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Your Directors have the pleasure in presenting the 29th Annual Report along with the Audited financial statements of the Company for the financial year ended on 31st March, 2017:
Highlights of financial results (Stand-alone & Consolidated) for the year were as under:
|D-a y 1 i r i 1 yc||2016-17||2015-16||2016-17||2015-16|
|Parnculars||Stand Alone||Stand Alone||Consolidated||Consolidated|
|Sales and other income||309.32||415.38||315.93||452.09|
|Operating profit before interest, depreciation and tax||(24.90)||18.82||(24.85)||11.39|
|Interest and other financial charges||2.68||2.95||2.68||2.95|
|Profit/ Loss before tax||(271.74)||(144.09)||(266.42)||(151.11)|
|Less: Income Tax (including deferred tax)||-||-||-||-|
|Profit/ Loss after tax||(271.74)||(144.09)||(266.42)||(151.11)|
|Balance carried to balance sheet||(271.74)||(144.09)||(266.42)||(151.11)|
Performance Highlights - Stand-alone :
Your Directors wish to inform you that during the year 2016-17, Company faced lot of problems on account of financial stress hence operations of the units were restricted between 30% to 40% of its installed capacity.
During 2016-17, the Company recorded sales and other income at 309.32 crores as compared to 415.38 crores in 201516. The loss (before/after tax) has been increased to (271.74) crores in 2016-17 as compared to (144.09) crores in 2015-16 due to less capacity utilization and incurring fixed expenses.
Performance Highlights - Consolidated :
During 2016-17, the Company recorded sales and other income at 315.93 crores as compared to 452.09 in 2015-16. The loss has been increased to (266.42) crores in 2016-17 as compared to (151.11) crores in 2015-16. The profit/loss (before/ after tax) was (266.42) crores being no tax expense in 2016-17 as compared to (151.11) in 2015-16.
A bulk of the activity in quantitative terms, relates to job-work on behalf of other parties. Revenue from job-work comprises 40% (approx.) of total income in different units, even though in quantitative terms it is 65-75% (approx.) of total work.
As reported in the last Annual Report, the company is still in stringent working capital situation and unable to source yarn for its own production. Hence during the year, company has earned a major portion of its revenue from jobwork. The world
renowned suppliers of denims, sheeting & terry towel are giving jobwork to the company in view of imported machinery, state of art infrastructure and superior quality product. Jobwork has enabled the company to reduce its cash losses & increase its capacity utilization.
Status of functioning of units of the Company:
At present, our Malwan unit, Abhaypur unit and Aung unit continue to be operational at a low / sub-optimal capacity and are working partially due to shortage of working capital though company is making full efforts to increase the capacity utilization by undertaking job work. Still, bottom line of the company is not improving inspite of the increase in capacity utilization as job works are being done on cost to cost basis. No doubt this helps to save the fixed cost.
In Aung and Abhaypur units, a bulk of the production relates to job-work for other parties. Production in Rewari Bujurg unit was expected to improve as lot of parties were approaching but we could not run the unit on regular basis due to lack of Infrastructure and Working Capital.
The advertisement was published in various newspapers for sale of 4 numbers of our non-operational units situated at Sonepat (Embroidery), Roorkee (Garment), Aung (Suiting, Shirting, Interlining) and Malwan (Spinning). Out of the 4 units, Aung and Sonepat Unit has been sold by the Bank but no response is received till date from any party to purchase the other 2 units. We are also trying to identify the purchaser, who can purchase the units but due to recession in the Textile industry / property market, people are not forthcoming for purchase of these assets.
PRESENT STATUS OF THE COMPANY AT NCLT :
The Company was registered under the Board for Industrial and Financial Reconstruction in terms of the provisions of section 15(1) of Sick Industrial Companies (Special Provisions) Act 1985 vide registration number 45/2014 and the reference of the Company before BIFR has been abated in accordance with third proviso of Section 15(1) of SICA w.e.f. 30.11.2016.
