Sudar Industries Ltd Directors Report

To

The Members of Sudar Industries Limited,

The Directors take pleasure in present the 13th Annual Report of the Company together with the Audited Statement of Accounts and the Auditors’ Report of your Company for the financial year ended, 31stMarch, 2014 .

1) FOREWORD:

The Indian economy experienced a deceleration in economic growth during the period 2013 -14. Your company had to face challenges in an inflationary market conditions coupled with a depreciating rupee leading to se in fall in unemployment and therefore your company decided on a new focus to achieve all round growth by enhancing exports and value for the organization. In the process, many decisions taken by your company showed favorable trends and results.

THE COMPANIES ACT,2013

The Ministry of Corporate Affairs (MCA) has notified 282 sections of the Companies Act, 2013 (CA2013/Act) in tranches in September 2013 and March 2014 with majority of the sections as well as rules being notified in March 2014. The Companies Act, 1956 continues to be in force to the extent of the corresponding provisions of the CA2013 which are yet to be notified. MCA vide its Circular dated April 4, 2014 clarified that the financial statements and documents annexed and has board’s report in respect of financial year that have commenced earlier than April 1, 2014 shall be governed by the provisions of the Companies Act, 1956 and in line with the same, the financial statements, auditor’s report and Board’s report and attachments thereto have been prepared in accordance with the provisions of the Companies Act, 1956. With respect to other provisions of the Act, appropriate references have been made in this report to the extent these provisions have become applicable effective April 1, 2014.

2) HIGHLIGHTS OF PERFORMANCE:

• ?Your company achieved turnover of Rs. 92,730 lakhs as against Rs. 44,002 lakhs in the previous year i.e. an increase of as compared to the previous year.

• ?Operating EBITDA increased in 2013 -14 by Rs. 3,765 Lacs to Rs. 10,689 Lakhs from Rs. 6,924 Lakhs in 2012-13.

• ?Consolidated profit before tax in 2013 -14 was Rs.6,538 Lakhs, against Rs.3,783 Lacs in 2012-13.Similarly, consolidated profit after tax was Rs.4,565 Lakhs in 2013 -14 as against Rs.2,556 Lakhs in 2012-13.

The financial year 2013-2014 was a challenging year amidst global economic uncertainties and recession. Despite there being constraints and a challenging environment, the company performed reasonably well which is evident from the results.

3) FINANCIAL RESULTS:

This fiscal has been an exciting year in terms of growth and profitability. We are confident that this change and the proposal to engage in trading in Iron ore, Minerals etc. will enable the company to maintain our growth trajectory in the future. The financial highlights for the financial year are given below:

		(Rs. In Lakhs)
PARTICULARS	F.Y. 2013-14	F.Y. 2012-13
Sales & Other Income	92,729.70	44002.27
Profit (Loss) before Interest, tax, Depreciation and Exceptional Items	10,689.40	6,924.10
Less: Depreciation	1,300.90	1,158.93
Less: Interest Charges	2,850.86	1,979.21
Profit/(Loss) before exceptional and extraordinary items an taxation	6,537.64	3,785.96
Add/(Less):Exceptional items	-	2.57
Profit (Loss) before Taxation	6,537.64	3,783.39
Less: Provision for Taxation
- Current tax	1,972.59	1,227.52
Profit (Loss) after Taxation	4,565.05	2,555.87
Balance of P&L A/c brought forward	5,320.45	2,764.58
Balance Carried to Balance Sheet	9,885.5	5,320.45
Earnings Per Share (Rs. per share)	20.29	11.36

4) BUSINESS OUTLOOK:

• ?Apparels:

Your Company, an integrated apparel manufacturer with its expertise in designing garments with its niche for finishing markets its products in wholesale market and multi -brand outlets. The Company’s international presence extends to United States of America, Italy, United Kingdom and the United Arab Emirates through merchandise exports. In order to expand its business activities, the Company has very recently commenced direct exports in Industrial Garments in the Financial Year 2013 to Gulf and South-East Asian Countries. The export sales in apparels segment of the Company for financial year 2013 -14 was Rs. 7,095 lacs against Rs. 2299 lacs in financial year 2012-13.

For the future, Your company has established a name for itself in the global markets.

B) HIGH ENDED FINE CHEMICALS PROVIDING INTERMEDIATE PRODUCTS FOR PHARMACEUTICAL AND AGRO CHEMICALS INDUSTRY:

Your Company has been successfully engaged in manufacturing chemical products in a wide range of activities which includes 6 Pharmaceutical Intermediates and 11 Agrochemical business relating to chemical products. The export sales in chemical segment of the Company for financial year 2013 -14 was Rs. 5,391.32 lacs against Rs. 2020 lacs in financial year 2012-13.

