DIRECTOR'S REPORT The Members of Sumeet Industries Limited Your Directors have pleasure in presenting the 27th Annual Report and Audited Statement of Accounts for the year ended 31st March, 2015. Your Company has delivered a robust performance despite considerable headwinds. The Company has registered consolidated revenue of Rs. 1165.33 Crores with Net Profit of Rs. 21.65 Crores. We, remained resolute and relentless in our quest for strengthening our cost-competiveness, better management of working capital and operational excellence across all businesses. OPERATIONS The company has posted a satisfactory performance for the year under review. The company has produced 86068.41 Tons of Pet Chips / Polyester / Polypropylene Multifilament Yarn and dispatched 83034.86 Tons of Pet Chips/Polyester/P.P./Poly yarns. Income from operation (Consolidated) of the company has marginally decreased from Rs. 1228.12 Crores to Rs. 1165.33 Crores. EBIDTA has been increased from Rs. 84.26 Crores to 85.47 Crores and Net profit after Tax (Consolidated) has been increased from Rs. 19.25 Crores to Rs. 21.65 Crores in comparison to last year. Our earning per shares stand at Rs. 3.73 and Book Value per Shares at Rs. 38.63 (Based on equity shares) as on 31st March, 2015. The year 2014-15 remained one of the challenging year as the polyester industry faced several challenges. Firstly, crude prices saw a sharp decline during the year, which triggered reduction in prices for Purified Terephthalic Acid (PTA) and Mono Ethylene Glycol (MEG) (key raw materials for polyester manufacturing). Secondly, the government levied Anti-Dumping Duty on PTAimports, which resulted in an increase in raw material cost. Your Company focused on widening product basket by adding value added products, expanding market reach, cost optimisation, and elevating people potential. As a result, your company has creating a dynamic business model. DIVIDEND The Board of directors do not recommended to declare dividend during the year due to ploughing back the profit to be utilized in the setting up new modification cum expansion programs and general corporate purposes. EXPAINSION& MODERNISATION During the year under review your company has successfully commissioned 4 (Four) new Texturising machines as forward integration with total capacity of 20 Tons per day to produce DTY yarns of varied deniers & filaments and also in the process ofsetting up another4 (four) new machines. NEW PROJECT In the Current financial year, the company has modified 4 (four) position of its existing FDY Line for Manufacturing Colour FDY Yarns. Colour FDY Yarns will be further processed on 30 Nos. of TFO Machineries which is going to be installed for plying and twisting the yarns. Twisted & Heat set Yarns will finally be used in manufacturing carpets. The company is also exploring enhancing the capacity of manufacturing recycled chips from Waste Recycling Plant by importing some more machinery of new technologies. OVERSEAS SUBSIDIARY COMPANY The company has a wholly owned subsidiary company in Singapore registered with Registrar of Companies and Business, Singapore. Pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India and the provisions of the Listing Agreement with Stock Exchanges, the company has prepared Consolidated Financial Statements of the Company and its subsidiaries are included in the Annual Report. EXPORTS The company has been exploring all the possibilities for exporting its products. During the year under review, your company has exported products worth of Rs. 114.33 Crores. At present company is exporting to Egypt, Saudi Arabia, China, Argentina, Poland, Vietnam, Philippines, Portugal, Morocco, Columbia, Bangladesh, Russia, Ethiopia, Mexico, Nepal, Brazil, Peru, Algeria, Thailand, U.S.A, Singapore and Turkey etc. The company is weighing further possibilities to export its value added newly developed Carpet Yarns. Exploring export markets has been a key area of focus for the company. Your Company expects more growth in the overall export sales in the current year also. DEPOSITORY SYSTEM As members are aware, the company's shares are compulsorily tradable in the electronic form. As on March 31, 2015 almost 94.67% of the Company's total paid-up capital representing 5,80,39,738 shares were in dematerialized form. In view of the numerous advantages offered by the Depository system, members holding shares in physical mode are advised to avail of the facility of dematerialization on either of the Depositories. Credit Rating The Company's financial discipline and prudence is reflected in the strong credit ratings ascribed by BrickworkRatings India Limited as below:- Long Term Borrowing : BWR BBB, Outlook: Stable Short Term Borrowing : BWRA3 + FIXED DEPOSITS The Company has invited deposits from public in accordance with the Section 73 and 74 of the Companies Act, 2013 (corresponding Section 58Aof the Companies Act, 1956) to the tune of Rs. 396.14 Lacs during the financial year 2013-14. No fresh deposits have been invited and nor any deposits have been renewed in the financial year 2014-15. Total outstanding deposits after repaying on