Zenith Fibres Ltd Directors Report.
Your Directors are pleased to present the 30th Annual Report along with the Audited Financial Statements for the year ended March 31, 2019.
|(Rs. in Lacs)|
|Revenue from Operations||2984.43||3698.23|
|Profit before Exceptional Item and Tax||258.89||477.69|
|Profit After Tax||218.69||319.39|
DIVIDEND AND RESERVE
With a view on the performance of the Company, the Directors recommend a dividend of 10% for the fiscal year ended on 31st March, 2019. The dividend, if approved by the Members in the ensuing AGM, will absorb about Rs. 47 Lacs including dividend distribution tax of Rs. 8 Lacs out of the distributable profits available, on reduced paid up capital due to buy back of shares by the Company.
During the year under review, your Company has not transferred any sum to the General Reserve.
The Company achieved total revenue of Rs. 3238.86 Lacs as compared to Rs.3962.68 Lacs last year. Profit before tax is Rs.258.89 Lacs and profit after tax stands at Rs. 218.69 Lacs during the year under review as against Rs. 477.69 Lacs andRs.319.39 Lacs respectively in the previous year.
The operations of the Company during the year declined much below expectations as compared to the previous year due to reduced off take of finished products due to various factors both domestic and international.
The Company plant located at Baroda, Gujarat is operating satisfactorily.
The paid up capital as on 31st March, 2019 was Rs. 442.23 Lacs consisting of 44,22,346 numbers of Equity Shares ofRs. 10/-each. During the year under review, the Company has not issued any bonus shares, equity shares neither any right shares with differential voting rights etc., nor granted any stock options or sweat equity.
However, the Board had approved offer for partial Buyback of fully paid equity shares of the Company in its meeting held on 30th March, 2019 and after due completion of the process, the Paid Up Capital of the Company stands reduced to Rs. 394.41 Lacs comprising of 3944136number of Equity shares of face value Rs. 10/- each.
APPOINTMENT/REAPPOINTMENT/CESSATION OF DIRECTORS/ KMP
Shri. Rajeev Rungta (DIN:00122221) Resigned w.e.f 30.03.2019 and Shri. Abhishake Rungta (DIN:00053730) Resigned w.e.f 24.05.2019
Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the Independent Directors have carried out an evaluation of the Board as well as evaluation of the working of its Audit and Nomination & Remuneration Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
SUBSIDIARY / JOINT VENTURE / ASSOCIATE COMPANY
Please refer Form AOC 1 at "Annexure A".
COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Board has on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors and KMP and also decide their remuneration. The Remuneration Policy is spelt out in the Corporate Governance Report.
The Company continued to face strong headwinds with reduced operations. Continuous endeavor is in place by the management to evaluate and reduce expenses of the Company wherever practical for permanent long term financial benefits. The management is continuing to evaluate further prudent optimal financial deployment of funds for better contribution towards profitability of the Company. The overall generation was reduced due to decreased sales. The Company has in the past kept surplus funds invested prudently, without any undue risk so as to ensure safety and liquidity of the funds.
The Company is committed to maintain the highest standards of Corporate Governance and adhere to all requirements as set out by law. The report on Corporate Governance as stipulated under SEBI (LODR) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (CSR) Committee has formulated and recommended to the Board, a CSR Policy indicating the activities to be undertaken by the Company, which has been approved by the Board and hosted on the Companys website. However, as per the Companies (Amendment) Act, 2017 effective from 19.09.2018 CSR activity during the year is not mandatory upon the Company.
The Company has not accepted any deposit within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES, SECURITIES OR INVESTMENTS
The Company has not given any guarantees or securities covered under the provisions of Section 186 of the Companies Act, 2013. However, the aggregate of loans and advances granted, as also investments are within the limits of Section 186 of the Act. These have been disclosed in the Financial Statements.
DECLARATION GIVEN BY INDEPENDENT DIRECTORS
The Company has received declaration from all Independent Directors of the Company to the effect that they meet the criteria of independence as stipulated u/s 149(6) of the Act.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) they have 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 of the Company for the year under review; c) they 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) they have prepared the annual accounts on a going concern basis; e) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; f) they have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF CONTRACTS OR ARRANGMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188 OF THE COMPANIES ACT, 2013
There are no materially significant related party transactions made by the company with Promoters, KMP or other designated persons during the year, which may have potential conflict with interest of the Company at large. However, detailed transactions are disclosed under notes of financial statements.
AUDIT COMMITTEE RECOMMENDATIONS
During the year, the Board has accepted all recommendations of Audit Committee and accordingly no disclosure is required to be made in respect of any non-acceptance of recommendation.
a) Independent Auditor
The Independent Auditor M/s. Surendra Modiani & Associates, Charted Accountant having F.R.N.126307W were appointed as Independent Auditors of the Company in the 28th Annual General Meeting of the Company for a period of five consecutive years, based upon the declaration of their eligibility, consent and terms of engagement. The Independent Auditors have not reported any incident of fraud to the Audit Committee of the Company for Financial Year 2018-19. b) Internal Auditor The Board of Directors has appointed M/s. Keyur Patel & Company, as Internal Auditors of the Company.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in form MGT-9 is placed on Companys website.