C) PROPOSAL TO TRADE IN IRON ORE, MINERALS AND AGRO COMMODITIES:

The Company is proposing to diversify its activitycommodities, to other metals and trading business of Iron ore, agro based minerals. The Company has obtained necessary approvals from the Shareholders of the Company through Postal ballot, and the expects good business deals in new markets.

5) DIVIDEND:

This year also your company would endeavor to strengthen the reserves for future expansion and therefore your Directors do not recommend any dividend for the year ended March 31, 2014.

6) ECONOMIC SCENARIO & OUTLOOK:

The global economy experienced a slowdown especially noticed in developed economies which had its impact on India as well. The Indian economy had to contend with high inflation in the year 2014 and increased lending rates. The tightening of the monetary policy further slowed the growth of the economy which affected all sectors.

7) SUSTAINABLE DEVELOPMENT:

The Company continues to provide sustainable waste management solutions through co -processing and re-engineering. Our clients have further increased with new waste streams efforts and continued to make the best use of fuels and raw materials thereby eliminating wastage.

8) CORPORATE SOCIAL RESPONSIBILITY COMMITTEE/CSR COMMITTEE:

During the year, your directors have constituted the Corporate Social Responsibility Committee comprising Mr. Satish Shenoy as the Chairman and Mr. Murugan M. Thevar, Mr. M.G. Subramaniam as other members.

The said committee has been entrusted with the responsibility of formulating and recommending to the board, a Corporate indicatingSocial to beResponsibility undertaken Policy by the(CSR Company,Policy) monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR Activities.

9) OCCUPATIONAL HEALTH AND SAFETY (OH&S);

Your Company communication, involvement and competency build engages in OH&S matters through policy of -up applied consistently continually throughout its operation. Programmes targetingcritical areas are being implemented across all and sites to address risks associated with operations. Effectiveness of these programmes is being constantly assessed by the Senior Leadership team. External audits are being conducted to check the level of implementation of these safety programmes.

Safety Leadership Programmes are being conducted across business units for the senior leadership team. The programmes comprises of practical exercises and interactive sessions and prepares managers to act as roleisk assessment job/activity . Our managers is integral are provided with different types of risk assessment tools t part of any o help them identify risk and decide on appropriate control measures. Hazard identification being conducted at sites to refine anticipation capability amongst the employees by enhancing their hazard observation skills.

Apart from our employees, our contractors are also involved in these workshops, which show an appreciable change in the attitude of contractors towards safety.

10) HUMAN RESOURCES:

Your company has embarked on a journey towards people excellence during the year. The aim of this journey is to re-engineer all the HR processes and ensure that each process is fine appropriate number of employees are groomed for future middle and senior leadership roles. Greater focus is given to hiring and retaining talent from different disciplines and streams.

As extension of faster learning for young talent, your company has embarked on a plan to impart intensive learning through challenging functional/cross functional projects and coaching to improve analytical and decision making capability.

The industrial relations scenario was peaceful. Your company embarked on a major programme for the on roll and off roll employees with an emphasis on involving and engaging them in a variety of small improvement projects at the shop floor level so that their engagement level is enhanced.

11) DIRECTORS

It has been the endeavor of your Company to place a lot of emphasis on its people which includes Employees, Directors and Customers. Your company believes that business being competitive in all spheres of activities, it is only competitive competent people who can ensure that the Company marches in its road plan for attaining growth and prosperity.

Your Company is proud to have a professional board who have excellent experience with good credentials and support the business with their inputs and decisions which can strongly support your Company in its accomplishments of being one of the formidable companies in the industry.

In consonance with the provisions of the newly enacted Companies Act, 2013 and taking into consideration the composition of the Board of Directors, Mr. M.G. Subramaniam retires by rotation and being eligible offers himself for reappointment at the forthcoming Annual General Meeting.

The Companies Act, 2013 (the Act) provides for appointment of independent directors. Sub-section (10) of Section 149 of the Companies Act, 2013 (effective from April 1, 2014) provides that independent directors shall hold office for a term of uptofive consecutive years on the Board of a company; and shall be eligible for re -appointment on passing of ordinary resolution by the shareholders of the company.

Sub-section (1) states that no independent director shall be eligible for more than two consecutive terms of five years. Sub - states that the provisions of retirement by rotation as defined in sub -sections (6) and (7) of Section 152 of thect A shall not apply to such independent directors.

The non-executive independent directors were appointed as directors liable to retire by rotation under the erstwhile Companies Act, 1956. The Board of Directors has been advised that non executive (independent) directors so the term that was ascertained at the time of appointment as per the resolution pursuant to appointedwould which they were appointed. Therefore, it stands to reason that only those non-executive (independent) directors who will complete their present term at the ensuing AGM of the Company in September 2014, being eligible and seeking reappointment, be considered by the shareholders for re-appointment for the first term of upto five consecutive years upto March 31, 2019.

