Today's Top Gainer
Note:Top Gainer - Nifty 50 More
Your Directors are pleased to present their Fifty Fifth Annual Report on the business and operations of the Company and the financial results for the year ended 31st March, 2018.
(in H Lakhs)
|Particulars||2017- 2018||2016- 2017|
|Gross Profit before Interest & Depreciation||6841.13||9732.17|
|Less : Interest||3897.72||3755.47|
|: Depreciation & Amortisation expense||2887.73||3103.18|
|Profit/(Loss) before prior year Adjustment||55.68||2873.52|
|Exceptional Items *||215.84||195.69|
|Profit before tax for the year||271.52||3069.21|
|LESS : Provision for Income Tax for the year||63.44||720.72|
|LESS : Deferred tax liability||(306.97)||397.61|
|Profit / (Loss) after tax||515.05||1950.88|
|ADD : Profit brought forward from last year/ Retained earnings||12390.03||11000.35|
|Dividend on Equity Share Capital||166.72||300.10|
|Corporate Dividend Tax||33.94||61.10|
|Transferred to General Reserve||100.00||200.00|
|Profit transferred to Balance Sheet||12604.42||12390.03|
Exceptional item of the current year includes GST transition input credit availed on Finished Goods and work in process of H153.39 lakhs, Profit on sale of assets of H38.33 lakhs and Excess Provision Written back of H24.12 lakhs (Previous year Net loss on sale of assets H1.59 lacs and Insurance claim for loss of Profit received H197.28 lacs).
During the year under review, we recorded a strong revenue from operation of H764 Crores, despite various challenges faced by us. We experienced a growth of 7.38% and 10% in the revenue of spinning business segment and garment segment respectively. During the year, we experienced an increase in trade receivables by 35.44% which further helped us to increase our current assets by 17.26%. A rise in our total expenditure led to a decrease in our PAT to H515.05 lakhs.
The denim industry is currently plagued by excess capacity adversely affecting the volumes and margins. The power division continued to be affected by the problem of high cross subsidy rates in Maharashtra. Realisations in yarn division have been generally stagnant, while in the case of denim fabric, sales were severely impacted in the domestic market. In export, sales volumes have improved, but the realization has been much lower on account of intense competition. In addition, the raw material rates have been higher. As a result of all these adverse factors, the operations have been badly affected, limiting the net profit after tax to H515 lakhs.
In view of the inadequate profits, the Board regrets its inability to recommend a dividend for the year 2017-18.
During the year under review the Company incurred capital expenditure of H9.96 Crores.
The exports at H159 Crores represents a small increase over that of previous year, though the volume growth has been 19%. The exports have been impacted by weak global markets coupled with 4% reduction in the duty draw back and strengthening of rupee in the previous year, eroding margins considerably. The industrys export competitiveness has also been affected by blockage in GST refunds and slow disbursements in rebates on State levies. As the domestic market has been sluggish, there has been intense competition in export market resulting in eroded margins. However, the Company has succeeded in retaining old customers while increasing its share of business with leading brands like Wrangler, Walmart, etc. The Company also continues its focus on new product development and better delivery in terms of quality and innovation in fabric design.
The denim industry has weathered a rough patch battling the effects of demonetization quickly followed by disruption on account of introduction of GST. It has now to contend with cheaper imports of fabrics & garments from Bangladesh and Sri Lanka. The export competitiveness continues to be a concern. The company is exploring options with new garment factories emerging in Africa and Vietnam regions. The Company is confident of its ability to face the evolving scenario with renewed dedication to improvements in quality and service for customer satisfaction.
Smt. Padmini Agarwal, Whole-time Director (DIN No. 01652449) will retire at the ensuing Annual General Meeting and being eligible, offers herself for reappointment.
Further details about the above Director are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.
Evaluation of the Boards Performance
In compliance with the Companies Act, 2013, and as per the latest Listing Regulations, the annual performance evaluation of the Board and of its Committees was carried out during the year under review. More details on the same are given in the Corporate Governance Report.
Familiarisation Program for Independent Directors
The Company has formulated a familiarisation program for the Independent Directors to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. The details of such program are available in the Companys website www.suryalakshmi.com
Policy on Appointment & Remuneration of Directors
The Company follows a policy on appointment and remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. More details on the same is given in the Corporate Governance Report.
Declaration by Independent Directors
The Company has obtained the declaration from the Independent Directors confirming that they meet the criteria of Independence provided in Section 149(6) of the Companies Act, 2013.
Directors Responsibility Statement
Your Directors state that:
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) the Directors 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;
(d) the Directors had prepared the annual accounts on a going concern basis; and
(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.
(f) 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.
Disclosures Under the Companies Act, 2013
i) Annual Return:
The Companys Annual Return has been hosted on Companys website and can be accessed at the weblink www.suryalakshmi.com
ii) Number of Board Meetings:
The Board of Directors met four times during the year 2017-2018. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.
iii) Changes in Share Capital:
There is no change in the share capital.
iv) Audit Committee:
The Board has constituted the Audit Committee which comprises of Sri R. Surender Reddy, as the Chairman and Sri R.S.Agarwal, Sri Navrang Lal Tibrewal and Sri A Mallikarjun as the members. More details on the committee are given in the Corporate Governance Report.
v) Related Party Transactions:
All the related party transactions are entered into on arms length basis and are in compliance with the applicable provisions of the Companies Act 2013 and the Listing Regulations.
