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The Board of Directors’ present the 32nd Annual Report of the Company together with the Audited Financial Statements of Accounts for the Financial Year ended 31st March, 2018.
The Company ‘s financial performance, for the year ended 31st March, 2018 is summarized below:
(Rs. in Crores)
31st March, 2018
31st March, 2017
Revenue from Operations
Profit before Tax & Depreciation
Profit before Tax
Tax Expense for Earlier Years
Profit after Tax
INDIAN ACCOUNTING STANDARDS (IND AS)
The Ministry of Corporate Affairs, vide its notification in the Official Gazette dated 16th February, 2015, notified the Indian Accounting Standard (“Ind AS”) applicable to certain classes of Companies. Ind AS has replaced the existing Indian GAAP prescribed under Section133 of the Companies Act, 2013, read with Companies (Accounts) Rules, 2014. Ind AS is applicable on the Company from 1st April, 2017, with a transition date of 1st April, 2016. The reconciliations and descriptions of the effect of the transition from previous GAAP to Ind AS have been set out in the notes to accounts in the standalone financial statement and in the notes to accounts in the consolidated financial statement.
OPERATIONAL RESULTS AND STATE OF AFFAIRS
The Company Revenue from Operations during 2017-18 is Rs. 1,649 Crores as against Rs. 1,631 Crores during 2016-17.
The profit before interest, depreciation and tax (PBIDT) is Rs. 153 Crores during 2017-18 as against Rs. 199 Crores in previous year. The profit after tax of the Company is Rs. 30 Crores in the current year as against Rs. 55 Crores in previous year.
During the year, the Company had export revenue of Rs. 441 Crores as against Rs. 424 Crores in previous year. The exports constituted about 27% of the total revenue of the Company.
The Company’s project of Rs. 135 Crores taken in hand in the previous year for installation of one Rope Indigo Dyeing Line with 73 new wide width imported Weaving Machines, Machinery for modernization and balancing in spinning and processing divisions and pollution control equipment. The project has been completed as per schedule.
TRANSFER TO RESERVE
The Board of Directors of the Company has not proposed to transfer any amount to General Reserve of the Company for the current financial year.
In view of the satisfactory performance, your directors are pleased to recommend for your approval, dividend @10% on 3,94,21,559 equity shares of Rs. 10/- each (Rs. 1.00 per Equity Share) for the financial year 2017-18 aggregating to Rs. 3.94 Crores which is subject to approval at the forthcoming Annual General Meeting. The Company would also pay dividend distribution tax on distributed dividend.
WHOLLY OWNED SUBSIDIARY COMPANY
Sangam Lifestyle Ventures Limited (“SLVL”) is a Wholly Own Subsidiary of the Company . The revenue from operation of the Company has increased to Rs. 684.43 Lakhs from Rs. 84.26 Lakhs in the last year.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiaries/Associate Companies/Joint Ventures is given in Form AOC-1 and forming part of the report as Annexure-I.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the applicable provisions of Companies Act, 2013 including the Ind AS 110 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year 2017-18.
INVESTOR EDUCATION AND PROTECTION FUND (“IEPF”)
Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“the Rules”) all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government after the completion of seven years from the date of completion. The shareholders whose dividends have been transferred to the IEPF Authority can claim their dividend from the Authority. The unclaimed or unpaid dividend relating to the financial year 2010-11 is due for remittance on 06th November, 2018 to the Investor Education and Protection Fund established by the Central Government.
Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the IEPF Authority. In accordance with new Rules, the Company sent notice to all shareholders whose shares are due to be transferred to the IEPF Authority and published requisite advertisement in the newspaper.
The Company has not accepted any deposits from the general public within the meaning of Section 73 to 76 of the Companies Act, 2013 and rules made thereunder. DIRECTOR AND KEY MANAGERIAL PERSONNEL During the year under review, on recommendation of Nomination and Remuneration Committee and in accordance with provisions of Section 196 and 197 of the Companies Act 2013, consent of the members were taken for re-appointment of Shri V.K. Sodani as Whole Time Director designated as Executive Director of the Company for a period of 5 years with effective from 1st October, 2017 to 30th September, 2022.
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 and Regulation 16 (1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
In terms of the provisions of the Companies Act, 2013 Shri V.K. Sodani Whole-time Director of the Company retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. The Board recommends his reappointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.
In accordance with provisions of the Companies Act 2013 and in terms of Articles of Association of the Company, Shri R.P Soni, Whole Time Director, designated as Chairman is proposed to re-appointed for a period of 3 years with effective from 1st September, 2018 at the ensuing 32nd AGM.
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel (“KMP”) of your company are Shri R.P. Soni, Chairman & Whole Time Director, Shri S.N. Modani, Managing Director & CEO, Shri V.K. Sodani, Whole Time Director and Shri Anil Jain, CFO & Company Secretary. There has been no change in KMP’s during the year.
