Stylam Industries Ltd Directors Report.

Your Directors are pleased to present the 28th Annual Report together with financial results for the year ended March 31, 2019.

FINANCIAL PERFORMANCE SUMMARY

rs. in crores
FINANCIAL RESULTS 2018-19 2017-18
Revenue from Operations* 460.67 337.96
Earnings before Interest, Taxes & Depreciation 77.26 49.25
Less: a) Finance Cost 11.13 7.70
b) Depreciation 15.79 10.83
Add: Other Income 1.59 2.34
Profit before tax 51.93 33.06
Less: Tax Expense 16.85 13.00
Profit for the Period 35.08 20.06
Add: Other Comprehensive Income (Net of Taxes) 0.10 (2.04)
Total Comprehensive Income 35.18 18.02
Opening balance in Retained Earnings 87.24 69.21
Add: Share premium 50.24 50.24
Closing balance in Retained Earnings 172.66 137.47

* Figures for Revenue from Operations are comparable numbers i.e Excise Duty has been removed as same does not form part of Revenue post GST implementation.

Highlights of Performance

During FY19, company put in a significant performance attaining net revenue from operations increased of Rs.460.67 crore as against Rs.337.96 crore in the previous year- a growth of 21.6%.

Operating margins has increased to Rs.77.26 crore from Rs.49.25 crore in previous year.

This performance has rationale when it is factored with high oil prices and other challenging business environment both in domestic and international trades.

Domestic

During the year under review, the company has registered an impressive significant growth of 51% in net revenue from domestic market. This growth is remarkable when attained at a time when Consumer sentiments remained suppressed for most part of the year with urban consumers feeling the overhang of inadequate job/income growth.

Exports

Despite a gloomy global outlook, exports, (including incentives), registered a growth of around 28% in value over the export of previous year.

Credit Rating

CARE has carried out a credit rating assessment of the Company for both short term and long term exposures and has re-affirmed rating at A- for long- term bank facilities and assigned A Two rating on the short term bank facilities at CARE A2.

Dividend

In view of expansion strategies which will facilitate in overall growth and performance of the company, your directors do not recommend any dividend for the year under review.

Material Changes and Commitments

There are no material changes which have occurred subsequent to the close of the financial year of the Company to which the Balance Sheet relates and the date of the report, such as

• Settlement of tax liabilities;

• Operation of patent rights;

• Depression in market value of investments;

• Institution of cases by or against the Company;

• Destruction of any assets or disposal of a substantial part of undertaking;

• Changes in capital structure; and

• Material changes concerning purchase of raw material and sale of the product.

Share Capital

The paid-up equity share capital as on 31st March, 2019, was Rs.8.16 crores, divided into 8,166,200 equity shares of face value of Rs.10/- each.

A) Issue of equity shares with differential rights

The Company did not issue equity shares with differential rights during the financial year 2018-19.

B) Issue of sweat equity shares

The Company did not issue sweat equity shares during the financial year 2018-19.

C) Issue of employee stock options

The Company did not issue stock options during the financial year 2018-19.

D) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees

The Company does not have a scheme for purchase of its own shares by employees or by trustees for the benefit of employees.

Maintenance of Cost Records

Pursuant to sub-section (1) of Section 148 of the Companies Act, 2013, the maintenance of Cost Records as specified by the Central Government is not required by the Company and accordingly such records are not made and maintained by the Company.

Deposits

During the year under review, the Company did not accept any deposits from the public within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

Directors and Key Managerial Personnel Change in Directorate

(i) Re-Appointment of Mr.Satpal Garg, as an Independent Director, for further period of 5 years Pursuant to the provisions of the Companies Act, 2013, the shareholders at the 23rd AGM of the Company held on 30th September, 2014, had appointed Mr. Satpal Garg as Independent Directors to hold office for a term of five consecutive years up to the conclusion of the ensuing Annual General Meeting. His term will expire at the conclusion of the 28th AGM.

Considering his vast knowledge, experience, expertise and contribution made by him during his tenure as an Independent Director, the Nomination & Remuneration Committee and the Board of Directors has recommended reappointment of Mr. Satpal Garg, as Independent Director for second term of five consecutive years from the conclusion of the ensuing 28th AGM till conclusion of 33rd AGM.

The Company has received declaration from Mr. Satpal Garg that he continues to fulfill the criteria of independence as prescribed under the provisions of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16 of the Listing Regulations (including statutory re-enactment thereof for the time being in force).

