SURYALATA SPINNING MILLS LIMI DIRECTORS' REPORT To The Members, Your Directors have pleasure in presenting the 32nd Annual Report together with the Company's Audited Financial Statements for the financial year ended 31st March, 2015. Details of operations Despite subdued market conditions and uncertain global environment, the Company enabled to increase turnover and maintained the profits in the Financial Year 2014-15. Highlights of the Company's Affairs The highlights of the Company's performance are as under: • Revenue from operations increased by 3.50% to Rs. 37694 lakhs, compared to Rs. 36418 lakhs in the previous year. • Exports decreased by 13.45 % to Rs. 10567 lakhs, compared to Rs. 12209 Lakhs in the previous year. • Production quantities increased by 11.25% to 24151 MTs as against 21708 MTs in previous year. • Profit Before Tax increased by 42.53% to f 1917 Lakhs, compared to f 1345 Lakhs in previous year. • Profit After Tax increased by 42.94% to Rs. 1265 Lakhs, compared to Rs. 885 Lakhs in previous year. • Cash Profits increased by 24.44% to Rs. 2785 Lakhs, compared to Rs. 2238 lakhs in previous year. Capital expenditure During the year under review, your company has incurred Rs. 1378 Lakhs towards the capital expenditure. Future outlook A note on the future outlook of your Company is presented under Management Discussion and Analysis, which forms part of this Report. Transfer to Reserves The Company has proposed to transfer f 1,000 lakhs to the general reserve for the financial year ended 31st March, 2015. Dividends Your Directors have recommended the payment of Dividend on the Cumulative Redeemable Preference Shares as per the terms and conditions of the Issue for the Financial Year 2014-15. The said Dividend will absorb a sum of Rs. Rs.53,66,028/-. The corporate dividend tax will be Rs. 10,73,069/-. Also your Directors have recommended the payment of Dividend on the Equity Shares at 18% (i.e.) f 1.80 per share of Rs. 10/- each for the year 2014-15. The dividend will absorb a sum of Rs. Rs. 76,80,600/- and the dividend tax will be Rs. 15,35,924/-. Deposits During the year under review, the Company has repaid the existing deposits of Rs.1,50,00,000/-(Rupees One Crore Fifty Lakhs Only) in compliance with Section 74 of the Companies Act, 2013. Further the Company has not accepted any deposits during the Financial Year 2014-15 in pursuance of Chapter V Companies (Acceptance of Deposits) Rules, 2014. Subsidiaries YP Solar Power Private Limited has been incorporated as a Wholly Owned Subsidiary of the Company vide CIN U40108TG2015PTC097746 w.e.f. 23rd February, 2015 to generate power for captive consumption purpose. The Company is yet to commence its business activities. 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 as Annexure I to this Report. Number of Meetings of the Board of Directors Five Board Meetings were held during the Financial Year 2014-15. The dates of the board meetings are as below : 12th May, 2014, 6th August, 2014, 6th November, 2014, 5th February, 2015 and 14th March, 2015. Changes in share capital During the year under review, your company has made an issue and allotment of 6,00,000 Equity shares of face value of f 10/- each on preferential basis at a premium of f 120/- each to the promoters & promoters group of the Company. Consequently the paid up equity share capital of the Company has increased from Rs.3,66,70,000 to Rs. 4,26,70,000. Further the company has also redeemed the 5,86,484 Cumulative Redeemable Preference Shares of f 100/- each at par held by promoters of the company. Consequently the paid up preference share capital of the company has decreased from f 7,36,48,400 to Rs. 1,50,00,000. 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, 2015, 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, 2015, and Profit and Loss Statement 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, 2015, 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 During the year under review, the Company has not entered into any related party transactions pursuant to section 188 of the Company's Act, 2013. Further there are no materially significant related party transactions made by the Company during the Financial Year 2014-15 which may have the potential conflict with the interest of the company at large. Accordingly, there are no transactions that are required to be reported in Form AOC-2 and as such doesn't form part of the Report. The Company has adopted a Related Party Transactions policy and the policy as approved by the board is uploaded on the Company's website www.suryalata.com Particulars of Loans, Guarantees and Investments During the year under review the company has invested f 1,00,000/- (Rupees one Lakh only) in the form of subscription to the shares of the Company YP Solar Power Private Limited incorporated as wholly owned subsidiary of the company. Further the Company has not granted any Loans / gave guarantees to any person or body Corporate covered 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 enclosed as Annexure - II. Further during the year under review, none of the employees are receiving remuneration as set out in Rule (5) (2) of the Companies (Appointment And Remuneration of Managerial Personnel) Rules, 2014. Directors The Board has deeply saddened to inform the Members of the Company about untimely demise of Sri Yash Agarwal (27 Years), Executive Director of the Company accompanying with his spouse Smt. Pankhuri Agarwal (26 Years) in the tragic accident at Thailand, Bangkok on 5th October, 2014. Words seems inadequate to express the sadness indeed its great loss to the Company and to the family of Promoters of the Company. Later to the above tragedy, and to shoulder the responsibilities of Sri Yash Agarwal, Executive Director (DIN 03168109) the Board has appointed Smt. Madhavi Agarwal as Executive Director of the Company with the designation Whole-Time Director at their meeting held on 6th November, 2014 subject to the approval of the Members in the ensuing Annual General Meeting of the Company. 