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Samtex Fashions Ltd.

BSE: 521206 | NSE: | Series: NA | ISIN: INE931D01020 | SECTOR: Textiles - Readymade Apparels

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Annual Report

For Year :
2016 2015 2014 2013 2012 2011 2010 2009 2008

Director’s Report

DIRECTORS’ REPORT

To,

The Members,

The Board of Directors hereby submit the 23rd Annual Report of your Company together with the Audited Accounts of the Company for the year ended 31st March’ 2016.

FINANCIAL RESULTS

Rs. In Lakhs

PARTICULARS

2015-2016

2014-2015

Sales and other Income

8538.15

10551.50

Profit before tax, interest, depreciation and write offs

530.85

720.03

Interest & Financial Expenses

312.14

416.66

Depreciation

102.64

104.79

Profit Before Tax

116.07

198.58

Provision for Taxation :

Current

19.90

11.95

Deferred

(15.41)

(9.03)

Earlier year

-

-

Profit after Tax

108.38

188.60

Balance of Profit from Previous Years

3162.70

2974.10

Balance of Profit carried forward

3271.08

3162.70

The company does not propose any transfer to General Reserve.

REVIEW OF OPERATIONS & FUTURE PROSPECTS:

The Gross Sales and other Income for the year ended 31st March, 2016 stood at Rs. 8538.16 lakhs and Net Profits at Rs. 108.38 Lakhs as compared to Rs. 10551.50 lakhs and Rs. 188.60 lakhs respectively in the previous year.

The international economic conditions especially in US are becoming more tough for survival. Board of Directors are finding it difficult as there is no sign of improvement in the years to come.

The Board of Directors in their meeting held on 28th May, 2016 discussed and decided to stop the production activity at its unit at NSEZ, Noida. A proposal for setting other business activity was placed. After some developments the manufacturing activities at NSEZ Noida unit were partially resumed.

Your Company’s Wholly Owned Subsidiary namely SSA International Limited has achieved a Turnover of Rs. 1629.00 crores and Net Profit of Rs.7.21 crores. As you are already aware that Company’s other wholly owned Subsidiary namely Arlin Foods Limited (formerly known as Sam Buildcon Limited) is not operational. Your Board is exploring new avenues for business. Your Directors further inform that on 9th July 2016 the Flood Water entered the Mandideep Plant of SSA International Limited, and there were losses of Inventory and some assets. The Insurance Surveyors are assessing the Losses.

MATERIAL CHANGES

During the year under review your company has sub-divided its share capital from 1 (one) Equity share having a face value of Rs. 10/- each into 5 (five) Equity Shares of the face value of Rs.2/- each.

As a result of such sub division the Authorized Share Capital of the company has been changed from 1,60,00,000 (One Crores Sixty Lakhs) Equity shares of Rs. 10/- each into 8,00,00,000 (Eight Crores) equity shares of Rs. 2/- (Rupees Two) each.

DIVIDEND

In order to conserve and strengthen the financial resources of the Company, the Directors regret their inability to recommend any dividend for the year 2015-2016.

DIRECTORS

Your Director Mr. Atul Mittal retires this year by rotation in accordance with the Articles of Association of the Company and being eligible offers himself for re-appointment.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149 (6) of the Companies Act, 2013.

BOARD OF DIRECTORS MEETINGS

During the year 7 (Seven) Board Meetings and 4 (four) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

AUDIT COMMITTEE

Pursuant to the provisions of section 177 of the Companies Act, 2013 and as per Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Audit Committee has comprise the following members:-

i) Mr. S.K. Gupta

ii) Mr. Raman Ohri

iii) Mr. Atul Mittal AUDITORS

STATUTORY AUDITORS

Pursuant to Section 139 of the Companies Act, 2013, Aggarwal & Rampal, Chartered Accountants, were appointed as Statutory Auditors in the 21st Annual General Meeting until the conclusion of 24th Annual General Meeting to be held in the calendar year 2017(subject to ratification of their appointment at every Annual General Meeting) at such remuneration as shall be fixed by the Board. In terms of the first proviso to section139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of Aggarwal & Rampal, Chartered Accountants as statutory auditors of the Company, is placed for ratification by the shareholders. SECRETARIAL AUDIT

Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s. DMK, Associates, Company Secretaries, as Secretarial Auditor to undertake the Secretarial Audit of the Company for the FY 2015-16.