(ii) Appointment of Ms.Purva Kansal who was appointed as an Additional and Independent Director on the Board of the Company on 28th September 2018 be and is hereby appointed as a Director and Independent Director of the Company for a period of 5 years w.e.f.28th September 2018

Pursuant to the provisions of the Section 149, 150 152 and other applicable provisions of the Companies Act, 2013, and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for time being in force), read with Schedule IV of the Companies Act, 2013,read with the Rules issued thereunder and the Listing Regulations, Ms. Purva Kansal (DIN 08205836) as Independent Director on the Board of Directors of the company for a period of 5 years w.e.f 28th September 2018.

The Company has received declaration from Ms. Purva Kansal that she fulfills the criteria of independence as prescribed under the provisions of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16 of the Listing Regulations (including statutory re-enactment thereof for the time being in force).

(iii) Appointment of Mrs. Renu Sood, who was appointed as an Additional and Independent Director as on 13h June 2019,be and is hereby appointed as a Director and Independent Director of the Company for a period of 5 years w.e.f 13th June 2019.

Pursuant to the provisions of the Section 149, 150 152 and other applicable provisions of the Companies Act, 2013, and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for time being in force), read with Schedule IV of the Companies Act, 2013,read with the Rules issued thereunder and the Listing Regulations,Ms. Renu Sood (DIN 02280975) as Independent Director on the Board of Directors of the company for a period of 5 years w.e.f 13th June 2019.

The Company has received declaration from Mrs. Renu Sood that she fulfills the criteria of independence as prescribed under the provisions of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16 of the Listing Regulations (including statutory re-enactment thereof for the time being in force)

(iv) Appointment of Mr. Ashutosh Pradeep Sardesai in place of Mr.Sachin Kumar Bhartiya, as Nominee Director.

In accordance with the provisions of Section 161(3) and other applicable provisions, if any, of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) therefore the time being in force) and the Articles of Association of the Company, Mr. Ashutosh Pradeep Sardesai (DIN 07860331) has been appointed as Nominee Director of the Company with effect from 27th June 2019 in place of Sachin Kumar Bhartiya (DIN 02122147). His appointment is by virtue of an agreement with Lighthouse Emerging India Investors Limited. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, the Nominee Director is not liable to retire by rotation.

(v) Resignation of Mr.Mahavir Singh as an Independent Director w.e.f.13th March 2019

Mr.Mahavir Singh, Independent Director of the company, has resigned from the Board of Directors, on personal grounds on 13thMarch 2019. He has confirmed that there were no material reasons other than stated in his resignation letter.

Company has immensely benefitted from his guidance. The Board places on record appreciation for his thoroughness, dedication and commitment.

(vi) Resignation of Mr.Ravinder Krishan as an Independent Director w.e.f.30th June 2019

Mr.Ravinder Krishan, Independent Director of the company, has resigned from the Board of Directors, on personal grounds on 30th June 2019. He has confirmed that there were no material reasons other than stated in his resignation letter.

Company has immensely benefitted from his guidance. The Board places on record appreciation for his thoroughness, dedication and commitment.

(vii) Retirement by Rotation and subsequent re-appointment

In accordance with the provisions of Section 152 and other applicable provisions, if any, of the Companies Act, 2013, read with Companies (Appointment and Qualification of Directors) Rule, 2014 (including any statutory modification(s) or re-enactment(s) therefore the time being in force) and the Articles of Association of the Company, Mr.Manit Gupta (DIN 00889528) and Mr.Sachin Bhatla (DIN 08182443), are liable to retire by rotation at the ensuing AGM and being eligible have offered themselves for re-appointment.

Change in Key Managerial Person

In accordance with the provisions of Section 203 of the Companies Act, 2013, the company has appointed Mr.Jatin as Company Secretary and Compliance Officer of the Company, with effect from 03rd June, 2019 in place of Mr. Sridhar Pentela who has resigned as Company Secretary and Compliance Officer of the company, for pursuing external opportunities.

Meetings

During the year under review Eleven Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

The details of constitution of the Board and its Committees are given in the Corporate Governance Report which forms part of this Annual Report.

Remuneration of Directors and Key Managerial Personnel

The remuneration paid to Directors is in accordance with Nomination and Remuneration Policy formulated in accordance with the provisions of Section 178 of the Companies Act, 2013 Regulation 19 of the Listing Regulation (including any statutory modification(s) or re-enactment(s) thereof for the time being in force)

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or reenactments) thereof for the time being in force) in respect of Director and Key Managerial Personnel is set out in the Annexure VI

Nomination and Remuneration Policy

The company has formulated and adopted the Nomination and Remuneration Policy in accordance with the provisions of Section 178 of the Companies Act, 2013 read with Part D of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Remuneration Policy is approved by the Board of Directors and is uploaded on the website of the Company.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 and Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Directors Responsibility Statement

In terms of the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, the Directors state that:

a. in preparation of annual financial statements for the financial year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. the Directors have 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 or loss of the Company for that period;

c. the Directors have 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. the Directors have prepared the annual accounts on a going concern basis;

e. the proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

f. the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Audit Committee

The composition of the Audit Committee is in alignment with provisions of Section 177 of the Companies Act, 2013 read with the Rules issued thereunder and Regulation 18 of the Listing Regulations.

