DIRECTORS REPORT Dear Shareholders, Your Directors have pleasure in presenting their 9th Annual Report on the Business and operations together with Audited Annual accounts of your Company for the financial year ended 31st March, 2016. Operations: Your Company's Revenue stands at Rs. 15242.56Lakhs (as against Rs. 14916.48 Lakhs in FY 2014-15), registering increase of 2% over the previous year. Profit before depreciation, interest and taxes stood at Rs. 1324.66 Lakhs (as against Rs. 1096.33 Lakhs in FY 2014-15. Net profit attributable to the shareholders at Rs. 297.07 Lakhs as against Rs. 181.06 Lakhs in FY 2014-15. During the year textile industry has recovered from earlier years' recessionary trend and performed well on an average. Exports: The export turnover including merchant export of your company during the year was Rs. 3020.09 Lakhs (as against Rs. 2060.81 Lakhs, registering a 46.55% increase over the previous year. Your Company has been exporting yarn to various countries like Brazil, USA, Singapore, Argentina, Portugal and continues to explore new markets to improve performance. This trend of increase in exports is expected to continue in the coming years. Future Outlook: The home-textiles and garment segments are reflecting sound growth both in the domestic and international markets due to good demand of apparels. There is a substantial scope for further growth in these segments. Your Company believes that the competition in the emerging markets will be met by developing production systems based on cost efficiency, high productivity, quality assurance, etc.The per capita polyester consumption is found to be 2.5 kg compared to the world average of 6.8 kg. Polyester consumption also witnessed a marginal increase of 2% in the overall domestic fiber consumption stats, and was seen eating into the share of other man-made fibres. Being dubbed as the poor man's cloth, this trend is expected to continue with the growing population and will exponentially increase with the increase in the GDP growth. The new majoritarian government will play an incrementally crucial role in bringing back consumer confidence in the economy. We expect this increase in consumer confidence to bring about an upsurge in domestic demand. Though, it might lead to an appreciated rupee which would hurt us in the short-term, we do expect that a stable - growth oriented government, with a stable currency are going to have a positive impact on the industry as a whole. We expect the new government bringing about favorable reforms for the textile sectors. We aim to capitalize on these future reforms by having a strong liquidity position, so we can capitalize on each and every opportunity the market generates by drastically expanding and diversifying our product base as to cater a larger audience. We aim to use retained earnings, preferred beliefs that the competition in the emerging markets will be met by improving our systematic efficiency, which will lead to a better cost rationalization, higher productivity, quality assurance and product differentiation. The economy is in the stage of prosperity and the Company expects good demand for its products in domestic as well as international markets. Major markets for Indian Textile and Clothing (T & C) export are the USA and EU and they have recovered from the recession of the past years. The domestic market is also on the path of healthy growth because of the fact that few manufacturing facilities operating abroad are slowing down due to recession. Expansion Plan & capital expenditure The company has already installed value addition equipments, aims to fulfill the demand of export market and enhance profitability, with a capital expenditure of 10 cr. It plans to fund this capex by using an ecclectic mix of promoter's equity, retained earnings and debt to ensure substainable growth for the company in the future. 2. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS There are no significant material changes and commitments affecting financial position of the company between 31st March, 2016 and the date of Board's Report. 3. CHANGE IN THE NATURE OF BUSINESS, IF ANY The company has not changed the nature of business during the financial year under review. 4. DIVIDEND Your Directors have recommended payment of dividend on 8% cumulative Redeemable preference shares as per the terms and conditions of the issue. The dividend will absorbasumof Rs. 61.84lakhs. Your Directors are pleased to recommend a dividend of 10% on the Equity Share Capital of the Company for the financial year ended 31st March, 2016. The dividend will absorb a sum of Rs. 29, 32 lakhs . The Corporate dividend tax levied will be Rs. 18.56 lakhs. 5. TRANSFER TO RESERVES Your Company proposes to transfer Rs. 0.50 lakhs to General Reserve account of the company for the year. 6. BOARD MEETINGS Eight (08) Board Meetings were held during the year viz. 08-May-2015, 28-May-2015, 31-July-2015, 13-Aug-2015, 18-Aug-2015, 28-Aug-2015,02-Jan-2016,13-Jan- 2016.The attendance of Directors for above mentioned meetings is disclosed in Corporate Governance Report. 