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Suryalata Spinning Mills Limited
Your Directors have pleasure in presenting the 35th Annual Report together with the Companys Audited Financial Statements for the financial year ended 31st March, 2018.
The Company has prepared financial results in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013.
The financial performance of the Company during the year ended 31st March, 2018 has been summarized below:
|(Rs. in Lakhs)|
|Particulars||Current Year 2017 - 18||Previous Year 2016 - 17|
|Profit before Interest, Depreciation and Tax||2,715||2,971|
|Profit Before Tax||1,240||1,370|
|Less : Provision for tax||400||425|
|Deferred Tax Liability||51||62|
|Profit After Tax||789||883|
|Add : Profit brought forward from last year||922||1,051|
|Add : Adjustment due to adoption of Ind AS||2||18|
|Amount available for appropriation||1,713||1,952|
|(a) General Reserve||800||1,000|
|(b) Dividend on Equity Shares||19||25|
|(c) Dividend distribution tax||4||5|
|Balance Carried forward to Balance Sheet||890||922|
Details of Operations
The year and review was marked by various structural reforms, the turbulence of sudden note ban coupled with induction of GST with effect from 1st July, 2017. Also continued Global weakness, fluctuations in currency exchange and stress on realizations are notable factors having effect on the operations. Despite all above, with foresighted de-risking strategies and by maintaining the sale volumes, the Company delivered a solid performance in the FY 2017-18. Operations were broadly effected with the following:
Average input (raw material) cost maintained at Rs.90.49 (exclusive of GST) as against Rs.93.31 (inclusive of Excise Duty and Sales Tax) in the previous year. Raw materials - fiber taxable @ 18% and finished product yarn is taxable @ 12% under GST Act, results to inverse duty structure.
Average yarn realization maintained at Rs.139.70 as against Rs.139.30 in the previous year.
Contributions for operations increased to Rs.47.20 per kg. from Rs.44.69 in the previous year. Operational cost increased to Rs.41.23 as against Rs.39.84 in the previous year.
Highlights of the Companys Affairs
The highlights of the Companys performance are as under:
Income from operations for the FY 2017-18 is Rs.33,412 Lakhs as compared to Rs.35,122 Lakhs in the previous year.
Exports are Rs.3,984 Lakhs compared to Rs.4,025 Lakhs in the previous year.
Production quantities is 23,401 MTs as against 24,889 MTs in the previous year as the plant produced finer counts.
Profit Before Tax for the FY 2017-18 is Rs.1,240 Lakhs as compared to Rs.1,370 Lakhs in the previous year.
Profit after Tax is Rs.789 Lakhs as against Rs.883 Lakhs in the previous year.
During the year under review, your company has incurred Rs.459.96 Lakhs towards the capital expenditure. The Company also spent Rs.715.15 Lakhs towards modernization cum expansion project undertaken at Kalwakurthy unit.
Transfer to Reserves
The Company has proposed to transfer Rs.800 Lakhs to the general reserve for the financial year ended 31st March, 2018.
Your Directors have recommended the payment of Dividend on the Cumulative Redeemable Preference Shares as per the terms and conditions ofthe Issue for the Financial Year 201718. The said Dividend will absorb a sum of Rs.41,30,000/-. The corporate dividend tax will be Rs.8,40,771/-.
Also your Directors have recommended the payment of Dividend on Equity Shares at 15% (i.e.) Rs.1.50 per share of Rs.10/- each to Non-promoter equity shareholders of the Company for theyear 2017-18. The dividendwill absorb a sum of Rs.18,97,035/- and the dividend tax will be Rs.3,86,192/-.
During the year under review the Company has not accepted any deposits in pursuance of Chapter V Companies (Acceptance of Deposits) Rules, 2014.
Disclosures under the Companies Act, 2013.
Extract of Annual Return
The Extract of Annual Return prepared in Form MGT-9 as per the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed to the Report as Annexure I.
Number of Meetings of the Board of Directors
Four (4) Board Meetings & Audit Committee Meetings were held during the Financial Year 2017-18 on the below mentioned:
1. 19th May, 2017
2. 4th September, 2017
3. 9th December, 2017
4. 10th February, 2018
The Meetings of the following Committees held on the respective dates as mentioned below:
1. Nomination and Remuneration Committee (NRC)
Meeting 4th September, 2017.
2. Corporate Social Responsibility (CSR) Committee
Meeting 19th May, 2017.
