The shares of the Company are presently listed on the Stock Exchange, Mumbai and the Stock Exchange, Ahmedabad.
A report on corporate governance including Auditors Certificate on compliance with the conditions of corporate governance under Clause 49 of Listing Agreement, Clause 34 (3) read with Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended to this report as Annexure "E".
PERSONNEL AND RELATED INFORMATION:
None of the employees has received salary of Rs. 60 Lac per annum or Rs. 5.00 Lac per month or more during the financial year 2015-16. Accordingly, no particulars of employees are to be given pursuant to the provision of Section 197 of the Companies Act, 2013 read with respective rules.
Since the company has no any subsidiary or holding company, no particulars are required to be given pursuant to the provisions of Section 197 (14) of the Companies Act, 2013.
Information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the statement annexed hereto (Annexure A) and forms part of this report.
Your Directors are pleased to place on record their sincere gratitude to the Government Authorities, Suppliers, Customers and Shareholders for their continued support and co-operation extended to the Company during the year.
Your Directors also express their deep appreciation for the sincere and devoted services rendered during the year by the workers, staff and executives at all levels of operations of the Company.
|For and on behalf of the Board,|
|Place : Nagpur||Vinod Maheshwari|
|Date : August 13, 2016||Chairman|
ANNEXURE A TO THE DIRECTORS REPORT
Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo. 1) CONSERVATION OF ENERGY :
The basic philosophy of the Company is to achieve economy in operations at all levels and ensure optimum use of resources and minimisation of energy wastes. This objective is achieved through a proper & continuous system of monitoring and maintenance adopted by the Company. The Cogeneration Power Plant is contributing consistently in bringing down the energy costs of the Company with minimal wastes and is also ensuring supply of power & steam to the Paper Plant thus enabling the company to achieve its optimum production capacity. Due to increase in required connected load at the Plant we have taken an alternative power source from Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) power grid during the year 2015-16.
Total Energy Consumption and energy conservation per unit of production is given below :
|A) POWER CONSUMPTION||2015-2016||2014-2015|
|From *M.S.E.D.C.L :|
|Units (in KWH)-||5,36,760||-|
|Own Generation :|
|Units (in KWH)-||1.36.02.665||1,96,25,720|
|Total Units Consumed (in KWH)-||1,41,39,425||1,96,25,720|
|Total Amount (in Rs. lacs)||664.96||887.13|
|Rate per Unit (in Rs.)||4.88||4.52|
B) CONSUMPTION PER UNIT OF PRODUCTION
|Machine Production (MT)||12905||18,124|
|Finished Production (MT)||12318||17,286|
*M.S.E.D.C.L. -Maharashtra State Electricity Distribution Company Ltd.
2) TECHNOLOGY ABSORPTION: RESEARCH AND DEVELOPMENT
The technology used for the existing project is fully indigenous. The production department of the Company is constantly engaged in the process of evaluating new ways and better methods to improve the performance, quality and cost effectiveness of its products.
Great emphasis is given on upgradation of technology as suggested by the Production Department. The Company does not have a separate Research and Development activity.
3) FOREIGN EXCHANGE EARNING AND OUTGO :
There was no any income earned or expenditure made in foreign exchange during the year under review.
|For and on behalf of the Board,|
|Place : Nagpur||Vinod Maheshwari|
|Date : August 13, 2016||Chairman|