UCO Bank had filed a winding up petition under section 433, 434 and 439 of the Companies Act, 1956 before the honorable High Court at Allahabad which has been now transferred to the National Company Law Tribunal-Allahabad for consideration. But the Company has objected on the ground that UCO Bank should be directed to file the petitions under the procedure and compliance with sections 7, 8 or 9 of the Insolvency and Bankruptcy Code, 2016. NCLT has asked explanation from UCO Bank on this point.
WINDING UP PETITION AGAINST M/S SHRI LAKSHMI COTSYN LTD.:
Due to the abatement of BIFR, few cases of Winding up filed by the following parties with the Allahabad High Court are revived now and the Company is contesting :
1- Ketan Kantilal Shah (FCCB Bond Holder) amount 2.8 million.
2- Soil & Environment Industries Pvt. Ltd. 9.34 lacs
PETITION BEFORE DEBT RECOVERY TRIBUNAL (DRT) AGAINST M/S SHRI LAKSHMI COTSYN LTD.:
Following parties have filed the case against the Company before DRT Allahabad & New Delhi which the Company is contesting:
1. Central Bank of India on behalf of consortium member banks has filed a recovery suit at DRT Delhi for an amount of 3904.47 crores
2. IFCI Ltd. Recovery Suit for an amount of 9.91 crore at DRT, New Delhi.
3. UCO Bank has also filed recovery suit at DRT Allahabad.
4. Edelweiss ARC has also filed a recovery suit at DRT allahabad.
Despite all adverse situations, the Company recorded an export of 40.08 crores in 2016-17 as against 180.15 crores in 2015-16 on Stand-alone as well as Consolidated basis.
The company is registered with the following organisations:
1. Director General of Quality Assurance (DGQA)
2. Director General of Suppliers & Disposals (DGS&D)
3. Ordnance Board Group of Factories.
5. Office of the Textile Commissioner as a Composite Mill.
6. Bureau of Indian Standards (BIS)
7. Department of Industrial Development, Ministry of Industry.
Company is duly registered with Export Promotional Council and possess valid Import Export code and RCMC issued by Federation of Indian Export Organisation.
Further based upon past performance of exports, Company is also registered with Ministry of Commerce and Industry as STAR EXPORT HOUSE.
WHOLLY-OWNED SUBSIDIARY COMPANIES
The Company has three subsidiary companies, details of which are as under :
M/s Shri Lakshmi Defence Solutions Ltd.
The company was incorporated on 19.12.2006 and engaged in manufacturing of bullet proof jacket, bullet proof helmet, armored vehicles, bullet proof morchas and other ballistic products for defense and homeland security. Due to the scarcity of working capital, the Company could not operate its functioning and also could not repay its loan of the Bank of Baroda .
The Bank after turning its account as NPA has taken over the possession of the unit and was trying to sale the unit as such. The Company has obtained stay order from DRT Allahabad against the sale of unit. The Company is still making efforts to find out some investor to run its defence business.
However, during the year 2016-17, the Company recorded sales (from trading activities) and other income of 430.49 Lacs as compared with 9.97 Lacs in 2015-16. Due to the Closure of factory, the Company has incurred running expenses net loss of (56.58) Lacs in 2016-17 as compared to a net loss of (94.55) Lacs in 2015-16.
M/s SLCL Overseas FZC, Sharjah U.A.E
The Company is a 100% subsidiary of SLCL, which has been set up at Sharjah Airport International Free Zone, Sharjah, and UAE. It is engaged in trading of 100% Polyester fabric material, garments and alike products and also exporting to other countries, besides trading in Sharjah itself.
M/s SLCL Overseas FZC, Sharjah U.A.E., a wholly-owned subsidiary, recorded a turnover of 230.43 Lacs in 2016-17 as compared with 3660.71 Lacs in 2015-16. During the year, the Company has suffered a loss of (24.18) Lacs in comparison with a loss of (1,243.51) Lacs in the previous year.
M/s Synergy Global Home Inc.