maturity as on 31.03.2015 has been remained it-Rs. 2,15,04,000/-. There were no deposits, which were claimed but not paid by the Company as on date. DIRECTORS Mr. Devi Prasad Saboo (DIN No. 00095024), Director of the company, would retire by rotation at the ensuing itAnnual General Meeting and pursuant to his unwillingness to act as a Director, ceased to be Director of the Company w.e.f. 30.09.2015 Mr. Dinesh Sharan Khare , presently Executive Director of the company has shown his unwillingness to continue to act as a Director, but on the request of the Board of Directors of the company in the meeting held on 13.08.2014, they consented to act as independent director of the company with effect from that date. Mr. Dinesh Sharan Khareis a Textile engineer having more than 28 years of experience in the field of Textile industry. The Board is very much obliged to him for providing his guidance and knowledge by continuing to act as a director in the capacity of Non- Executive Independent Director. The period of appointment of Mr. Sumeet Kumar Somani (DIN No.00318156) to act as a Executive Director (Whole Time) will expire on 30.09.2015. The Board, in its meeting held on 13.08.2015, has, subject to the approval of members in the ensuing Annual General Meeting extended the terms of his appointment to act as a Executive Director (Whole time) for a further period of five years w.e.f. 1st October, 2015. DETAILS OF COMMITTEE DIRECTORS The Committee shall comprise of at least two non-executive directors, at least half of whom shall be independent Directors. The Board may appoint the Chairperson of the Committee whether executive or non-executive as member of this committee. Composition of Audit Committee of Directors, Nomination and Remuneration Committee of Directors and Stakeholders Relationship/Grievance Committee of Directors, number of meetings held of each Committee during the financial year 2014-15 and meetings attended by each member of the Committee as required under the Companies Act, 2013 are provided in Corporate Governance Report and forming part of the report. AUDITORS a) Statutory Auditors In compliance with the Companies (Audit and Auditors) Rules, 2014, the Members, at the 26th Annual General Meeting of the Company held on September 30,2014, appointed M/s. Pradeep Singhi & Associates,Chartered Accountants, (ICAI registration no. : 108029W) as Statutory Auditors of the Company to hold the office until the conclusion of the next Annual General Meeting of the Company. Members are requested to re-appoint them at the Annual General Meeting. b) Cost Auditors The Company has been maintaining cost accounting records in respect of manufacture of polyester yarns pursuant to directives of the Central Government. The company has been appointed M/s. V. M. PATEL & ASSOCIATES, (Firm Registration No. 10519) as Cost Auditors, for conducting the audit of cost records for the financial year2015-16 and approval of the members is being sought for ratification of their remuneration. c) Internal Auditors The Board has appointed M/s. RRA& Co., Chartered Accountants (ICAI Registration Number 112115W) as Internal Auditors of your company for the financial year 2015-16. The report prepared by the Internal Auditors is to be reviewed by the Statutory Auditors & Audit Committee. d) Secretarial Auditors M/s. Dhiren R. Dave, Practising Company Secretary (CP No. 2496, Membership No. 4889) were appointed as Secretarial Auditor, to conduct secretarial audit of the company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31 March 2015 is annexed herewith and forms part of the Annual Report as Annexure-1. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. The Board has re- appointed Dhiren R. Dave, Practising Company Secretary, as secretarial auditors of theCompany for the financial year 2015-16. MANAGEMENT DISCUSSION AND ANALYSIS In terms of Clause 49 (VIII) (D) of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis Report for the FY 2014-15 duly reviewed by Audit Committee and approved by Board forms part of this Report. PERSONNEL AND RELATD DISCLOSURES The Board of Directors wishes to express their appreciation to all the employees for their outstanding contribution to the operations of the company. Pursuant to the provisions of the Companies (Appointment & Remuneration of managerial personnel) rules 2014, no employee is drawing remuneration in excess of the prescribed limits. Yourcompany also appreciates that revenue and profit growth cannot take place without the right equality of people. To that effect, your company has undertaken a series of measures that ensures that the most appropriate people are recruited in to the organization. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure-2 forming part of the Annual Report. INTERNAL CONTROL SYSTEM Your Company has a well established Internal Control system to ensure an effective internal control environment that provides assurance on the efficiency of conducting business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The Internal Auditor certifies on the assurance of adequacy of Internal Control System on quarterly basis which are regularly reviewed by the Audit Committee. Independence of the audit is ensured by the direct reporting of internal audit function to the Audit Committee of the Board. CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility is an integral part of the Company's ethos and policy and it has been pursuing on a sustained basis. The Company assists schools situated at nearby villages by distributing dresses & books among it poor students and computers to nearby situated primary schools etc. Technical education and training are it imparted to the employees through Industrial Training and Workshops. Emphasis was laid on creation of awareness amongst the villagers about the need to protect the environment. CSR activities carried out by the Company have strengthened the relationship with local people. As stipulated under schedule VII of the Companies Act, 2013, the company has undertaken various activities it under CSR compliance during the year under report, the company has spent a sum of Rs. 34.62 Lacs towards it CSR activities in line with compliance with section 135 of the Companies Act, 2013. The shortfall Rs. 5.42 Lacs in the amount spent on CSR activities during the year ended on 31st March,2015 is intended to be utilised in future upon identification of suitable projects within your Company's CSR policy. The details of amount spent on CSR activities during the year are mentioned in Annexure-3 forms part of the Annual report. INDUSTRIAL RELATIONS The Company continued to maintain harmonious and cordial relations with its workers in all its businesses duringthe year under report. Your company firmly believes that a dedicated workforce constitute the primary source of sustainable competitive advantage. PREVENTION OF SEXUAL HARASSMENT POLICY The Company has in place Prevention of Sexual Harassment Policy in line with the requirements of The SexualHarassmentof Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. Your Directors state that during the year under review, there were no cases filed pursuant to The Sexual Harassmentof Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. RISK MANAGEMENT Risk Management is the systematic process of understanding, measuring, controlling and communicating it organization's risk exposures while achieving its objectives. The company's risk management policy stems from a philosophy of pursuing sustainable growth and creating economic value while calibrating and mitigating risks. The Board of Directors regularly review risks and threats and takes suitable steps to safeguard its interest and that there is no element of risk identified that may threaten the existence of the Company. The focus shifts from one area to another area depending upon the prevailing situation. The Risk Management Policy has been reviewed and found adequate to the requirements of the Company by independent firms of Chartered Accountants and approved by the Board. A detailed report on significant risks and mitigation is forming part of Management's Discussion and Analysis. INSURANCE All the properties of the Company including buildings, plant and machineries and stocks have been adequately insured. LOANS, GUARANTEES OR INVESTMENT MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 " Loans, guarantees and investments covered under section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT. No material changes and commitments affecting the financial position of the Company occurred from the end of the financial year 2014-15 till the date of this report. Further there was no change in the nature of business of the Company. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT. During the year under consideration, there were no such instances. EMPLOYEE STOCK OPTION The company has not issued any Employee Stock Option. CASH FLOW ANALYSIS The Cash Flow Statement for the year under reference in terms of Clause 32 of the Listing Agreement with the stock exchanges forms part of the Annual Report. FOREIGN EXCHANGE TRANSACTIONS In order to hedge the company's exposure to foreign exchange and interest rate, the company enters into forward contracts. The volatility witnessed in the global markets has reiterated the need for robust forex management systems and prudent investment practices. All forex exposures are hedged upon the occurrence of an exposure. In case of liabilities in respect of foreign currency loans obtained for acquisition of fixed assets, the variation in the liabilities arising out of exchange rates at the year end have been capitalized during the year as per Companies (Accounting Standard) Amendment Rules, 2009. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE Information in accordance with the provisions of Section 134 (3) (m) of the Companies Act, 2013 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the Annexure-4 forming part of this report. % RESEARCH & DEVELOPMENT The Company is giving great emphasis to innovation in product and process technology and operational efficiencies. The company has set up a separate fully equipped well designed lab for testing of MEG and PTA and developing better quality of Pet chips and Yarns with different deniers and filaments. It has institutionalized a multiple-stage quality control system at the material handling, operations and finished goods stage. Efforts are made to explore and develop more valued added category of yarns. The enhanced quality so developed has been performing well in the domestic as well as in international market. Successful efforts are being made to re-engineer the products & process to reduce cost and optimize material consumption. The product lines of the plant are designed to change product with minimum changeover losses and thus meet customer requirement even for small quantities. CONTRACTSANDARRANGEMENTWITH RELATED PARTY All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. Such transactions form part of the notes to the financial statements provided in this Annual Report. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. CORPORATE GOVERNANCE Your Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms integral part of this Annual Report. (i) The Company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. (ii) Pursuant to Clause 49 of the listing agreement with Stock-Exchanges, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance and a Management Discussion and Analysis Statement as stipulated under Clause 49 of the Listing agreement forms integral part of this Annual Report. EXTRACT OF ANNUAL RETURN The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 in prescribed Form MGT-9 (Annexure-5) is forming part of the Annual Report. DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement: (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 judgements 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; and (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. DECLARATION OF INDEPENDENCE BYTHE INDEPENDENT DIRECTORS Pursuant to Section 149(6) of the Companies Act, 2013, Independent Directors of the Company have made a declaration confirming the compliance of the conditions of the independence stipulated in the aforesaid section. WHISTLE BLOWER MECHANISM In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the Company has adopted a Vigil mechanism/Whistle Blower Policy. This policy is explained in corporate governance report. POLICYON DIRECTORS APPOINTMENT AND REMUNERATION Nomination & Remuneration Policy The Board of Directors of the company in view of enforcement of Companies Act, 2013 read with rules framed there under and amendment to Clause 49 of the Listing Agreement, re-designated the Remuneration Committee as "Nomination and Remuneration Committee" at the Meeting held on August 11,2014. The Nomination and Remuneration Committee and this Policy shall be in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Clause 49 under the Listing Agreement (as may be amended from time to time). Emphasis is given to persons from diverse fields or professionals. Policy on Remuneration Policy on remuneration of Directors, Key Managerial Personnel and employees of the Company is that :- • Remuneration to Key Managerial Personnel, Senior Executives, Managers, Staff and Workmen is industry driven in which it is operating taking into account the performance leverage and factors such as to attract and retain quality talent. The remuneration policy is in consonance with the existing industry practice. • For Directors, it is based on the shareholders resolutions, provisions of the Companies Act, 2013 and Rules framed therein, circulars and guidelines issued by Central Government and other authorities from time to time. Performance Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit Commitee, Nomination and Remuneration Committee. This evaluation is led by the Chairman of the Board Governance, Nomination and Remuneration Committee with specific focus on the performance and effective functioning of the Board. The result of the evaluation is satisfactory and adequate and meets the requirement of the Company. Independent directors have three key roles — Governance, Control and Guidance. Some of the performance indicators based on which the independent directors are evaluated include: (a) Ability to contribute and monitor our corporate governance practices. (b) Ability to contribute by introducing international best practices to address top-management issues. (c) Active participation in long-term strategic planning. (d) Commitment to the fulfilment of a director's obligations and fiduciary responsibilities. KEY MANAGERIAL PERSON Mr. Shankaral Somani who is Managing Director (Executive), Mr. Sumeet Kumar Somani, the Executive Director and Chief Financial Officer and Mr. Anil Kumar Jain, Company Secretary who have been appointed before commencement of the Companies Act, 2013 are the Key Managerial Personnel of the company. ACKNOWLEDGEMENT Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities and Shareholders during the year under review. Your Directors wish to place on record their deep sense of appreciation for devoted services of the Executives, Staff and workers of the Company for its success. On behalf of the Board of Directors Sd/- Shankarlal Somani Chairman cum Mg. Director Place: Surat Date : 13th August 2015 |