DIRECTOR'S REPORT Dear Members: Your Directors have pleasure in presenting the 32nd Annual Report together with the Audited Accounts of the Company for the year ended on 31st March, 2015. DIVIDENDS: Yours directors have not proposed any dividend on Equity Shares of the company, on the ground that the company have overcome from the past losses but looking at the upcoming uncertainty directors recommended to conserve the profit for future events. OPERATIONS: During the year Sales and Other Income (Gross) has increased from Rs.3101.18 lacs to Rs. 3663.25 lacs whereas the company has earned Gross Profit of Rs.243.08 lacs against previous years Gross Profit, of Rs. 139.78 lacs. After Depreciation of Rs.72.24 lacs, Finance Charges of Rs.136.95 lacs and Provision for Taxation of Rs.5.01 lacs, the company has incurred profit of Rs. 28.88 lacs. As you would observe, the company has made a turnaround vis-a-vis the previous year and had not only increased its top line substantially, but has also come back into the black. This has been pretty much been contributed on account of the change in the sentiment of the industry and the gradual implementation of the positive steps taken by the new government. Though the first half of the year was slow the turnaround started showing its positive effects from Sep 2014. However, with the positive attitude and strong mandate of the new government, we envisage a big turnaround of the economy, and the first reflections of the same would be felt by companies linked directly or indirectly with the infrastructure growth of the contrary. The Directors of the company are confident of not only a turnaround in the coming year, but see a strong prospect of growth. MANAGEMENT DISCUSSION AND ANAYSIS ON STRATEGY, OUTLOOK AND MARKET : The company continues its stand on establishing at least 30% of its sales in the Conveyor Belting segment in the offshore markets. The company has started exports to Conveyor Belt Manufacturers in Spain, Serbia and Philippines. The company is also actively pursuing establishing sales with the overseas plant of both Ms. Semperit and Continental, whose Indian plants are already being supplied by Sanrhea. The company is also actively pursuing and is in dialogue with Fenner Precision UK, as well as some companies in Turkey and Malaysia for establishing supplies of Specialised Fabrics. As regard to the sales of the company's Chafer Fabric to various tyre companies, the companies product has been well establishes both at Apollo Tyres as well as BKT Tyres, and supplies have gradually been increasing. The company hopes that in the coming year it would be able to establish volume supplies to all the plants of Apollo as well as BKT in India, which would aggregate to a substantial volume. The company is also actively in the process of getting approvals at ATG Tyres as well as Ceat Ltd. Effects of this should be seen in the coming year, when the company would stand at establishing about 25-30 % of its volume towards this product category. In the Square Woven Fabric segment, the Brake Diaphragm Fabrics manufactured by the company has seen a substantial growth with supplies now being established not only to Mega Rubber Technologies Ltd., but also to TVS Sundaram Industries and Roop Polymers Ltd. The total volume of this product category has also three folded. The company is also actively pursuing the possibility of exporting the same. As far as the other specialised fabrics are concerned, the company also sees a good growth potential in the various Inflatable Products market like Air Cells and Boats. With the positive implementation of policies in the Power, Automobile and Defence Sectors, the requirements of such fabrics should see a surge in the coming years. The company, in the year participated in the Rubber Expo - India at New Delhi. This has helped the company in initiating dialogues with many new customers across its product categories. EXPANSION CUM DIVERSIFICATION : The company, in the year has installed two additional TFO Twisters as well as Four more Rapier Weaving Machines and is waiting an additional two more looms. The company is also intending taking up an exercise to upgrade its Dipping Plant and Sectional Warping Machine. Implementation of all this will not only help increase the total output, but will also help establish higher quality standards, as required by the higher profile customers the company has decided to concentrate on for all future sales. The effects of this should start reflecting in the coming year. DIRECTORS & KEY MANAGERIAL PERSONNEL: Mr. Tushar Patel, Managing Director & Chief Executive Officer [CEO] was re-appointed as a Managing Director by the board of directors at their meeting held on 29th May 2014, for a period of three years. Mr. Dhawal Jadhav, Company Secretary holds the office of Key Managerial Personnel. Mr. Jasubhai Patel, Chief Financial Officer [CFO] also holds the office of Key Managerial Personnel. DECLARATION OF INDEPENDENT DIRECTORS: The Independent Directors have fulfilled the criteria of Independence as defined under section 149(6) of the companies act, 2013 and requisite declarations in terms of section 149(7) of the Act have been received. Mr. Miten Mehta, Director of the company retires by rotation and being eligible for reappointment offers himself for reappointment COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES The provisions of Section 178(1) relating to constitution of Nomination and Remuneration Committee are applicable to the Company and hence the Company has devised a policy relating to appointment of Directors,payment of managerial remuneration. Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors hereby make the following statement in terms of Section 134 (3)(c) and 134 (5) of the Companies Act, 2013 with respect to Directors' Responsibility. We confirm that: (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 ended 31st March, 2015 and of the profit 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 the Companies Act, 2013, 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; (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. CORPORATE GOVERNANCE The Company has been pro-active in following the principles and practices of good Corporate Governance. Provision of clause 49 relating to Corporate Governance and Management Discussion & Analysis are not applicable to the company vide SEBI Circular No. CIR/CFD/POLICY CELL/7/2014 dated 15th September, 2014 and therefore, Corporate Governance report and Management Discussion & Analysis are not forming part of the Annual Report. FIXED DEPOSITS: Fixed Deposit from the shareholders as at the end of the accounting year aggregate to Rs. Nil. The company has adhered to rules and regulations as per Companies (Acceptance of Deposits) Rules and the Companies Act, 2013 RELATED PARTY TRANSACTIONS All transactions entered by the Company with related parties were in the ordinary course of business and at Arm's Length basis. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. The details of the transactions with related parties are given in the financial statements. BOARD MEETINGS During the year, four meetings of the Board of Directors were held. VIGIL MECHANISM/ WHISTLE BLOWER POLICY The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. REMUNERATION POLICY The Company has adopted a Remuneration Policy for the Directors, Key Managerial Personnel and other employees, pursuant to the provisions of the Act and Clause 49 of the Listing Agreement. PARTICULARS OF EMPLOYEES AND REMUNERATION AND RELATED DISCLOSURES The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports 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 up to the date of ensuing Annual General Meeting. In terms of the provisions of Section 197~of the Companies Act, 2013 read with Rules 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure forming part of the Annual Report. Disclosures pertaining to remuneration and other details as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure forming part of the Annual Report. Having regard to the provisions of Section 136(1) read with its relevant provisio of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during Working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost. AUDITORS REPORT: The observations of the auditors are explained where ever necessary in appropriate notes to the Accounts and needs no further explanation. However, your directors wish to inform you that diminution in the value of investment is of short term nature and therefore, no provision has been made. AUDITORS: The auditors of the company M/s. Kantilal Patel & Co., Chartered Accountants [Firm Registration No: 104744W] retires and being eligible, offers themselves for reappointment. SECRETARIAL AUDITOR The Company has appointed M/s. SPANO & Associates, Company Secretaries to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed with this report in Annexure-B. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Details of the same are provided in the Management Discussion and Analysis Report attached to this report. The Internal Auditors reviews the efficiency and effectiveness of the systems and procedures. The Audit Committee approves and reviews the internal audit plan for the year. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed with this report in Annexure-C. INDUSTRIAL RELATIONS The employee relations have remained cordial throughout the year and industrial harmony was maintained. Measures for the safety, training and development of the employees continued to receive top priority. The Directors wish to place on record their appreciation of the valuable contribution made by the employees of the Company at ail levels towards the performance and growth of the Company. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 The company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the financial statements. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees. The Nomination and Remuneration Committee has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Directors. Directors were evaluated on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings. Areas on which the Committees of the Board were assessed induded degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings. The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, research and development, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 is given in the Annexure-A forming part of this Report. ACKNOWLEDGEMENT Your Directors would like to express their appreciation for the support extended by Bankers and Government Officers. Your Directors also place on record their deep appreciation of the services rendered by the Officers, staff and workers of the company at all levels. Your Directors also acknowledge the continued invaluable support extended by you - our shareholders- and the confidence that you have placed in the company. For & On behalf of the Board TUSHAR PATEL MANAGING DIRECTOR Date : 29/05/2015 Place: Ahmedabad |