The Boards of Directors at their Meeting held on 30th June 2019, appointed Ms.Purva Kansal,Independent Director as a member of the Committee in place of Mr. Ravinder Krishan, who resigned as a Director w.e.f 30th June 2019.

All the members of the Audit Committee are financially literate and have experience in the financial management.

The committee reviews the report of Internal Auditor every quarter.

Corporate Governance

Transparency is the cornerstone of the Companys philosophy and all requirements of Corporate Governance are adhered to both in letter and spirit.

All the Committees of the Board of Directors meets at regular intervals as required in terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Your Board of Directors has taken all necessary steps to ensure compliance with all statutory and listing requirements. The Directors and key managerial personnel of your Company have complied with the approved Code of Ethics for Board of Directors and Senior Executives of the Company.

The Report on Corporate Governance as required under the Listing Obligations and Disclosure Requirements Regulations, 2015forms part of and is annexed herewith marked as "Annexure - II" The Auditors Certificate on compliance with Corporate Governance requirements is also attached to this Report.

Business Excellence and Quality Initiatives

The Company continues to be guided by the philosophy of business excellence to achieve sustainable growth. Customer-focused culture towards building long-term customers relationships is the key agenda of the Management.

The Company follows the principles of total quality management. The Company continues to be certified under ISO 9001: 2015 certifications for complete range of laminates manufactured.

Auditors and Auditors Report

Statutory Auditor:

M/s Mittal Goel & Associates, Chartered Accountants (Firm Registration No. 017577N) are proposed to be appointed as auditors for a period of 5 years commencing from the conclusion of this AGM till the conclusion of the 31st AGM of the Company to be held in 2022.

M/s Mittal Goel & Associates have confirmed their eligibility and qualification required under Section 139, 141 and other applicable provisions of the Companies Act, 2013 and Rules issued thereunder (including any statutory modification(s) or re-enactment(s) thereof for the time being in force)

The Auditors Report for the financial year ended 31st March 2019 on financial statements of the Company is a part of this Annual Report. The Auditors Report for the financial year ended 31st March, 2019 does not contain any qualification, reservation or adverse remarks.

Cost Auditor:

The company was not required to appoint Cost Auditor for the financial year ended 31st March 2019.

Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Sanjiv K Goel, Practicing Company Secretary, to undertake Secretarial Audit of the Company for the financial year 2018-19.

The Secretarial Audit Report in Form MR-3 for the financial year ended March 31, 2019 is annexed herewith as "Annexure-.I". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Internal Auditor:

Company has appointed Mr.Viay Bhatia, General Manager, as Internal Auditor of the Company to carry our internal audit of the company. Mr.Vijay Bhatia is Chartered Accountant by qualification. Internal auditor conducts regular audits that are performed as per the annual Audit Plan. The Internal Audit team conducts its audits which are carried out at factory, branches and corporate offices with the objective to evaluate and continuously improve the effectiveness of internal controls and governance processes. Additional areas, if any, identified during the year are taken up as special assignments. The audit findings are reviewed by the Audit

Committee of Directors and corrective action, as deemed necessary is taken. Company also has laid down procedures and authority levels with suitable checks and balances encompassing the entire operations of the Company.

Extract of the Annual Report

The extract of the Annual Return of the Company as on 31st March, 2019 in Form No. MGT - 9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, are set out in the "Annexure IV" of this report.

Related Party Transactions

All related party transactions that were entered during the financial year were in the ordinary course of business and on an arms length basis. There were no materially significant related party transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval is also obtained from the Audit Committee for the related party transactions which are of repetitive nature which can be foreseen and accordingly the required disclosures are made to the Audit Committee on quarterly basis in terms of the approval of the Committee.

The policy on materiality of related party transactions and also on dealing with related party transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company.

Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arms length basis, Form AOC - 2 is not applicable to the Company.

Loans, Guarantees or Investments

Pursuant to Section 186 of the Companies Act, 2013, Company has not directly or indirectly

a) given any loan to any person or other body corporate other than usual advances envisaged in a contract of supply of materials if any,

b) given any guarantee or provide security in connection with a loan to any other body corporate or person and

c) acquired by way of subscription purchase or otherwise, the securities of any other body corporate, exceeding sixty percent, of its paid-up share capital, free reserve and securities premium account or one hundred percent of its free reserves and securities premium account whichever is more.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) encompasses much more than social outreach programmes.