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. Board of Directors recommends the above re-appointment brief profile of directors is given in the Corporate Governance report attached to this report. Details of Directors or Key Managerial Personnel who were appointed or have resigned during the year. Sri K. Nageswara Rao, has been designated as Chief Financial Officer (CFO) of the Company pursuant to the provisions of Section 203 of the Companies Act, 2013 in the Board Meeting of the Company held on 6th August, 2014. The Board of Directors have also appointed Smt. Prameela Rani M as Company Secretary of the Company at their meeting held on 6th November, 2014, pursuant to the provisions of Section 203 of the Companies Act, 2013. Committees of the Board Currently the Board has four Committees : 1. Audit Committee 2. Nomination and Remuneration Committee 3. Corporate Social Responsibility Committee 4. Stakeholders Relationship committee Audit 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 Lakshmikanth Reddy, Member and Sri R S Agarwal, Member. The Company follows a policy on remuneration of directors and other senior managerial personnel's. 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 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 Company's philosophy for giving back to society as a corporate citizen and lays down the guidelines and mechanism for undertaking socially useful programmes for the welfare and sustainable development of the community at large, is titled as the Suryalata Spinning Mills Limited Corporate Social Responsibility Policy. The core theme of the Company's CSR policy is giving back to the society from which it draws its resources by extending helping hand to the needy and the underprivileged. 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, environment and community welfare. 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 prepared and the same is enclosed as Annexure III to this Report. Stake Holders Relationship Committee Stake holders 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 Stake holders relationship Committee of the company. Auditors The Auditors, M/s. Brahmayya & Co., Chartered Accountants, (ICAI Firm Registration No 000513S) Hyderabad, Statutory Auditors of the Company, retires at the ensuing Annual General meeting and are eligible for re-appointment pursuant to section 139 of the Companies' Act, 2013. Auditor's Report The Auditor's Report to the Shareholders for the year under review does not contain any qualification or adverse remark. The Audit Committee of the Company has reviewed the audited financial statements for the year under review at its meeting held on 25th May, 2015 and recommended the same for the approval of the Board. Secretarial Auditor The Board has appointed M/s R. & A Associates, a firm of practicing Company Secretaries, Hyderabad as the Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial year ended 31st March, 2015 in compliance with the provisions of Section 204 of the Companies Act, 2013. The report of the Secretarial Audit Report by M/s. R & A Associates, in Form MR-3 is enclosed as as Annexure IV to this Report. Replies to the observations made in the Secretarial Audit Report Sri K Nageswara Rao was acting as General Manager - Finance of the Company and keeping in view of his expertise and services rendered to the Company the board has designated Sri K Nageswara Rao as Chief Financial Officer of the Company at their meeting held on 6th August, 2014. He is Member of institute of Chartered Accountants of India (ICAI). The Company was in search of suitable person for the position of Company Secretary and has appointed Smt. Prameela Rani M as Company Secretary of the Company at the meeting of Board of Directors held on 6th November, 2014. The Board is reforming the existing internal control systems of the Company in order to ensure foremost compliance of the applicable rules, laws and regulations. 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 2015-16, 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. Further please note that pursuant to the Companies (Cost Records & Audit) Rules, 2014, the appointment of Cost Auditor for the Financial Year 2014-15 was not applicable to the Company. 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. 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. Change in the Nature of Business During the year under review there has been no change in the nature of business of the Company The details of significant material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future No significant or material orders were passed by the regulators or courts or tribunals impacting the going concern status and company's 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, 2015 to the date of signing of the Director's 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 Vto this Report. Corporate Governance A detailed Report on Corporate Governance in Annexure VI, Management Discussion and Analysis Report and the Certificate from the Auditors of your Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, forms part of 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. 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. Mechanism for Board Evaluation Clause 49 of the Listing Agreement states that the board shall monitor and review the board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The Directors evaluation was broadly based on the parameters such as understanding of the Company's 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 Board's 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 the performance of Non-Independent Directors, Chairman and the quality, quantity and timelines of flow of information between the Company management and Board. Disclosure pertaining to sexual harassment of women at workplace During the Financial year ended 31st March, 2015 the Company has neither received any complaints nor there are any pending complaints pertaining to sexual harassment. Acknowledgments The Board of Directors places on record its gratitude to IDBI Bank Limited, State Bank of India, Insurance Companies and Government Authorities for their assistance and cooperation. 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 R. Surender Reddy Chairman DIN 00083972 Place : Secunderabad Date : 12th August, 2015 |