NUMBER OF MEETINGS OF THE BOARD
Five meeting of the Board were held during the year. The detail of meetings of the Board held during the year forms part of the Corporate Governance Report.
The Composition of the Board and its committees has also been given in the report on Corporate Governance.
The Audit Committee consists of Shri Achintya Karati, Independent Director, Shri T.K. Mukhopadhyay, Independent Director and Shri R.P. Soni, Executive Director. Shri Achintya Karati is the Chairman of the Committee and Mr. Anil Jain is the Secretary of the Committee. All the recommendations made by the Audit Committee were accepted by the Board.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans given, investments made, guarantees given and securities covered under section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the financial year were on an 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 .All Related Party Transactions are placed before the Audit Committee as also the Board for approval. There are no material subsidiary companies as define in Regulation 16(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The policy on Related Party Transactions as approved by the Board is available on the website of the Company’s at weblink: http://www.sangamgroup.com/ financials/Policies/RPT%20Policy.pdf.
Particulars of Related Parties contracts or arrangements under section 188 of the Companies Act, 2013 are given in Form AOC-2 and forming part of the report as Annexure-II.
Your Directors draw attention of the members to Note no.40 to the financial statement which sets out related party disclosures.
COMPANY’S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES
The Policy of the Company on remuneration of Directors, KMPs and other employees including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is available on the Company’s website at the http://www.sangamgroup. com/financials/Policies/Remuneration%20Policy.pdf
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There are no material changes or commitments affecting the financial position or business activities of the Company between the end of the Financial Year and the date of this Report.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company conducts familiarization programme for all independent directors at the time of their appointment and also at regular intervals to enlighten the directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company etc. The policy of the familiarization programme are put up on the website of the Company at the weblink:http:// www.sangamgroup.com/financials/Policies/FP%20 Policy.pdf.
CORPORATE SOCIAL RESPONSIBILITY (“CSR”)
Your Company is committed to and fully aware of its CSR, the guidelines in respect of which were more clearly laid down in the Companies Act, 2013. The Company‘s vision on CSR is that the Company being a responsible Corporate Citizen would continue to make a serious endeavor for a quality value addition and constructive contribution in building a healthy and better society through its CSR related initiatives and focus on education, environment, health care and other social causes The Corporate Social Responsibility Committee comprises Shri R.P. Soni, Shri S.N. Modani and Shri Ramawatar Jaju. Shri R.P. Soni is chairman of the Committee.
The Company has identified following focus areas for CSR:
- Eradicating hunger, poverty and malnutrition
- Promoting Health care including Preventive Health care
- Ensuring environmental sustainability and ecological balance through
- Employment and livelihood enhancing vocational skills and projects
- Promotion of education especially among children, women,elderly and the differently abled
- Promoting gender equality and empowering women
- Contribution or funds provided to technology incubators located within academic institutions
- Rural Development Projects
During the financial year 2017-18, your Company has spent Rs. 136.65 Lakhs towards CSR activities. The details of the CSR spend by the Company is annexed as Annexure III forming part of this report. The CSR Policy may be accessed on the website of the Company’s at web link:http://www.sangamgroup.com/financials/Policies/ CSR%20Policy.pdf.
EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEES AND OF DIRECTORS
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.
The performance of the Board as a whole, Committees and individual Directors was evaluated by seeking inputs from all Directors based on certain parameters such as: Degree of fulfilment of key responsibilities; Board structure and composition; Establishment and delineation of responsibilities to various Committees; Effectiveness of Board processes, information and functioning; Board culture and dynamics and Quality of relationship between the Board and the Management.
The Directors also made a self-assessment of certain parameters - Attendance, Contribution at Meetings and guidance/support extended to the Management. The feedback received from the Directors was discussed and reviewed by the Independent Directors at their annual separate Meeting. At the separate Meeting of Independent Directors, performance of Non-independent directors, including Chairman, Board as a whole was discussed. The performance of the individual Directors, including Independent Directors, performance and role of the Board/Committees was also discussed at the Board Meeting.
INTERNAL FINANCIAL CONTROL
Your Company has an effective internal control and risk mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Company ‘s internal control system is commensurate with its size, scale and complexities of its operations. The Directors inform the members that in pursuit of strengthening internal control systems, your Company has put in place a system whereby all areas of the operations of the Company are reviewed by the internal as well as external professionals and independent audit firms. Your Company takes adequate measures with respect to gaps, if any, reported. The Audit Committee of your Company regularly monitors the annual operating plans, risk assessment and minimisation procedures as well as mitigation plans. Your Directors endeavour to continuously improve and monitor the internal control systems.
A Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 is annexed to Independent Auditor’s Report on Standalone Financial Statements and to Independent Auditors Report on Consolidated Financial Statements.
Audit Committee evaluated the Risk Management Policy of the Company to make it more focused in identifying and prioritizing the risks role of various executives in monitoring and mitigation of risk and reporting process. The Risk Management Policy has been reviewed and found adequate to the requirements of the Company by the Board.