M/s Synergy Global Home Inc., is a wholly-owned subsidiary and was incorporated at U.S.A.; which deals in trading of home furnishing items.
During the year, M/s Synergy Global Home Inc. has not done any business as in the previous year in 2015-16, therefore there is no turnover or profit in the year 2016-17. However, the company, suffered a loss of 0.03 lacs in 2015-16.
EXEMPTION UNDER SECTION 129 OF THE COMPANIES ACT, 2013 FOR NOT ATTACHING THE BALANCE SHEET OF THE SUBSIDIARY COMPANIES
In pursuance with the provisions of Section 129 of the Companies Act, 2013, the requirement of attaching the Financial Statements, Auditors Report and Directors Report of the subsidiaries concerned has been dispensed with and therefore, Board of Directors of your Company have given their consent for not attaching the balance sheet of the subsidiary concerned. The Statement in Form AOC-1 containing the salient features of the financial statements of your Companys subsidiary companies pursuant to first proviso to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, forms part of the Annual Report.
The Annual Accounts of the subsidiary companies shall also be kept for inspection by any shareholders at the Registered Office of the holding Company on any working day and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.
Changes in Directors and Key Managerial Personnel :
During the period, there was no change in Directors and Key Managerial Personnel of the Company.
Declaration by an Independent Director (s) & re- appointment, if any
A declaration by an Independent Director(s) that he/ they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 has been obtained.
Number of meetings of the Board of Directors
A calendar of Meetings is prepared and circulated in advance to the Directors.
During the Financial year 2016-17, Five meetings of Board of Directors were held. The meetings were held on 30th May 2016, 12th August 2016, 31st August 2016, 14th November 2016 and 13th February 2017. The maximum time gap between any two meetings was not more than four calendar months.
The composition of an Audit Committee and details of meeting are stated in the Corporate Governance Report.
Details of establishment of vigil mechanism for directors and employees
The vigil mechanism for directors and employees to report genuine concerns has been established as per the provisions of Section 177(9) read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014 for directors and employees to report their genuine concerns or grievances.
Particulars of loans, guarantees or investments under section 186:
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
Related Party 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. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key
Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations , 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 Finance, Audit Grievance, Nomination & Remuneration and Compliance Committees etc. The Management evaluates the performance of committees and its functioning at regular intervals.
Remuneration & Nomination Policy
The Board has framed a policy which lays down the framework in relation to selection and appointment of Directors, Senior Management of the Company and in relation to their remuneration.
RISK MANAGEMENT POLICY:
A statement indicating development and implementation of a risk management policy for the Company are set out in the corporate governance report forming part of the Board report.
During the Financial Year 2016-17, the Company has not issued any equity shares, so there has been no change in share capital.
Since the Company and its subsidiaries have incurred the loss, your Directors have not recommended any dividend for the year ended on 31st March, 2017.
M/s Pradeep & Associates, Chartered Accountants, Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting on completion of the maximum term permitted under the Section 139 of the Companies Act 2013. The observations of Auditors in their report read with notes to the accounts are self-explanatory and do not call for further explanation.
Pursuant to the provisions of section 139 of the Companies Act 2013 read with the Rules made thereunder, it is mandatory to rotate the statutory auditors on completion of the maximum term permitted under the said section. The Audit Committee of the Company has proposed and on 30th May 2017, the Board of Directors of the Company has recommended the appointment of M/s Tandon & Tandon, Chartered Accountants, 9/81 Arya Nagar, Kanpur-02 ( Firm registration number 002070C) as the Statutory Auditors of the Company. M/s Tandon & Tandon will hold office for a period of five consecutive years from the conclusion of the 29th Annual General Meeting of the Company scheduled to be held on 26th September 2017, till the conclusion of 34th Annual General meeting to be held in the year 2022 subject to the approval of the shareholders of the Company.
The Central Governments Cost Auditor order specifies an audit of cost accounting records of the textile Company every year. This is applicable to the products manufactured by the Company. The Board of Directors, subject to the approval of the Central Government, ratified the appointment of Mr. Arun Kumar Srivastava, Cost Accountants, Kanpur, to carry out cost audit for the current year.