There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. Thus disclosure in Form AOC-2 is not required.
All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseeable and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee and the Board on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The Related Party Transactions Policy as approved by the Board is uploaded on the companys website at the web link: http://www. suryalakshmi.com/policyonrelated.html
vi) There are no frauds reported by the Auditors U/s.143(12) of the Companies Act, 2013.
vii) No Loans/Guarantees / Investments under Section 186 of the Companies Act, 2013 have been made during the year.
viii) There were no significant and material orders passed by the Regulators/ Courts that would impact the going concern status of the Company and its future operations.
As per the latest Listing Regulations on Corporate Governance, Management Discussion and Analysis Report forms part of the Annual Report (Annexure - 5).
The Company has complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under the Listing Regulations. A separate section on corporate governance under the Listing Regulations, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report
(Annexure - 1).
Corporate Social Responsibility Policy
At Suryalakshmi a major concern has been, the sincere effort by the Company to recognize the role played by the Society at large, the environment and its human resources in its sustainability and growth and to strive to discharge its social responsility as a corporate citizen. To this end, the Company has always tried to strike a fine balance of economic, environmental and social commitments.
The sustainable stewardship mantra is not limited to philanthropy, but encompasses holistic community development and other initiatives to strengthen business sustainability.
The core areas for Suryalakshmis Corporate Social Responsibility (CSR) Programmes for this year have been health care, environment and education. Details of the projects / activities implemented by the Company are furnished in a separate Annexure-2 to this report.
The Company constituted a Committee of CSR consisting of Sri L.N.Agarwal, Sri Paritosh K. Agarwal and Sri R.Surender Reddy, with Sri L.N.Agarwal as Chairman.
The Company could not spend the planned amounts on the CSR activities in view of certain pending approvals from the local authorities. Steps are being taken to obtain the same at the earliest and complete the commitments.
The Company has instituted a proper mechanism for identifying and establishing controls to effectively manage di3erent kinds of risks viz., Trend Related Risks, Raw Material Risks, Brand / Technology Risks, Operational Quality Risks, Human Resources Risks, Regulatory Risks and Financial Risks.
A Committee headed by Sri Paritosh Agarwal, Managing Director periodically reviews the risks and take steps to mitigate identified risks.
Whistle Blower Policy
The Company has in place a Whistle Blower policy for vigil mechanism for Directors and employees to report to the management about unethical behaviour, fraud, violation of Companys Code of Conduct. None of the Personnel has been denied access to the audit committee.
Declaration About Compliance with the Code of Conduct by Members of The Board and Sr. Management Personnel.
The Company has complied with the requirements about Code of Conduct for Board members and Sr. Management Personnel.
Disclosure Under the Sexual Harassment of Women at workplace (Prevention, Prohibition And Redressal) Act, 2013.
The Company has in place an Anti Sexual Harrasment Policy in line with the requirements of the Sexual Harrassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trained) are covered under the Policy.
The following is a summary of sexual harassment complaints received and disposed off during each Calender year:
A) No. of Complaints received - NIL b) No. of Complaints disposed off - NIL
I. Auditors and Their Report:-
The Auditors Report to the shareholders for the year under review does not contain any qualification, reservation or adverse remark or disclaimer made.
II. Cost Auditor and Cost Audit Report
As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying our audit of cost records relating to Textile Division every year.
Pursuant to Section 148 of the Companies Act, 2013 the Board of Directors on the recommendation of the Audit Committee, has appointed M/s. Aruna Prasad & Co., Cost Accountants (Firm Registration No. 100883) as the Cost Auditors for the Financial Year 2018-19 and has recommended their remuneration to the shareholders for their ratification at the ensuing Annual General Meeting. M/s. Aruna Prasad Co., Cost Accountants have confirmed their appointment is within the prescribed limits and also certified that they are free from any disqualification.
III. Secretarial Auditor and Secretarial Audit Report
The Board had appointed Mr.K.V.Chalama Reddy, Company Secretary in Whole-time Practice (M.No.
F9268), to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2017-18. The report of the Secretarial Auditor is annexed to this report as Annexure -3.
Internal Control Systems & their adequacy
Your Company has an effective and adequate internal control systems in place commensurate with the size and complexity of the organisation. Internal and operational audit is carried by M/s.K.Vijaya Raghavan & Associates LLP, a reputed firm of Chartered Accountants. The Internal Audit system is designed to meet the statutory requirements as well as ensure proper implementation of management and accounting controls.
The internal auditors submit their report to the Managing Director and also to the Audit Committee, which reviews the report and ensures that the Audit observations are attended by the Management.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
Information on conservation of energy, technology absorption, foreign exchange earnings and out go, as required to be given pursuant to provision of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed here to marked Annexure-4 and forms part of this report.
The Company has not accepted any deposits from the public during the year under review.
Periodic Training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district / state level sports events are regularly undertaken.
An integrated woman focused program trains unskilled women to undertake skilled jobs at its units.
Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act, and the Rules framed thereunder is enclosed as Annexure-6 to the Boards Report.
The Board of Directors are pleased to place on record their appreciation of the cooperation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.
The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.
|for and on behalf of the Board|
|Date : 19th May, 2018||L.N.AGARWAL|
|Place : Secunderabad||Chairman & Managing Director|