Non-executive (independent) directors who do not complete their term at the ensuing AGM, will continue to hold office till the expiry of their term (based on retirement period calculation) and thereafter would be eligible for re -appointment for a fixed term in accordance with the Companies Act, 2013.

Based on the above, Mr. Anand Kadam and Mr. Satish Shenoy were appointed as Independent Directors of the Company for a term of two consecutive years effective from April 1, 2014 upto March 31, 2016.

12) DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company confirm that -

1. In preparation of the Annual Accounts for the financial year ended March 31, 2014, the applicable accounting standards have been followed.

2. The Directors 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 ofial year and of the profit or loss of the company for that period.

3. The Directors had taken proper and sufficient care accountingrecords in accordance with for the maintenance of adequate the provisions of this Act for safeguarding preventingand detecting fraud and other the assets of the company for irregularities.

4. The Directors had prepared the Annual Accounts on a going concern basis.

13) DISCLOSURES REGARDING CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

Information as per the Companies (Disclosure of Particulars on the report of the Board of Directors) Rules, 1988 relating to Conservation of Energy, Technology Absorption, Forex Earnings and Outgo is provided in the annexure forming part of this report.

14) INTERNAL CONTROL SYSTEMS:

The company has a robust and comprehensive internal control framework to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, and at the same time safeguarding assets and economical and efficient use of resources. The internal control system commensurate with the size, scale and complexity of its operations. It is being constantly assessed and strengthened with new/revised standard operating procedures and robust internal and information technology controls.

The company’s internal audit department objectively and independently tests the design and operating effectiveness of the internal control system to provide a credible assurance to the Board and the Audit Committee regarding the adequacy and effectiveness o the internal control system. The internal audit function monitors the effectiveness of controls and also provides an independent and objective assessment of the overall governance processes in the company.

The scope and authority of the Internal Audit activity are well defined. Internal Audit plays a key role by providing an assurance to the Board of Directors and value adding consultancy service to the business operations.

15) BUSINESS RISK MANAGEMENT:

Your company has robust business risk management practices to identify, evaluate business risks and opportunities. This is monitored at the Corporate office. The business risks and opportunities so identifiednd a detailed action plan to mitigate the identified business risks is thereafter drawn up and its

16) ENHANCING SHAREHOLDERS VALUE:

Your company believes that its members are among its most important stakeholders. Accordingly, your company’s operations are committed to the pursuit of achieving high levels of operating performance and cost competiveness, consolidating building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. The company is also committed in creating value by ensuring that its actions positively impact the socio -economic and environmental dimensions for the society for sustainable growth and development.

17) PARTICULARS OF EMPLOYEES:

In terms of the provisions of Section 217 (2A) of the Companies Act,1956, read with the Companies (Particulars of the Employees) Rules,1975 as amended, the names and other particulars of the employees are set out in the Annexure A to the Directors Report.

18) DEPOSITS:

During the year under review, Company has not accepted any deposits from the Public within the meaning of the provisions of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

19) AUDITORS

M/s. Suresh Hegde & Company, Chartered Accountants, Mumbai and M/s. Mukesh Mehta and Associates, Chartered Accountants Mumbai, have given consent for their reappointment as the joint statutory auditors of the Company subject to member’s approval in the ensuing Annual General Meeting.

20) CREDIT RATING

The Company continues to have the highest domestic credit ratings of BBB Negative from CARE which means strong reflecting the company’s financial discipline and prudence.

21) BOARD COMMITTEE:

In compliance with both the mandatory and non-mandatory requirements under the Listing Agreements and the applicable laws, the board has constituted the following Committees:

a) Audit Committee

b) Nomination and Remuneration Committee

c) Stakeholders Relationship Committee

d) Investment Committee

e) Corporate Social Responsibility Committee

22) CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of corporate governance and strictly adhere to the Corporate Governance requirements set out by SEBI.

As per clause 49 of the Listing Agreement with the stock exchanges, a separate section on corporate governance practices, followed by the company together with a certificate from the company’s auditors confirming your Company is committed to good corporate governance and firmly believes in and consistently follows good corporate governance practices, leading to a very high level of transparency in accounting and reporting to its shareholders.Ther the Board and the Senior Management. A report on the Corporate Governance and a certificate from Company forms part of the Annual Report. The Company has fully complied with the Corporate Governance practices specified under the Listing Agreement with Stock Exchanges.

23) MANAGEMENT’S DISCUSSION AND ANALYSIS:

A detailed review of operations, performance and future outlook of the Company is given separately under the head "Management’s Discussion and Analysis".

24) LISTING OF SHARES:

The shares of the Company are listed on the National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The Company has paid the annual listing fees to the NSE and BSE for the year 2014-2015.