The Company ratified the appointment of a firm of Chartered Accountants M/s Srivastava S and Company of Kanpur as internal auditors to review the internal control systems of the Company and report thereon. The Report of the Internal Auditors is reviewed by the Audit Committee.
Pursuant to the provisions of Section 204(1) of the Companies Act 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Ms. Pallavi Agarwal, Company Secretary in Practice, (C. P. No. 13448) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure A".
With an increasing concern towards ecology and global warming, consumers are favoring organic and eco-friendly textile products. Therefore, the demand of organic cotton is accelerating with brands and retailers continuing to implement long-term commitment to increase their use of organic cotton. Your Company also continues to pursue its mission for environmental excellence and constantly explores opportunities to improve ecology and the environment.
RESEARCH AND DEVELOPMENT
The company posses in-house R&D facilities which results in cost saving. The continuous R&D efforts enabled the company to product innovation.
Companys R&D strategy is anchored on the development and speedy commercialization of globally competitive products, processes and technologies through best-in-class research interventions backed by world-class infrastructure. It has a strong R&D cell for advanced testing laboratories.
All the insurable assets of your Company including inventories, building, plant and machinery were adequately insured.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS FOR THE YEAR 2016-17:
The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, forms part of this Report and is annexed in the Annual Report, together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in the Listing Regulations.
GREEN INITIATIVE FOR PAPER LESS COMMUNICATIONS:
In accordance with MCAs recent circulars bearing no. 17/2011 dated 21.04.2011 and 18/2011 dated 29.04.2011, your company can mail documents and various other notices (including notice calling Annual General Meeting, Audited Financial Statements, Directors Report, Auditors Report etc) to the shareholders through electronic mode to the registered e-mail addresses of shareholders.
(A) Particulars of employees
The industrial relations throughout the year under review remained cordial. As none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed, hence the particulars of employees under the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not given in the report.
(B) Conservation of energy, technology absorption and foreign exchange earnings and outgo
Particulars with respect to conservation of energy, among others, as required under Section 134(3) clause (m) of the Companies Act, 2013 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure forming part of this Report.
(C) Directors responsibility statement
As required under clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards were followed and there are no material departures;
2. The Directors selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the period;
3. The Directors took proper and sufficient care to maintain 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.
4. The Directors prepared the annual accounts on a going concern basis.
5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
6. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
None of the Directors are disqualified under the provisions of Section164 (2) of the Companies Act, 2013. The Directors have made the requisite disclosures, as required under the provisions of the Companies Act, 2013 and the Listing Regulations.
Extract of the Annual Return
The extract of the annual return in Form No. MGT - 9 shall form part of the Boards report. The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as " Annexure C".
Corporate Social Responsibility (CSR)
The disclosures under Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is not required to be made since clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is not applicable to the Company. However, the Company time to time undertakes several initiatives towards the welfare of employees, society, environment etc.
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below-
(i) The ratio of the remuneration of each director/KMP to the median remuneration of the employees of the company and the percentage increase in remuneration of each director for the financial year 2016-17 are given below:
Name of KMP
Remuneration per month as on
|As on 31.03.2017||As on 31.03.2016||Percentage increase in remuneration||Ratio to median remuneration|
|1. Dr. M.P. Agarwal||200000||400000||Nil||16.66:1|
|2. Mr. Pawan Kumar Agarwal||125000||250000||Nil||10.42:1|
|3 Mr. Devesh Narain Gupta||200000||200000||Nil||16.67:1|
|4 Mrs. Sharda Agarwal||62500||125000||Nil||5.21 :1|
|5 Dr. GN Mathur||0||0||Nil||-|
|6 Prof. Dr. R.K Trivedi||0||0||Nil||-|
|7 Mr. Rakesh Kumar Srivastava||130000||130000||Nil||10.83:1|
(ii) Percentage increase in the median remuneration of employees in the financial year: 5.16%
(iii) Number of permanent employees on the rolls of company: 3158
(iv) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
Average percentage increase in the salaries of employees other than KMPs for Financial Year 2016-17 was 5.75 % as compared to previous financial year. There has been no percentile increase in the salaries of key managerial personnel in comparison with the increase in the remuneration of other employees for the same period.
