DIRECTORS' REPORT TO
THE MEMBERS, Your Directors have pleasure in presenting the Thirtieth Annual Report on the working of the company and Audited Accounts for the year ended 31st March, 2015 DIVIDEND Your Directors are pleased to recommend the payment of Dividend at Re.1.20 per share on the face value of Rs.10/- per share. This Dividend is not taxable in the hands of the Members. However, Tax on the Dividend amounting to Rs. 9.59 Lakhs would be paid by the Company. MANAGEMENT DISCUSSION AND ANALYSIS REVIEW OF THE OPERATION, CURRENT TRENDS AND FUTURE PROSPECTS: COMPANY PERFORMANCE During the year under review the performance of your company was moderate. The turnover has increased from Rs.119 Crores to Rs. 143 Crores. The table below shows comparative figures of production and sales of the company's products in quantity. There has been a marked improvement in the production and sales, quantity wise. The global economy has posted a moderate growth of 2.6%. Your company being an export oriented company, the stabilization and growth in European, US and other countries contribute a significant change in turnover. The economic growth of our country also makes an impact. This has made the company to take into account various factors not only of domestic but also global. The price of crude oil has a marked impact on PP / HD, raw materials for the company. Since the price of crude oil nosedived, its impact was on the supply position of raw material. Steps had been taken to streamline and strengthen the supply chain. The fall in price had also an indirect effect on the marketing of the company's products. This is a hurdle and to have a cushioning effect, your company has formulated a policy of the production capacity. It postulated the necessity for having constant increase in production and implementation of cost effective economic measures which your company was able to achieve. As part of this continuous process of expansion, the company has invested Rs. 330 Lakhs. The machinery and other required inputs are of the latest technology. Apart from the above, the power factor and strength of rupees will have certain impacts on your company. The sale of cotton yarn has also contributed to an extent. However, the present position of cotton yarn is not encouraging. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL Shri. R. Ramji, was reappointed as Managing Director of the Company for a period of three years with effect from 01-04-2015, subject to approval of the shareholders at the ensuing Annual General Meeting. His reappointment has been considered and recommended by the Nomination and Remuneration committee Shri. S.R. Subramanian, Director, retries by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for reappointment. Declaration by Independent Directors:- The Independent Directors of the company have declared that they meet the criteria of Independence in terms of Section 149 (6) of the Companies Act, 2013 and that there is no change in their status of Independence. Shri. K. Lakshminarayanan, Shri. S. Renganathan, Shri. A. Thiruppathi Raja and Shri. S. Sankar were appointed as Independent Directors of the Company for a period of five years with effect from 01-09-2014, at the AGM held on 03-09-2014. Policy of Directors Appointment and remuneration:- In accordance with Section 178(3) of the Companies Act, 2013 and based upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors have approved a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and Other Employees. The objective of the Nomination and Remuneration Policy is to ensure that the level and composition of remuneration is reasonable, the relationship of remuneration to performance is clear and appropriate to the long term goals of the Company. The policy also envisages and takes into account the total involvement with dedication and human touch. Key Managerial Personnel:- Shri. R. Ramji, Managing Director, Shri. P.S. Ramanathan, Company Secretary & Chief Compliance Officer and Shri. S. Seenivasa Varathan, Chief Financial Officer were designated as "Key Managerial Personnel" of the company pursuant to Section 2 (51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. BOARD EVALUATION Pursuant to Section 134(3)(p) of the Companies Act, 2013, and Clause 49(II)(B)(6)(b)(iii) of the Listing Agreement, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters. Pursuant to Clause 49(II)(B)(5) of the Listing Agreement, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Director at the Board Meeting, which shall be taken into account at the time of reappointment of Independent Director. MEETINGS During the year Six Board Meetings were held. The details of the Meetings of the Board and its various Committees are given in the Corporate Governance Report. The number of days in between the board meeting did not exceed 120 days. LISTING Consequent to the closure of Madras Stock Exchange, your company being eligible as per the directions of Bombay Stock Exchange under diluted Norms of Listing, has filed the application along with deposit of Rs. 5 Lakhs. The necessary documents, particulars and clarification have also been furnished. The board is pleased to inform that Bombay Stock Exchange has given in principle approval for direct listing. The an nual l isting fee of Rs. 2 Lakhs for the year 2015 - 16 has also been paid. The listing is expected shortly. DEPOSITS The Company had Fixed Deposit amounting to Rs. 322.66 Lakhs at the beginning of the year. The company has not accepted fresh deposits from 1st April, 2014. The company had repaid deposits of Rs. 29.72 Lakhs with interest during the year. As per the provisions of General Circular No. 09 / 2015 the company had the option to repay the deposits in accordance with the terms and conditions of acceptance. However, the company has repaid on various dates the entire deposits together with interest. There is no outstanding amount on principle & interest as on 30th June, 2015. ORDERS PASSED BY REGULATORS Pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, which would impact the going concern status of the company. INTERNAL FINANCIAL CONTROLS The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. Sri. P.S. Ramanathan, the Compliance Officer, has been appointed as the Internal Auditor with a dedicated internal audit team. The internal audit reports were reviewed periodically by Audit Committee as well as by the Board. Further, the Board annually reviews the effectiveness of the Company's internal control system. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Pursuant to Section 186(4) of the Companies Act, 2013, it is reported that the Company has not given any loans, guarantees and no investments has been made in bodies corporate or firm. REPORT ON CORPORATE GOVERNANCE: The Company has complied with the requirements of Corporate Governance as stipulated in Clause 49 and 35 B of the Listing Agreements. A report on Corporate Governance is annexed herewith and it forms part of the Directors Report as per Annexure -I. The code of conduct as approved by the board is provided in the above annexure and website. CORPORATE SOCIAL RESPONSIBILITY Company has taken corporate social responsibility initiatives. The Committee comprising one Independent Director and two directors have been constituted as CSR Committee to develop CSR policy and implement the CSR initiatives whenever it is applicable to the Company. However, the corporate social responsibility activities pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013 is applicable only from the current financial year 2014 - 2015. The progress and details are given in Annexure - II. AUDITORS : M/s. Krishnan & Raman, Chartered Accountants, were appointed as Auditors of the company for a period of three years by the member of the company in the Annual General Meeting held on 03.09.2014. The appointment for the year 2015 - 2016 is to be ratified by the members at the ensuing Annual General Meeting. The Audit Committee considered their eligibility under the provisions of Companies Act, 2013. COST AUDITORS : As per provisions of Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, the Government has not notified the products of our company to which the Cost Audit would be applicable. Hence, the Cost Audit was not conducted for your company for the financial year 2014 - 15 SECRETARIAL AUDITOR Pursuant to Provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, Your company has appointed Mr. B. Subramanian, Company Secretary in Practice, Chennai, to conduct the Secretarial Audit of the Company for the Financial year ended 31st March, 2015. The Secretarial Audit Report (in Form MR - 3) is attached as Annexure - III to this report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo are given in Annexure - IV to this report. EXTRACT OF ANNUAL RETURN The details regarding extract of Annual Return in Form No: MGT-9 pursuant to Section 92 of Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, is annexed herewith as Annexure - V. WOMEN AT WORK PLACE In order to prevent sexual harassment of women at work place a new Act of 2013, has been notified. Under the said Act, the company is required to setup Internal Complaints Committee to look into complaints of sexual harassment at work place of any women employee. The company has adopted the policy for prevention of sexual harassment and has setup a committee for implementation of the policy. During the year, the company has not received any complaints of harassment. VIGIL MECHANISM / WHISTLE BLOWER POLICY In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Clause 49(II) (F) of the Listing Agreement, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The policy is available at the Company's website. A forum to enable the concerned personnel of the Company to report any deviation or other acts which are against the general code of conduct of personnel, business and other activities has been created. RISK MANAGEMENT POLICY Company has developed and implemented a risk management policy, as required under clause 49(v) of the listing agreement. A committee of the Board named as Risk Management Committee has been formed by the Board to address and evaluate various risks impacting the Company, in practice with reference to the forex and interest rate. At present the board has not identified any element of risk which may threaten the existence and development of the company. The Company has laid down a Risk Management Policy and Procedure to inform the Board Members about the Risk assessment and minimization process, which is a vigorous and active process for identification and mitigation of risks. Necessary inputs are provided to the Audit Committee on a monthly basis. The production and sales are monitored and any deviation from the projected is identified, solution found and necessary rectifications are done periodically. Audit Committee as well as the Board of Directors have adopted the Risk Management Policy and the Audit Committee reviews the risk management and mitigation plan from time to time. MATERIAL CHANGES AND COMMITMENTS No Material changes and commitments, affecting the financial position of the Company has been occurred between the end of the financial year 2014-15 and till the date of this report. PERSONNEL None of the employees is in receipt of remuneration in excess of the limit laid down under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors are annexed as Annexure - VI and forms part of this Report. RELATED PARTY TRANSACTIONS: There were no materially significant related party transactions which could have potential conflict with the interests of the Company. Transactions with related parties are in the ordinary course of business on arm's length and are periodically placed before the Audit Committee and Board for its approvals and Form AOC-2 is enclosed as Annexure- VII The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board, which has been uploaded on the website of the Company. HUMAN RESOURCES Your company treats its "human resources" as one of its most important assets. Your company enjoys a very cordial relationship with workers and employee at all levels. Your company continuously invest in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your company thrust is on the promotion of talent internally through job rotation and job enlargement. TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND Pursuant to the provisions of the Investor Education Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the company, as on the date of last AGM 3rd September, 2014 with the Ministry of Corporate Affairs. An amount of Rs. 2,34,961.62 unclaimed dividend pertaining to the year 2008 will be transferred to the IEP Fund, before 09.09.2015. CODE OF CONDUCT The Board has laid down the code of conduct for Directors of the company and senior management personnel. The Directors shall follow in letter and spirit the provisions as contained in section 166 of the Companies Act, 2013. They shall also follow general principles of pillars of character. The same with certain variation involving their nature of work applies to the senior management personnel. All the directors of the board and senior management personnel have confirmed the compliance with the code. INSIDER TRADING The company has formulated and implemented the code of conduct for prevention of insider trading with regard to the securities by directors and designated person of the company as per SEBI (Prohibition of Insider Trading) Regulations, 2015. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the Directors 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) they 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) they 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) they had prepared the annual accounts on a going concern basis; (e) they 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) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. ACKNOWLEDGEMENT Your Directors wish to take this opportunity to place on record their gratitude and sincere appreciation for the timely and valuable assistance and support received from Bankers - City Union Bank, Share Transfer Agents, Customers, Suppliers, Share Holders and Regulatory Authorities. The Board also express and records its appreciation for the hard and dedicated efforts of the employees as a team at all levels. On Behalf of the Board, For POLYSPIN EXPORTS LIMITED, S.V. RAVI Director R.RAMJI Managing Director Date : 30.07.2015 Place : Rajapalayam |