3. Stakeholders Relationship Committee (SRC) Meeting - 10th February, 2018.
For details pertaining to attendance of Directors for the said Meetings, please refer to the Corporate Governance Report, which forms part of this report.
Changes in Share Capital
There was no change in the share capital of the Company during the financial year under review.
Directors Responsibility Statement
Pursuant to the requirements under Section 134 of the Companies Act, 2013 with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirms:
(a) that in the preparation of the annual accounts for the Financial Year ended 31st March, 2018, the applicable accounting standards have been followed;
(b) that 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 as at 31st March, 2018, and Statement of Profit and Loss of the Company for that period;
(c) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the directors have prepared the annual accounts for the Financial year ended 31st March, 2018, on a going concern basis;
(e) that the directors have laid down internal controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
(f) that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;
Statement on Declaration given by Independent Directors under Sub-Section (6) of Section 149 of the Companies Act, 2013.
The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Sub-Section (6) of section 149 of Companies Act, 2013.
Related Party Transactions
All the related party transactions are entered on arms length basis and are in compliance with the applicable provisions and 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 pertaining to Related Party transactions in Form AOC-2 is not required.
The disclosure with respect to transactions with Related Parties in compliance with the applicable Accounting Standards is disclosed in notes forming part of financial statements annexed to this Report.
The Company has adopted a related party transactions policy and the policy as approved by the board is uploaded on the Companys website www.suryalata.com
Particulars of Loans, Guarantees and Investments :
During the year under review, the Company has not granted any loans, neither provided guarantees nor made any investments covered in the register maintained under Section 186 of the Companies Act, 2013.
Particulars of Employees
The details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure H.
Further during the year under review, the list of top ten employees in terms of remuneration drawn as set out in Rule 5(2) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - HH.
Details of Directors and Key Managerial Personnels appointed or resigned during the year:
There was no change in Directors of the Company during the Financial year under review.
In accordance with the provisions of the Companies Act, 2013 and in terms of Articles of Association of the Company, Sri Mahender Kumar Agarwal, Joint Managing Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
Committees of the Board:
Currently the Board has four Committees:
1. The Audit Committee
2. The Nomination and Remuneration Committee
3. The Corporate Social Responsibility Committee
4. The Stakeholders Relationship Committee
The Audit Committee consists of Sri R Surender Reddy, Chairman, Sri R S Agarwal, Member and Sri K R Suresh Reddy, Member. All the recommendations made by the Audit Committee were accepted by the Board.
Nomination and Remuneration Committee.
The Nomination and Remuneration Committee consists of Sri K R Suresh Reddy, Chairman, Sri K. Lakshmikanth Reddy, Member and Sri R S Agarwal, Member.
Policy on Key Managerial Personnels appointment remuneration and other details:
The Company follows a policy on remuneration of directors and other senior managerial personnels. The Policy is recommended by the Nomination and Remuneration Committee and approved by the Board. More details of the same is given in the Corporate Governance Report.
Corporate Social Responsibility Committee.
The Corporate Social Responsibility consists of Sri R Surender Reddy, Chairman, Sri Vithaldas Agarwal, Member and Sri Mahender Kumar Agarwal, Member.
This policy encompasses the Companys philosophy for giving back to society as a corporate citizen and lays down the guidelines and mechanism for undertaking socially useful programs for the welfare & sustainable development of the community at large, is titled as the Suryalata Spinning Mills Limited Corporate Social Responsibility Policy.
The core theme of the Companys CSR policy is giving back to the society from which it draws its resources by extending helping hand to the needy and the under privileged.
Corporate Social Responsibility is the commitment of business to contribute for sustainable economic development. It is the contribution of the corporate sector for philanthropic causes like education, health, water, sanitation, animal welfare, environment and community development. In alignment with vision of the company, through its CSR initiatives, will continue to enhance value creation in the society, through its services, conduct & initiatives, so as to promote sustained growth of the society, in fulfillment of its role as a Socially Responsible Corporate, with environmental concern.
The Report on Corporate Social Responsibility as per Rule 8 of (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure IV.
Stakeholders Relationship Committee.
Stakeholders Relationship Committee consists of Sri K R Suresh Reddy, Chairman, Sri Vithaldas Agarwal, Member and Sri Mahender Kumar Agarwal, Member.
The Scope of the committee shall include considering and resolving the grievances of the security holders of the company which may arise due to any of the reasons cited in the Stakeholders Relationship Committee of the company.