The Secretarial Audit Report for the Financial Year 2015-16 submitted by them in prescribed form MR-3 has been annexed hereto, marked as Annexure -4 and forms an integral part of this Report. The Secretarial Auditor has made certain observations. The observations and reply thereto are as under:

Qualifications/Observations

1. According to Section 178 of the Act and Regulations 19 of LODR, there must be minimum three Non-executive directors to constitute the Nomination and Remuneration Committee(NRC) whereas NRC of the Company is comprises of only two Non-executive Directors.

The Company’s Board comprises of four numbers of Directors, with two Executive Promoter Directors and two Independent Non Executive Directors. The Company is in the process of appointing one more non executive director in the Board shortly.

2. It is observed that 100% promoter’s equity shares in the company are in not in dematerialized form as required under Regulation 31 of SEBI (Listing Obligation and Disclosure Requirement), 2015 (LODR).

As on 31st March, 2016 the equity share capital in non dematerialized form belonging to Promoter Category, have been shifted to others category and share holding pattern submitted to stock exchange for the period ended 31.03.2016 contains promoters equity as 100% De materialized form and is in compliance of Regulation 31 of SEBI (Listing Obligation and Disclosure Requirement), 2015 (LODR).

3. The constitution of Internal Complaints Committee (ICC) is not in accordance with Section 3 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

The company is in the process of appointing one member from NGO to make the constitution of Internal Complaints Committee in compliance of Section 3 of the Sexual Harassment of Women at Workplace ( Prevention, Prohibition and Redressal) Act, 2013.

4. The company has not attached Form AOC-2 relating to transactions incurred on arm length basis in the ordinary course of business as an annexure to Board report for the FY 2014-2015.

During the Financial Year 2014-15, all the transactions with the related parties were in ordinary course of business and on arm’s length basis, hence, were out of the purview of Section 188 of the Act. Further all transactions with related parties were also reviewed by the Audit Committee of the Board. The AOC-2 relating to transactions for the Financial Year 2015-16 is attached with this Board’s Report.

5. The Company has received a notice u/s 7A of Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 from Employees’ Provident Fund Organization (EPFO) dated 05.08.2015 for determination of PF amount and thereafter received demand notice dated 11.07.2016 of Rs.6,11,93,017/-. Thereafter the Company has fled an appeal with Employees’ Provident Fund Organization Tribunal (EPFOT) which was heard on 22.07.2016, EPFOT waived the pre deposit of said demand and stayed the impugned order of EPFO dated 11.07.2016 till further orders.

Your Company after receiving the notice from EPFO filed the appeal with Employees’ Provident Fund Organization Tribunal (EPFOT) which was heard on 22.07.2016, EPFOT waived the pre deposit of said demand and stayed the impugned order of EPFO dated 11.07.2016 till further orders. Presently the matter is pending with EPFOT.

INTERNAL AUDIT

M/s. Ashok Aggarwal & Co. a firm of Chartered Accountants is conducting periodic Internal Audit of all operations of the Company and the Audit Committee of the Board of Directors has reviewed their findings regularly. Their reports have been well received by the Audit Committee.

AUDITORS’ REPORT

The Statutory Auditors of the Company has submitted their reports on the standalone and consolidated Financial Statements of the Company for the Financial Year ended 31st March, 2016. The Auditor has made certain observations. The observations and reply thereto are as under:

Qualifications/Observations

Going concern concept of the company may be affected if the decision of the Board of Directors meeting held on May 28, 2016 to stop the production activities of the company is implemented by the management.

In the Board of Directors meeting held on May 28, 2016, Board decided to stop the production activities of the company at its unit at NSEZ, Noida. After this decision the Production activities were stopped for some time and later on after some developments were partially resumed. The necessary ratification of decision was informed to Stock Exchange and was taken on record by the Board of Directors.

Rest are self-explanatory and no further comments are required. The observation or comment of the auditors on financial transactions or matters are not having any adverse effect on the functioning of the company.