(v) The key parameters for any variable component of remuneration availed by the directors: None
(vi) Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that remuneration is as per the remuneration policy of the Company.
Information as per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 : Statement showing the names of Top 10 Employees in terms of remuneration drawn during the year:
|. Employee Name||Designation||Remuneration received (CTC) per month||Educational Qualification & Experience||Date of commencement of employment||Age||Previous employment & Designation|
|1 KSHIRAD KUMAR DAS||Vice President||197053||Diploma in IIHT, Exp. 23 Years||19/07/2010||44||Nahar Industrial Enterprises Ltd, Sr. Manager (Dyeing)|
|2 SANDEEP VASHIST||Sr. Vice President||175000||P G Diploma in Textile Designing, Exp. - 25 Years||15/12/2016||52||Om Sacc India, Head International Marketing|
|3 RSURENTHER KUMAR||Dy. General Manager||150000||M.Tech-Textile Engg. - IIT Delhi, Exp. 13 Years||01/05/2012||36||Vallabh Textile Cp Ltd, Dy. Manager|
|4 SUBHASH CHAND JAIN||VP (Finance)||150000||M.Sc (Phy.), Exp. 44 Years||07/12/2010||67||Shamken Spinners Ltd, DY. GM|
|5 RAKESH SETHI||Vice President||125000||M.Sc, Ph. D(Chemistry), Exp. 10 Years||30/01/2012||37||Trident Industries,R&D Head,|
|6 B.R.GARG||Director Technical||120000||B.Text, Exp. 50 Years||28/09/2007||74||Sutlej Industries Bhilad, Sr.Vice President|
|7 RAJEEV ANAND||General Manager||112116||B.Sc, Exp. 26 Years||11/04/2015||48||OSIL Home Furnishing Products Panipat, General Manager Production|
|8 CHANDAN SINGH BANOULA||Assistant Vice President||105999||BA, Diploma in Textile Techonogy, Exp. 23 Years||08/12/2015||47||Northern Textile Mill, Technical Manager|
|9 LAVANYA VASHIST||Manager||100000||Structural Engineering, Gurgaon, Exp. Nil||15/12/2016||23||N/A|
|10 SANJAY PANDEY||DGM - Marketing||100,000||MBA, Exp. 14 Years||06/10/2016||38||Kushbu Vinyl Pvt Ltd. (DGM Sales )|
Nature of employment for above mentioned employees are permanent.
None of the above mentioned employees are holding any percentage of equity shares in the company within the meaning of clause (iii) of sub-rule (2) above; and
None of the above mentioned employees is a relative of any director or manager of the company.
Details of employees drawing a remuneration of 1.02 crores or above per annum if employed throughout the financial year or 8.50 Lacs per month if employed for any part of the year and posted in India: NIL
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company respects and values diversity reflected in various backgrounds, experiences, and ideas and is committed to providing employees with a workplace that is free from discrimination or harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has Internal Complaints Committee (ICC) established in accordance with the aforesaid Act for addressing sexual harassment incidents. No complaints on sexual harassment were received by the Company during the financial year under review.
Your Directors wish to place on record their appreciation of the timely support provided by the Companys bankers, all the vendors and tie-up entities and the dedication and commitment of the employees at all levels. Your Directors convey their grateful thanks to all the Government authorities and shareholders for their continued and unstinted assistance, co-operation and patronage.
We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them.
For and on behalf of the Board
|Dr. M. P. Agarwal||Devesh Narain Gupta|
|Chairman and Managing Director||Deputy Managing Director|
Registered office : 19/X-1, Krishna Puram G.T. Road, Kanpur Date : 11th August, 2017