In accordance with the requirements of Section 135 of Companies Act, 2013, Company has constituted a Corporate Social Responsibility Committee.

The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed hereto as "Annexure - III"

The Company has contributed Rs.0.54 crore towards various CSR activities during the year, the Company has increased/scaled up its CSR intervention in the areas prescribed in the Companys CSR policy.

As a socially responsible Company, your Company is committed to increase its CSR impact and spend over the coming years, with its aim of playing a larger role in Indias sustainable development by embedding wider economic, social and environmental objectives. The Company has identified projects where contribution will be meaningful for the economic uplift of the society. Preference was given to allocate and spend higher amount on activities pertaining to local area and areas around the Companys factories. However, being early years in implementation of CSR, the Company has faced practical problems as regards to co-ordination and consensus amongst the beneficiaries, local villagers, gram panchayats and other related agencies to carry out the identified projects.

The initiatives taken by the Company will certainly help in deploying larger funds across social sectors and achieve rapid scale in utilizing its full CSR budget in the coming financial years. The Company remains committed to the cause of CSR and will take necessary steps to fulfill its CSR obligations during the coming financial years. The Company is however committed to the cause of CSR and will take necessary steps to fulfill its CSR obligations during the coming financial years.

Internal Control

The Company has proper and adequate system of internal controls which is in line with its size, operations and complexity. These systems are verified and tested routinely by certified auditors as well as internal audits, which cover all the key areas of the business. The internal control system ensures measurability and verifiability, reliability of accounting management efficiency and management information. The system also ensures compliance with all applicable laws and regulations, protection of the Companys assets and identification of critical risk areas to address them effectively.

Fraud Reporting

During the year under review, no fraud was reported by the Auditors of the Company to the Audit Committee or the Board of directors.

Occupational, Health, Safety and Environment

Company has effectively deployed policies on Safety, Occupational Health & Environment at all locations. It continually focusses on improving the effectiveness of system processes.

Brand Visibility

During the year under review, the Company has conducted various connect initiatives like Architects meet, Distributors meet, Dealers meet, to drive brand visibility and demand generation. This year also the Company budgeted an amount on Branding activities, to attract new customers, to create bigger footprint to enable expansion into new markets.

Insurance

The Companys properties, including building, plant, machineries etc and stocks are adequately insured against risks.

Listing

The equity shares continue to be listed on BSE Limited (BSE). The Company has paid annual listing fee for the financial year 2019-20.

Compliance with Code of Ethics for Board of Conduct for Directors and Senior Management Personnel

All Directors and Senior Management Personnel have affirmed Compliance with the Code of Ethics for Board of Directors and Senior Executives. A Declaration to that effect is attached with the Corporate Governance Report.

Detail of Significant and Material Orders Passed by Regulators or Courts of Tribunals Impacting the Going Concern Status and Companys Operation in Future

There are no significant material orders passed by the Regulators/Courts which would impact the Going Concern status of the Company and its future Operations.

Conservation of Energy and Technology Absorption and Foreign Exchange Earnings and Outgo

Information pursuant to Clause (m) of Sub-Section (3) of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure V".

Human Resources

The Company recognizes that the purpose of Human Resources is to be a catalyst and change agent.

Over the years, there has been a paradigm shift in the approach adopted by Employee Relations through different initiatives in various capacities. We drive sustainable growth and have been instrumental in bringing in thought leadership in building strong employee relations. The Company is focused on building a high performance culture with a growth mindset. Developing and strengthening capabilities for all employees remained Companys an ongoing priority. The Company maintains momentum on building speed and simplification in ways of working.

Particulars of Employees

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 is Not Applicable as no employee is in receipt of remuneration in excess of the limits prescribed under this Section.

CEO and CFO Certification

Pursuant to Regulation 17(8) read with Pert B of Schedule II of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the CEO and CFO certification is attached with the annual report. The Managing Director and CEO and the Chief Financial Officer also provide quarterly certification on financial results while placing the financial results before the Board in terms of Regulation 33 of the (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Acknowledgement

The Board place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment.

The Board also wishes to place on record its appreciation for the support and cooperation the Company has been receiving from its suppliers, redistribution stockiest, retailers, and others associated with the Company as its trading partners.

The Directors also take this opportunity to thank all Investors, Clients, Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.

On behalf of the Board,
Place: Chandigarh Jagdish Gupta
Date: 26th August 2019 Managing Director, Chairman