COMPLIANCE CERTIFICATE FROM COST AUDITOR FOR MAINTENANCE OF COST RECORDS

Pursuant to the provisions of section 148 of the Companies Act, 2013 and rules made there under and with Cost Accounting

Record Rules 2011, the company is maintaining the Cost records .

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS

As required by Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management’s discussion & analysis report is appended in the Annual report.

CORPORATE GOVERNANCE

The Company is committed to maintain the standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI.

As required under SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015 a separate report on Corporate Governance report along with Certificate on its compliance is annexed to this report.

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 134(3)(c) read with Section 134(5), the Directors state 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 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.

(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.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS

All independent directors have given declarations to the effect that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and provisions under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

In terms of Section 178(3) of the Companies Act, 2013, upon recommendation of the Nomination and Remuneration Committee, the Board has adopted the Nomination and Remuneration Policy of the Company. Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other prescribed matters, are governed by such policy. As per terms of Section 178(4) of the Act, such policy is attached hereto as Annexure - 1 which forms part of this report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism Policy to deal with instance of fraud and mismanagement, if any.

As per the policy objective, the Company encourages its employees who have concerns about suspected misconduct, to come forward and express these concerns without fear of punishment or unfair treatment. A vigil mechanism provides a channel to the employees and Directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of conduct or policy. The mechanism provides for adequate safeguards against victimization of employees and Directors to avail of the mechanism and also provide for direct access to the Managing Director/Chairman of the Audit Committee in exceptional cases. Such policy is made available on the website of the Company. LISTING AGREEMENT

The Securities and Exchange Board of India (SEBI) issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on September 2, 2015 in order to streamline the provisions of the Listing Agreement for different segments of capital market in order to ensure better enforceability. The said regulations were effective from December 1, 2015. Accordingly all the listed entities were required to enter in to fresh Listing Agreement within six months from the effective date. Therefore, the Company entered into Listing Agreement with the BSE Limited in the month of February, 2016.

CREDIT RATING

During the year under review the Company sustained its long term credit rating of “BB ” and short term credit ‘A4 ” SUBSIDIARIES

The Company has two subsidiaries namely, SSA International Limited and Arlin Foods Limited (Formerly known as Sam Buildcon Limited). During the year, the Board of Directors (‘the Board’) reviewed the affairs of the subsidiaries. As per Section 129(3) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, a consolidated financial statement of the Company and its subsidiary has been prepared and attached to the stand alone financial statement of the Company. The Consolidated Financial Statements have been prepared in accordance with the relevant accounting standards. Form AOC-1 annexed to the Financial Statements.

The accounts of the Subsidiaries are also available for inspection for shareholders /members /investor, during the business hours at the registered office of the company.

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of Business of the Company during the year. The Company has two wholly owned subsidiaries namely M/s SSA International Limited and M/s. Arlin Foods Limited (formerly known as M/s. Sam Buildcon Limited).There was no change in the nature of business in SSA International Limited as well as Arlin Foods Limited. PUBLIC DEPOSIT

The Company has not invited or accepted fixed deposits from public during the year under review, under Chapter V of the Companies Act, 2013 and the Rules made there under.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The internal Audit functions reports to the Chairman of the Audit Committee and to Chairman and Managing Director of the Company. The Internal Audit monitors and evaluates the efficiency and adequacy of Internal control systems in the company. It’s compliances with operating systems, accounting procedure and policies at all locations of the Company.

RELATED PARTY TRANSACTIONS

During the year under review, there was no new transaction with related parties falling under the purview of Section 188 of the Act. All the transactions with the related parties were in ordinary course of business and on arm’s length basis, hence, were out of the purview of Section 188 of the Act. All transactions with related parties were duly reviewed by the Audit Committee of the Board. Particulars of such transactions is mentioned in the prescribed Form AOC-2 is appended as Annexure- to the Board’s Report.

LOANS, GUARANTEES AND INVESTMENT

During the year under review Company has invested Rs. 1.5 crores (Rupees One Crores Fifty Lakhs) in the equity capital and provided the Guarantee of Rs. 807.46 crores, enhanced from existing Rs.716.79 crores, for working capital limits and other limits to its wholly owned subsidiary SSA International Limited.

