DIRECTORS' REPORT Dear Shareholders, 1. We have pleasure in presenting the 36th Annual Report on the business and operations of Company and Financial Results for the year ended 31st March, 2015. 2. OPERATIONS The Company achieved Total Revenue of Rs. 10787.92 Lakhs (including Other Income of Rs. 152.83 lakhs) and achieved profit after tax of Rs. 29.04 Lakhs for the Year ended 31st March, 2015 as against Total Revenue of Rs. 11443.70 lakhs (including Other Income of Rs. 150.63 lakhs) and profit after tax of Rs. 9.71 Lakhs for the Year ended 3Ist March, 2014. Non-availability of quality power, fluctuations in cotton prices and currency fluctuation (depreciation in Euro) have affected the performance of the Company. 3. SHARE CAPITAL The authorized capital of the Company as on 3Ist March, 2015 was Rs. 35,25,00,000/- divided into 3,52,50,000 equity shares of Rs. 10/- each and paid-up capital was Rs. 4,90,85,760/- divided into 49,08,576 equity shares of Rs. 10/- each. 4. DIVIDEND In view of insufficient profits for the year under review, the Board is unable to recommend dividend. 5. EXPORTS During the year under review the company's exports were Rs. 22.49 Crores as against Rs. 26.89 crores of the previous financial year. Steep fluctuations of cotton prices and depreciation of Euro have affected the exports. 6. EXPANSION & MODERNISATION Modernization and technological up-gradation programs continue in the Company to maintain competitiveness and achieve better quality. Company plans to modernize by adding balancing equipment with a capital cost of about Rs. 95.32 lacs. Stringent cost control measures remain in place in all possible areas and are regularly reviewed. 7. FUTURE OUTLOOK The Company's efforts in development of new value added products are expected to yield better results. The company has further plans to modernize/ expand its operations at its spinning unit. In the bleached cotton business, the Company plans to produce new products such as surgical cotton rolls and cotton buds. This will help in good value addition to its product range and improve the prospects of the company in the coming years. 8. CORPORATE GOVERNANCE A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with Corporate Governance norms stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance. 9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section forming part of the Annual Report. 10. ENVIRONMENT AND POLLUTION CONTROL The manufacturing facility has obtained environmental clearance from the Pollution Control Board concerned and is in compliance with all current environmental legislation. As an integral part of its environment protection drive, the Company ensures the very minimum quantity of generation of waste, low emission levels and low noise pollution levels during operations of its manufacturing facility. 11. DIRECTORS AND KEY MANAGERIAL PERSONNEL A. RETIREMENT BY ROTATION Pursuant to provisions of the Companies Act, 2013, Sri Badrinarayan Agarwal (DIN 00042I23), Director will retire at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his re-appointment B. APPOINTMENT Smt Sushma Gupta (DIN 07147330) was appointed as an Additional Director who shall hold office till the date of this Annual General Meeting. A member proposed her candidature for appointment at the ensuing Annual General Meeting. In terms of the Companies Act, 2013 Smt Sushma Gupta is proposed to be appointed as independent Director for a term of 5 years, not liable for retirement by rotation. Brief resume of the Directors retiring by rotation and independent Director, nature of their expertise in specific functional areas and names of public companies in which they hold directorships as stipulated under clause 49 of the listing agreement with the Stock Exchange are given as Annexure to the Notice. Sri B. Somasekhara Rao was appointed as Chief Financial Officer of the Company w.e.f. 30th May, 2014 and Company Secretary w.e.f. 9th February, 2015. C. CESSATION During the year under review, Sri Jeetender Kumar Agarwal and Sri Devender Kumar Agarwal resigned from the directorship of the Company from 3Ist March, 2015 and Sri B.R.S.Reddy, Vice President (Corp. Affairs) & Company Secretary resigned w.e.f. 7th February, 2015 in terms of the restructuring of the organization and pursuant to the sanctioned scheme of demerger. Sri Pankaj Goel, Independent Director also resigned from the Directorship from 31st March, 2015 citing personal pre-occupations. The Board places on record its appreciation for the valuable services and guidance rendered by Sri Jeetender Kumar Agarwal, Sri Devender Kumar Agarwal, Sri Pankaj Goel and Sri B.R.S.Reddy during their tenure as Director on the Board and as Company Secretary respectively. D. EVALUATION OF THE BOARD'S PERFORMANCE During the year, the Board adopted a formal performance evaluation policy for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board's functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board, Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgement etc. The evaluation of the Independent Directors and that of the Chairman was carried out by the entire Board excluding the Director being evaluated and the evaluation of Non-Independent Directors was carried out by the Independent Directors. A separate meeting of Independent Directors was also held during the year wherein the performance of Chairman, Board, Executive Directors was evaluated. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company. E. REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is attached to this report as Annexure I. F. DECLARATION BY INDEPENDENT DIRECTORS All the Independent Directors of the Company have given declaration stating that they meet the criteria of independence as provided under Companies Act, 2013. G. FAMILIARIZATION PROGRAMME OF INDEPENDENT DIRECTORS Each newly appointed Independent Director is taken through a formal induction program including the presentation from the Managing Director on the Company's manufacturing, marketing, finance and other important aspects. The Company Secretary briefs the Director about their legal and regulatory responsibilities as a Director. The induction for Independent Directors include interactive sessions with Executive Committee Members, Business and Functional Heads, visit to the manufacturing site etc. The details of such program are available on company's website (www.suryavanshi.com ). 12. AUDITORS' REPORT A. STATUTORY AUDITORS The Statutory Auditors of the Company, M/s. Brahmayya & Co, Chartered Accountants, Hyderabad will retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Statutory Auditors' Report does not contain any reservation, qualification or adverse remark. B. SECRETARIAL AUDITOR During the year, the Company has appointed M/s R & A Associates, Practising Company Secretaries as Secretarial Auditor. The Secretarial Audit report for the financial year 2014-15 is annexed herewith as Annexure 11 to this Report. The Secretarial Audit Report does not contain any reservation, qualification or adverse remark. C. COST AUDITOR Pursuant to Section 148 of Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee appointed Aruna Prasad & Co., Cost Accountants as the Cost Auditors of the Company for the year 2015-I6 and has recommended the remuneration to the shareholders for their ratification at the ensuing Annual General Meeting. The Auditor has confirmed that the appointment is within the prescribed limits and also certified that they are free from any disqualifications. 13. DIRECTORS' RESPONSIBILITY STATEMENT: To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: (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 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 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 this Act 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; (e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (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. 14. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The Policy on materiality of related party transactions as approved by the Board may be accessed on the Company's website. Your Directors draw attention of the members to Note 30 to the financial statement which sets out related party disclosures. 15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, is annexed and marked Annexure 111 and forms part of this Report. 16. 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 was observed. 17. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES: The information required pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(I) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard. No employee was in receipt of remuneration in excess of the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and hence the disclosure as required under Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not required. 18. POLICY ON SEXUAL HARASSMENT: The Company has adopted policy on Prevention of Sexual Harassment of Employees at workplace in accordance with The Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 20I3. During the year under review, the Company has not received any complaints pertaining to sexual harassment. 19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186: The Company has not made any loan, given guarantee or provided security pursuant to the provisions of Section 186 of Companies Act, 2013. The details of investments made by the Company pursuant to the provisions of Section 186 of Companies Act, 20I3 is provided in Note 10 to the financial statement. 20. DISCLOSURES: A. EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company is annexed herewith as Annexure IV to this Report. B. COMPOSITION OF AUDIT COMMITTEE The Audit Committee comprises Sri R. Surender Reddy (Chairman), Sri Surender Kumar Agarwal, Sri Manish Gupta and Sri Rajender Kumar Agarwal as other members. All the recommendations made by the Audit Committee were accepted by the Board. C. VIGIL MECHANISM The Company has implemented a vigil mechanism policy to deal with instance of fraud and mismanagement, if any. It provides for the directors and employees to report genuine concerns and provides adequate safeguards against victimization of persons who use such mechanism. The Policy on vigil mechanism may be accessed on the Company's website at the link: <http://www.suryavanshi.com/whistle->blower-policy.html. There were no complaints received during the year 2014-15. D. NUMBER OF BOARD MEETINGS The Board of Directors of the Company met Ten (10) times during the year. For further details, please refer report on Corporate Governance. E. LISTING FEES The Company confirms that it has paid listing fees for the year to BSE Limited where its shares are listed. 21. 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: a. Details relating to deposits covered under Chapter V of the Act. b. The Company has no subsidiaries, joint ventures or associate companies. c. 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. 22. APPRECIATION: The Board of Directors is pleased to place on record their appreciation of the co-operation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies. The Board would also like to thank the Company's shareholders, customers, suppliers for the support and the confidence which they have reposed in the management. The Board place on record its appreciation of the contribution made by the employees at all levels for their hard work, solidarity, co-operation and support. By order of the Board For Suryavanshi Spinning Mills Limited B.N.Agarwal Executive Chairman Place : Secunderabad Date : I6.05.2015 |