7. DIRECTORS AND KEY MANAGERIAL PERSONS Retirement By Rotation Pursuant to provisions of the Companies Act, 2013, Mr. Mayank Agarwal (DIN: 02749089), Whole Time Director will retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment. Appointment The Boards of Directors has appointed Mr. Sushil Kapadia as Additional director of the Company at their meeting held on 28th May, 2016. Re- appointment During the year under review, the members in the 8th Annual General Meeting held on 25th September,2015 approved the appointment of Mr. Manish Kumar Gupta (DIN: 07096129), Non-Executive Director as Independent Director as per the provisions of Section 149 sub-section (10) who are not liable to retire by rotation with effect from 25th September, 2015 to 24th September, 2020. Resignation During the year under review Mr. Pundlik Sampatrao Thakare has been resigned from his directorship of the Company with effect from 5th May, 2016 due to sudden death and your company has complied all necessary compliances in this regard. Mr. Kailash Purohit was appointed as the Company Secretary and Compliance Officer of the Company with effect from 2nd January, 2016 and resigned from the post with effect from 12th May, 2016. 8. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS The Company has received declarations from all the Independent Directors of the Company as per the provisions of Section 149 subsection (7) of the Companies Act, 2013, confirming that they meet the criteria of independence as prescribed both under Section 149 sub-section (6) of the Companies Act, 2013 read with the Rule 4 of Companies (Appointment and Qualification of Directors) Rule, 2014 and the SEBI (Listing Obligations and Disclosures Requirement) Regulations, 2015. 9. 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 2015-16 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.suryaamba.com 10. CHANGES IN SHARE CAPITAL The Paid up Share Capital as at March 31, 2016 stood at f 10,66,19,440/- During the year under review, your company has not issued shares with differential voting rights nor has granted any stock options or sweat Equity Share. 11. COMPOSITION OF COMMITTEES Audit Committee The Audit committee comprises Mr. Amit Goela (Chairman), Mrs. Seema Rani Agarwal, Mr. Sushil Kapadia as other members. All the recommendations made by the Audit Committee were accepted by the Board. Stakeholder Relationship Committee The Stakeholders relationship committee comprises Mr. Amit Goela (Chairman), Mrs. Seema Rani Agarwal, Mr. Sushil Kapadia as other members. Nomination & remuneration Committee The Nomination & remuneration Committee comprises Mr. Amit Goela (Chairman), Mr. Manish Kumar Gupta, Mr. Sushil Kapadia as other members. The Company has a Nomination and Remuneration Committee (NRC) and the details of the Committee and the terms of reference of the NRC Charter are set out in the Corporate Governance Report, which is part of the Board's Report. The Company's Policy for selection and appointment of Directors and their remuneration is based on its NRC policy which, inter alia, deals with the manner of selection of the Board of Directors and such other matters as provided under section 178(3) of the Act and SEBI Listing Regulations. This Policy is accordingly derived from the said Charter and the scope of NRC is set out in the Corporate Governance Report. The Company has a Nomination and Remuneration Committee (NRC) and the details of the Committee The Company's shareholders may refer the Company's website for the detailed Nomination & Remuneration Policy of the Company on the appointment and remuneration of Directors including criteria for determining qualifications, positive attributes, independence of a Director; and other matters provided under sub-section (3) of section 178. Corporate Social Responsibility (CSR) Committee The company has not crossed the threshold limit as prescribed under section 135 of the Companies Act, 2013, hence has not been constituted the Corporate Social Responsibility Committee for the year. 12. VIGIL MECHANISM In compliance with requirements under Section 177 of the Companies Act, 2013, your Company being a Listed Company has established a Vigil (Whistle Blower) Mechanism and formulated a Policy in order to provide a framework for responsible and secure whistle blowing/vigil mechanism. The Vigil (Whistle Blower) Mechanism aims to provide a channel to the Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct policy. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations and in order to maintain these standards, the Company encourages its employees who have genuine concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. The mechanism provides for adequate safeguards against victimization of Directors and employees to avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. This neither releases employees from their duty of confidentiality in the course of their work nor can it be used as a route for raising malicious or unfounded allegations about a personal situation. The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Task Force or to the Chairman of the Audit Committee. 13. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Sectionl34 (5) of the Companies Act, 2013, the Directors confirm that: a. in the preparation of the annual accounts for the year ended 31st March, 2016 the applicable accounting standards had been followed along with proper explanation relating to material departures; b. 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 at the end of the financial year 31st March, 2016 and of the loss of the company for that period. c. the Directors 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. the Directors have prepared the annual accounts for the period ended 31st March, 2016 on a going concern basis. e. 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. 14. SUBSIDIARIES , JOINT VENTURES AND ASSOCIATE COMPANIES Your Company has no subsidiaries, joint ventures and associate companies during the year. 15. EXTRACT OF ANNUAL RETURN As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in Form MGT-9 as a part of this Annual Report is in ANNEXURE I. 16. 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 are In terms of the provisions of Rule (5) (2) of the Companies (Appointment And Remuneration Of Managerial Personnel) Rules, 2014. 17. AUDITORS Statutory Auditor M/s S. Venkatadri & Co., Chartered Accountants, Hyderabad Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their reappointment, if made, would be within the prescribed limits under Section 139 of the Companies Act and that they are not disqualified for reappointment. Auditor's Report The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. Cost Auditor The Board of Directors have appointed M/s. G. R. Paliwal & Co., Cost Auditors, Nagpur for conducting the cost audit of the Company for the financial year 2016-17, 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 his remuneration for the ratification of Members at the ensuing annual general meeting. Secretarial Auditor The Board has appointed Ms. Aarju Agrawal, Practicing Company Secretary, to conduct Secretarial Audit of the Company for the financial year ended 31st March, 2016 in compliance with the provisions of Section 204 of the Companies Act, 2013. The report of the Secretarial Audit Report in Form MR-3 is enclosed as Annexure III to this Report. Replies to the observations made in the Secretarial Audit Report The Board of Directors of the Company have appointed Ms. Aarju Agrawal, Practicing Company Secretary to conduct the Secretarial Audit for the financial year ended March 31, 2016 is provided in the Annual Report. The Secretarial Audit Report confirms that the company has complied with the applicable provision of the Companies Act 2013, The Securities Contracts ( Regulation )Act 1956, Depositories Act 1996, The Foreign Exchange Management Act 1999, to the extent applicable to overseas Direct Investment (ODI) Foreign Direct Investment & External Commercial Borrowing all the regulations and guidelines of SEBI (SAST) Regulation 2011, The SEBI ( Prohibition of Insider Trading) Regulation 1992, The SEBI (Issue of Capital and Disclosure requirement regulation 2009, Listing Agreement with the stock Exchange (Effective upto 30th November, 2015) and SEBI Listing Regulations, 2015 (Effective from 1st December, 2015) & the Memorandum and Articles of the Company. The following explanation of the secretarial audit report is as under: In view of the Secretarial Audit Report, the Company has adequate systems in place in the company for the Compliance of other laws; as regards the non-compliances mentioned in the Secretarial Audit Report in respect of the following: a. Disclosure regarding unpaid and unclaimed dividend required pursuant to provision of Section 205A and 205C of the Companies Act, 1956 ( Section 124 and 125 of the Companies Act, 2013) and Rule 3 of IEPF Rules, 2012 As the Form INV-5 is not available in the MCA Portal, the Company is unable to file the form, however the Company has already taken the steps for gathering/reconciling/preparing the data for the unpaid and unclaimed dividend. As soon as the Form gets available in the MCA portal the Company will promptly file the form in order to complete the compliance. b. The Company has duly filed forms with Ministry of Corporate Affairs (MCA) within the stipulated time allowed under the Companies Act, 2013 except some forms required pursuant to provisions of Companies Act, 2013 and rules made there under. The Company will take due care that these timelines allowed to file the E-forms to ROC under the Companies Act, 2013 should be complied with and the company assure that delay in filing will not arise in future. c. The Company has received notice from SEBI in respect of non-redressal of Investor Grievances posted on SEBI Complaints Redress System ("SCORES") and the Company is duly endeavoring to resolve and to take necessary steps in this regard. The Company has duly replied to the Notice received from SEBI within the stipulated timeline and the Company has already taken necessary steps to redress the grievances of investors. The Company is accessing the "SCORES" on regular basis so that no Investor grievances remain unsolved and endeavouring to dispose off the complaints on priority basis 18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required under the Rule 8 of the Companies (Accounts) Rules, 2014 is annexed and marked ANNEXURE IV and forms part of this Report. 19. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS: The Company has effective 'internal financial controls' that ensure an orderly and efficient conduct of its business, including adherence to Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. 20. 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. 21. MATERIAL CHANGES AND COMMITMENTS , IF ANY, AF FECTING 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, 2016 to the date of signing of the Director's Report 22. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED Your Company has not given any loan or guarantee to any person or body corporate nor invested in any body corporate during the Financial Year under review pursuant to Section 186 of Companies Act, 2013 23. RISK MANAGEMENT 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. 24. CORPORATE SOCIAL RESPONSIBILITY As an evolved and concerned corporate citizen, your company believes that corporate social responsibility (CSR) initiatives are a way to pay back societal debts and obligations. We do not see CSR as charity; nor even as a responsibility; but as an opportunity to change and help the society. Our CSR activities are conceived to bridge gaps in society and help transform communities around our workplace At Suryaamba, CSR activities are undertaken in various manners such as providing donations for social and cultural activities, conducting eye check-up camp, providing cold drinking water during summer season for travelers near to the factory premises. 25. FORMAL ANNUAL EVALUATION Your Company has devised a Policy selection of Directors, determining independence of Directors and for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non executive directors and executive directors. 26. 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 Sr. Management Personnel. The said policy is available on the website of the Company. 27. MECHANISM FOR BOARD EVALUATION As per the requirements of SEBI (LODR) Regulations, 2015 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. The 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 ofthe 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 time lines of flow of information between the Company management and Board. 28. CORPORATE GOVERNANCE A detailed Report on Corporate Governance in Annexure V, Management Discussion and Analysis Report and the Certificate from the Auditors of your Company regarding compliance of conditions of Corporate Governance as stipulated under Regulation 34 of the SEBI (LODR) Regulations, 2015, forms part of this Report. 29. DISCLOSURE PERTAINING TO SEXUAL HARASSMENT OF WOMEN AT WORKPLACE The Company is an equal opportunity employer and believes in providing opportunity and key positions to women professionals. It has been the endeavor of the Company to encourage women professionals by creating proper policies to tackle issues relating to safe and proper working conditions for them and create and maintain a healthy and conducive work environment, free of discrimination. This includes discrimination on any basis, including gender and any form of sexual harassment. We feels proud to intimate that there were no complaints reported under the provisions Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report 4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries as the company has no subsidiaries. 5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 30. SECRETARIAL STANDARDS Your company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India. ACKNOWLEDGMENT The Board of Directors are pleased to place on record their appreciation of the co-operation and support extended by State Bank of India, Axis Bank Ltd., various State and Central Government agencies, Stock Exchange and other Agencies. The Board would like to thank the Company's shareholders, Customers, Suppliers for the support and the confidence, which they have reposed in its management. The Board also wishes to place on record its appreciation of the valuable services rendered by all the employees of the company. For and on behalf of the Board of Directors For Suryaamba Spinning Mills Ltd Virender Kumar Agarwal (Managing Director) (DIN : 00013314) Seema Rani Agarwal (Jt. Managing Director) (DIN: 0143026) Place : Nagpur Date : 10-June-2016 |