INDUSTRIAL RELATIONS

The Industrial relations remained cordial during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE OUTGO

In terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, a statement containing details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in the manner as prescribed under the Companies (Accounts) Rules, 2014, is given in Annexure - 2 hereto and forms part of this Report. EXTRACT OF THE ANNUAL RETURN

In terms of Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the extract of the annual return in form

MGT-9 is annexed herewith as Annexure - 3

POLICIES

As per the regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 all listed entities are required to formulate certain policies. All such policies are available on our website i.e. www.samtexfashions.com. Key policies that have been adopted by the Board are as follows:

Name of the Policy

Brief description

Web link

Vigil Mechanism Policy

The Vigil (Whistle Blower) Mechanism aims to provide a channel to the Directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the Codes of Conduct or policy

http://www.samtexfashions.com/finance_reports/ finance report download. php?id=1439197042. pdf&name=VIGIL MECHANISM POLICY

Board Diversity

To ensure a transparent Board nomination process with the diversity of thoughts, experience, knowledge, perspective and gender in the Board

http://www.samtexfashions.com/finance_reports/ finance report download. php?id=1439196915.pdf &name=POLICY ON BOARD DIVERSITY

Policy on Preservation of Documents

This policy deals with the retention and archival of corporate records of the Company

http://www.samtexfashions.com/finance_reports/

finance e_report _download. php?id=1460372452.pd

f&name=Policy on Preservation of Documents

Policy- Dealing with Related Parties

This policy regulates all the transactions between the Company and its related parties

http://www.samtexfashions.com/finance_reports/

finance _report_ download. php?id=1460372529.

pdf&name=Policy- Dealing with Related Parties

Policy on Material Subsidiary

This policy deals with determination of Material Subsidiaries of Samtex Fashions Limited in terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (SEBI LODR)

http://www.samtexfashions.com/finance_reports/

finance _report_ download. php?id=1460372662.

Pdf & name=Policy- Determining Material Subsidiary

Materiality of Events

The objective of the Policy is to determine materiality of events or information of the Company and to ensure that such information is adequately disseminated in pursuance with the Regulations and to provide an overall governance framework for such determination of materiality.

http://www.samtexfashions.com/finance_reports/

finance _report _download. php?id=1460372810.pdf

&name=Policy on Materiality of Events

Risk Management Policy

The objective of Risk Management at Samtex Fashions Limited is to create and protect shareholder value by minimizing threats or losses, and identifying and maximizing opportunities.

http://www.samtexfashions.com/finance_reports/ finance report download .php?id=1439196980. Pdf & name=RISK MANAGEMENT POLICY

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/ COURTS/ TRIBUNALS

A demand Notice dated 11.07.2016 from Employees Provident Fund Organization under section 7-A of the Employees Provident Funds & Miscellaneous Provisions Act, 1952 was received . An Appeal before the Employees Provident Fund Appellate Tribunal , New Delhi have been filed . As per Tribunal order dtd. 27.07.16 the notice issued to the company is liable to be st aside and been stayed.

DEMATERIALIZATION OF SHARES

Your Company’s shares are participating both with National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). The ISIN number of the Company is INE931D01020.

STOCK EXCHANGE LISTING

The Equity shares of your Company are listed at: The Bombay Stock Exchange, (BSE), Mumbai.

CORPORATE SOCIAL RESPONSIBILITY

The Company was not required to constitute corporate social responsibility committee pursuant to section 135 of the Companies Act, 2013.

CODE OF CONDUCT:

In compliance with Regulation 26(3) of the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015and the Companies Act, 2013, the Company has framed and adopted a code of conduct. The code is applicable to the members of the Board and all employees of the Company.

The Board Members have affirmed compliance with the Code of Conduct for the period ended March 31, 2016. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy.

The Company is committed to provide a safe and conducive work environment to its employees. During the year under review. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

Your Directors wish to place on record their gratitude to members, business associates, various agencies of the Government, Financial Institutions and Banks for all the help and Co-operation extended by them to the Company.

They also acknowledge with appreciation the devoted services rendered by the workers, staff and Executives at all levels of the Company.

For and on behalf of the Board of Directors

For SAMTEX FASHIONS LIMITED

Rita Mittal

Place : New Delhi (Chairperson & Managing Director)

Dated : 12.08.2016 DIN 03398410

Director’s Report