Statutory Auditors :
At the Annual General Meeting (AGM) held on September 4, 2017, M/s. K.S.Rao & Co., Chartered Accountants (ICAI Firm Registration Number 003109S), were appointed as Statutory Auditors of the Company to hold office for a period of five years and there appointment will be subject to the ratification of members at every Annual General Meeting. However, pursuant to the Companies (Amendment) Act, 2018, the ratification of the auditors at every annual general meeting of the company has been dispensed with.
The Auditors Report to the Shareholders for the year under review does not contain any qualification or adverse remark.
The Board has appointed M/s. VCAN & Associates, a firm of practicing Company Secretaries, Hyderabad as the Secretarial Auditors to conduct Secretarial Audit of the Company for the Financial Year ended 31st March, 2018 in compliance with the provisions of Section 204 of the Companies Act, 2013.
The Report of the Secretarial Auditor in Form MR-3 is enclosed as Annexure V to the Report.
Cost Auditor :
The Board of Directors have appointed M/s. Aruna Prasad & Co., Cost Auditors, Chennai for conducting the cost audit of the Company for the financial year 2017-18, in compliance to the provisions of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit Rules,) 2014, on the recommendations made by the Audit Committee and has recommended her remuneration for the ratification of Members at the ensuing Annual General Meeting.
Vigil Mechanism/Whistle Blower Policy:
The Board of Directors of the Company have adopted Whistle Blower Policy. This policy is formulated to provide an opportunity to employees and an avenue to raise concerns and to access in good faith the Audit Committee, to the highest possible standards of ethical, moral and legal business conduct and its commitment to open communication, in case they observe unethical and improper practices or any other wrongful conduct in the Company, to provide necessary safeguards for protection of employees from reprisals or victimization and to prohibit managerial personnel from taking any adverse personnel action against those employees.
The Policy on vigil mechanism/whistle blower policy may be accessed on the Companys website www.surya.la.ta.com
Details of adequacy of internal financial controls.
The company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.
A detailed Report on Corporate Governance, Management Discussion and Analysis Report and the Certificate from the Auditors of your Company regarding compliance of conditions of Corporate Governance as stipulated under Schedule V of SEBI (LODR) Regulations 2015 forms part of this Report.
Change in the Nature of Business.
There has been no change in the nature of business of the Company during the financial year under review.
The details of significant material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.
No significant or material orders were passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future during the year under review
Material changes and Commitments, if any, affecting the financial position of the Company.
There were no material changes and commitments in the business operations of the Company from the Financial Year ended 31st March, 2018 to the date of signing of the Boards Report.
Conservation of energy, technology absorption, foreign exchange earnings and outgo.
The information with respect to Conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Rule 8 of Companies (Accounts) Rules, 2014, are provided in the Annexure VI to this Report.
Risk Management Policy.
The Company has policy for identifying risk and established controls to effectively manage the risk. Further the company has laid down various steps to mitigate the identified risk. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
Declaration with the compliance with the code of conduct by Members of the Board and Senior Management personnel .
The Company has complied with the requirements about code of conduct for Board members and Senior Management Personnel.
The said policy is available on the website of the Company www.suryalata.com
Mechanism for Board Evaluation.
The board of directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the schedule IV of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.
The Directors evaluation was broadly based on the parameters such as understanding of the Companys vision and objective, skills, knowledge and experience, participation and attendance in Board/ Committee meetings; governance and contribution to strategy; interpersonal skills etc.
The Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as evaluation of the working of its Board Committees. A structured questionnaire was prepared covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board Culture, execution and performance of specific duties, obligations and governance.
A meeting of the Independent Directors was also held which reviewed performance of non-independent directors, performance of the board as a whole and performance of the chairman after taking in to account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
Disclosure pertaining to sexual harassment of women at work place.
During the Financial year ended 31st March, 2018 the Company has neither received any complaints nor there are any pending complaints pertaining to sexual harassment.
The Board of Directors places on record its gratitude to IDBI Bank Limited, State Bank of India, IndusInd Bank Limited, Insurance Companies and Government Authorities for their assistance and co-operation. The Board also acknowledges the support of the shareholders of the Company. The Board also places on record their deep sense of appreciation for the committed services of all the employees of the Company.
For and on behalf of the Board
For Suryalata Spinning Mills Limited
|Vithaldas Agarwal||Mahender Kumar Agarwal|
|Managing Director||Joint Managing Director|
|Date : 19th May, 2018|