25) HOLDING / SUBSIDIARY COMPANY:

During the year, your company has incorporated three subsidiaries which can support the company in its trading operations in South East Asia, United Arab Emirates and London. It includes trading in Apparels and Fine Chemicals and its proposed business interest in trading in mineral and iron ore.

The Companies incorporated are as under:

• ?Sudar Industries UK Ltd. Registered in United Kingdom.

• ?Sudar Global Industries FZE, Registered in Dubai.

• ?Averlin Industries PTE Limited, Registered in Singapore.

26) AUDITORS:

In terms of the sub-section (2) of section -04-2014) no Listed company 139 of the Companiesshall appoint or re-appoint an Auditing Firm as the Auditor for more than two terms of is eligible to be appointed or re-appointed in the same company after five years from the completion of existing term. In pursuance of the above, every listed company shall comply with this requirement within a transitional period of three years from the date of commencement of the Act i.e. 1st April, 2014.

The Company’s Joint Auditors M/s Suresh Hegde & Co. and M/s Mukesh Mehta & Associates, who retire at the ensuing Annual General Meeting of the Company, are eligible for re-appointment..

The Company has received letters from all of them to the effect that -appointment, if made, would be within the their re prescribed limits under Section 141 (3) of the Companies Act,2013 and that theyarenotdisqualifiedfor re -appointment.

27) INDUSTRIAL RELATIONS:

Industrial Relations remained cordial in the Company’s manufacturing locations without any activities.

28) RATING FROM DUN & BRADSTREET

The Company has been rated 5A2 by Dun & Bradstreet indicating financial statements and indicates a fair overall status of the company.

29) ACCOLADES:

Your Directors would like to inform that your company has been bestowed with the Gujarat Business Excellence Award by the Small and Medium Business Development Chamber of India in January, 2014. Your directors would like to inform that your company has featured in Businessworld magazine in August, 2014 India’s fastest growing companies.

30) ACKNOWLEDGEMENTS:

Your directors would like to express their appreciation for the assistance and co -operation received from bankers, govt. authorities, customers, vendors during the year. Your directors also wish to thank all employees, associates and business partners who have contributed towards the success of the Company.

31) CAUTIONARY STATEMENT:

Statements in the Directors’ Report and the Management Discussion and Analysis describing the company’s objectives, expectations or forecasts may be forward looking within the meaning of applications laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the company’s operations include global and domestic demand and supply conditions , changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial

	FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
PLACE: NAVI MUMBAI	MURUGAN M. THEVAR	M.G. SUBRAMANIAM
DATE: AUGUST 12,2014	MANAGING DIRECTOR	WHOLE TIME DIRECTOR

ANNEXURE A TO THE DIRECTORS’ REPORT:

Statement of particulars of employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 forming part of the Directors Report for the year ended March 31, 2014.

Sl. No.	NAME OF THE EMPLOYEE	DESIGNATION	REMUNERATION (IN RS.)	QUALIFICATION AND EXPERIENCE	DATE OF COMMENCEMENT OF EMPLOYMENT	AGE	LAST EMPLOYMENT HELD
1.	Mr. Murugan M. Thevar	Vice Chairman & Managing Director	Rs. 60,00,000/- (Rupees Sixty Lacs only)	Mr. Murugan M. Thevar is the founder and Promoter of our Company. He has completed his education from Tamilnadu.	Mr. Murugan M. Thevar is the founder and Promoter of our Company	47	N.A.

ANNEXURE B TO THE DIRECTORS’ REPORT:

FORM A

PARTICULARS	2013 -14		2012-13
	Garment	Chemical	Garment	Chemical
(A) POWER AND FUEL CONSUMPTION
1. Electricity
a. Purchased
Units	2,08,784	12,44,106	1,80,998	6,53,670
Total Amount (Rs. In lacs)	27.11	115.42	17.37	51.76
Rate/ Unit Rs.	12.98	9.28	9.59	7.91
b. Own Generation
I) Through Diesel Generator (in Liters)	14,985	6,154	19,098	1,468
II) Through Steam Turbine (Rs. In lacs)	9.74	52.59	9.55	27.20
(B) CONSUMPTION PER UNIT OF PRODUCTION
Product: Ready Made Garments Intermediate Chemicals
Production	76,80,374 Pcs	5,75,298 Kg	56,88,684 Pcs	1,66,215 Kg
Electricity	2,08,784	12,44,106	1,80,998	6,53,670

FORM B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION

The Company has taken initiative in technology up gradation to improve its productivity and reduce manufacturing cost. adopted a Total ‘Quality Management Programme’ to ascertain and impose individual worker responsibility within the labor force, thereby ensuring greater quality and productivity.

	FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
PLACE: NAVI MUMBAI	MURUGAN M. THEVAR	M.G.SUBRAMANIAM
DATE: AUGUST 12,2014	MANAGING DIRECTOR	WHOLE TIME DIRECTOR