EXPLANATION/COMMENTS ON QUALIFICATION/ RESERVATION/ADVERSE REMARK/DISCLAIMER BY THE AUDITORS, IF ANY
Since there are no qualification/reservation/ adverse remark/ disclaimer either by the Auditors or Secretarial Auditors in their respective report, no explanation/comment is offered.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all Employees in the course of day to day business operations of the company. The details of the Code are available on the website of the Company. All the Board Members and the Senior Management Personnel have confirmed compliance with the Code. All KMP have been given appropriate briefing in this regard.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has a Vigil Mechanism/Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading pursuant to SEBI (Prohibition & Insider Trading) Regulations, 2015 with a view to regulate trading in securities by the Directors and Designated Employees of the Company. The details of the Code are available on the website of the Company. All Directors and the Designated Employees have confirmed compliance with the Code.
MEETINGS OF THE BOARD
Five meetings of the Board of Directors were held during the year. For details, please refer the Corporate Governance section of this Report.
Pursuant to provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed Dhruvalkumar D. Baladha, Company Secretary in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended 31st March, 2019 is annexed herewith marked as "Annexure B" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
The Company continuously keeps a watch regarding any possible risk threatening the existence of the Company and ensures necessary mitigation of the same.
DETAILS OF SIGNIFICANT & MATERIAL ORDERS IMPACTING THE GOING CONCERN STATUS/COMPANYS OPERATIONS IN FUTURE
No significant/material orders have been passed by the regulators or courts or tribunals impacting the going concern status of the Company or companys operations in future.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 the company has proper system to receive the complaint and constituted Internal Complaints Committee. During the year, no complaint was received from any employee.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is as per "Annexure C" to this Report.
Information required under Section 197 read with rules 5(2)(i) & 5(3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is not attached. Members interested in inspecting these particulars, may do so at the Registered Office of the Company from 14 days before and upto one day before of the said AGM during normal business hours on working days. None of the employees was in receipt of remuneration exceeding Rs. 8,50,000/- p.m. or Rs. 1,02,00,000/- p.a.
MANAGEMEMNT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report for the year under review as stipulated under Regulations 34 and Schedule V of the SEBI (LODR) Regulations, 2015 is as under:
1. Industry Structure and Development
During the year under review, there was no significant improvement in the off take of Polypropylene Fibre in the country. However, not only does the potential loom large, there is certain movement in this direction which augurs well for the future. The management hopes the same will bear fruit at the earliest.
2. Segment wise Operational Performance
The Company operates only in one segment viz manufacturing of Manmade Fibres.
Performances in terms of profits are commensurate to the production and sales and routine increase in costs:
|(Quantity in MT)|
|(Rs. in Lacs)|
|Profit Before Tax||258.89||477.69|
|Profit After Tax||218.69||319.39|
Exports and sales of Yarn were 383.65 (599.21MT) and 478.54 (681MT) respectively.
3. Quality & Future Outlook
The outlook for the Polypropylene Staple Fibre is encouraging overall. Efforts are continually underway for growth in the international market whereby substantial potential exists. Product quality of the company is in consonance with international standards and all efforts are made to adhere to the same.
4. Threats and Concerns
The Company is committed to manufacture and deliver quality products strictly as per requirement of the customer. Constant feedback from the customers are received and all efforts made for continuous improvement in process performance and product quality, wherever required. With established production base of almost three decades, the Company is in a position to maintain production and supply of quality products smoothly. This testifies to the fact that there is virtually nil rejections of the Companys products. The Company has benefit of its long standing with its customers and can match the prices suitably as per pricing policy as and when required. For the above reasons, no major threat is overseen and the Company is confident to face any threat from the competition. The Company is also maintaining healthy liquidity to meet any unforeseen exigencies.
5. Internal Control Systems and their adequacy
The Company has appropriate Internal Control Systems for business processes, financial reporting & controls, compliance with applicable laws, regulations etc. The Company has appointed statutory auditors to evaluate Internal Control System. Regular internal audits and checks ensure that system and procedures are continuously improved. The Audit Committee reviews the adequacy and effectiveness of Internal Control Systems and suggests ways of further strengthening them from time to time.
6. Human Resources and Industrial Relations
The Company has adequate and qualified human resources and enjoys cordial relations with its employees. Numbers of employees were 90 as on 31st March, 2019. The Board of Directors wishes to place on record its appreciation for the contribution made by all the employees at all levels during the year.
7. Cautionary Statement
Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis may constitute forward looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumption, the actual results might differ.
Industrial relations remained cordial throughout the year.
CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION AS WELL AS FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has not imported any foreign technology and hence, the company does not have any information to offer in respect of Technology Absorption. However, information in respect of Conservation of Energy & Foreign Exchange Earnings and outgo is as per "Annexure-D".
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, IF ANY, DURING THE PERIOD FROM 31ST MARCH, 2019 TO THE
DATE OF THE REPORT
The Board had passed Resolution in its meeting held on 30th March 2019 for Buying Back of upto 5,50,000 Fully paid Equity Shares of the Company at Rs. 55/- Per Share. Based upon valid shares tendered by the members, Companys Paid up Equity share capital stands reduced to 3944136 Equity Share of Rs. 10/-each
The Company is in the process of acquiring a Wind Turbine Generator of 1.5 MW on captive consumption basis in the state of Gujarat. Accordingly, necessary amendments have been made to the Main Object clause of the Memorandum of the Company.
The Company would like to thank all the Stakeholders, Bankers, Employees, including inter alia Suppliers, Vendors and Investors and also place on record its appreciation to all the valuable customers for their consistent unstinted support throughout the year.
|On behalf of the Board of Directors|
|Date: 14/08/2019||Executive Chairman|