The Audit Committee evaluated various risks and that there is no element of risk identified that may threaten the existence of the Company .
WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Board of Directors has adopted Whistle Blower Policy/Vigil Mechanism.
The Whistle Blower Policy/Vigil Mechanism aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. A mechanism has been established for employees to report concerns about unethical behaviour, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the chairperson of the audit committee in exceptional cases. The Vigil Mechanism Policy has been posted on the website of the Company .http://www.sangamgroup.com/financials/ Policies/Whistle%20Blower%20Policy.pdf.
Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the stipulations set out in the Listing Regulation and have implemented all the prescribed requirements.
A Corporate Governance Report and Auditors’ Certificate regarding compliance of conditions of Corporate Governance form part of the Annual Report. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board Members and Senior Management personnel also forms part of the Annual Report.
In accordance of the provisions of Section 139, 142 and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Audit & Auditors) Rules, 2014, M/s. Rajendra & Co., Chartered Accountants (FRN: 108355W) and M/s O.P. Dad & Co., Chartered Accountants (FRN: 002330C) were appointed as the Statutory Auditors of the Company for a period of five years to hold office from the conclusion of the 31st Annual General Meeting of the Company held on 29th September, 2017 till the conclusion of the 36th Annual General Meeting to be held in the year 2022 (subject to ratification of their appointment by the members at every Annual General Meeting held after this Annual General Meeting). In accordance with the provisions of Companies (Amendment) Act, 2017 notified w.e.f. 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditor is not required to be ratified at every AGM.
As required under the provisions of Section 139 of the Companies Act, 2013, the company has obtained a written certificate from the above mentioned Auditor to the effect that they conform with the limits specified in the said Section and they had also given their eligibility certificate stating that they are not disqualified within the meaning of Section 141 of Companies Act, 2013.
As regards Auditors observations, the relevant notes on account are self-explanatory and therefore, do not call for any further comments.
The Auditors’ Report does not contain any qualification, reservation or adverse remark.
Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of Cost Records every year. The Board of Directors, on the recommendation of Audit Committee, has appointed M/s K.G. Goyal & Company, Cost Accountants, Jaipur (Firm Registration No. 000017) Cost Auditors of the Company for conducting the Cost Audit of the Company for the Financial Year 2018-19. As required under the Companies Act, 2013, a resolution seeking members’ approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.
The Cost Audit Report for the Financial Year 2017-18 does not contain any qualification, reservation or adverse remark. The Company has obtained Cost Audit Report for the year 2017-18 and is in process to file the same with the Central Government.
The Secretarial Audit Report for the financial year 2017-18 received from M/s S.P. Jethlia & Co., Practicing Company Secretary, Bhilwara, Secretarial Auditors of the Company , in form MR-3, does not contain any qualification, reservation or adverse remark. The Report of the Secretarial Audit for the year ended 31st March, 2018 is annexed herewith and forming part of the report as Annexure-IV.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board of Directors has appointed to M/s V.M. & Associates, Company Secretaries in Practice (Firm Registration No. P1984RJ039200) as Secretarial Auditor of the Company for the financial year 2018-19.
PREVENTION OF SEXUAL HARASSMENT AT WORK PLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the Financial Year ended 31st March, 2018, the Company has not received any Complaints pertaining to Sexual Harassment.
PARTICULARS OF REMUNERATION OF DIRECTORS/ KMP/EMPLOYEES
Disclosure pertaining to remuneration and other details as required Under Section 197(12) of the Companies Act, 2013 and Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - V.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Energy conservation continues to be an area of major emphasis in our Company. Efforts are made to optimize the energy cost while carrying out the manufacturing operations. The information relating to energy, technology absorption and foreign exchange earnings and outgo required to be disclosed under section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is given in Annexure VI to this report.
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) Issue of equity shares with differential rights as to dividend, voting or otherwise.
b) Issue of shares (including sweat equity shares) to employees of the Company under any scheme.
c) 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.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to section 134(5) of the Companies Act, 2013 the Board of Directors, to the best of their knowledge and ability, confirm that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures
2. They have 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 as at 31st March, 2018 and of the profit of the Company for the year ended on that date
3. They have 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
4. They have prepared the annual accounts of the Company for the year ended on 31st March, 2018 on a going concern’ basis.
5. They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were generally operating effectively; and
6. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis as stipulated under the Listing Regulations is presented in a separate section forming part of this Annual Report.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014, the extract of annual return is annexed herewith and forming part of the report as Annexure-VII.
The Company is grateful to its customers, shareholders, suppliers, financial institutions, bankers, Central and State Governments for their constant support to the Company . The Directors also place on record their deep appreciation of the contribution made by employees at all levels, the consistent growth of the Company was made possible by their hard work, loyalty, dedication, coordination and support.
For and on Behalf of the Board of Directors
For Sangam (India) Limited
Place: Bhilwara (DIN 00401439)
Date: 9th August, 2018