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SAKUMA EXPORTS LTD. Directors Report, SEL Reports by Directors
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SAKUMA EXPORTS LTD.

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Directors Report Year End : Mar '18    Mar 16

TO THE MEMBERS OF SAKUMA EXPORTS LIMITED

The Directors take pleasure in presenting the Thirteenth Annual Report together with the Audited Financial Statements for the year ended 31st March, 2018. The Management Discussion and Analysis has also been incorporated into this report.

1. FINANCIAL RESULTS

Key highlights of standalone and consolidated financial results for Sakuma Exports Limited for the financial year 2017 — 18 are tabulated below:

(Rs. in Lakhs)

Particulars

Standalone

Consolidated

2017 - 18

2016 - 17

2017 - 18

2016 - 17

Sales & Other Income

2,19,886.94

2,02,867.87

4,55,672.82

3,92,711.41

Profit Before Depreciation & Tax

2,775.46

2,261.78

5,910.349

4,520.13

Depreciation

47.31

59.51

47.31

59.51

Profit Before Tax

2,728.14

2,202.27

5,863.04

4,460.63

Provision for Tax:

- Current Tax

887.50

750.00

960.68

821.14

- Deferred Tax

(2.18)

(8.28)

(2.18)

(8.28)

- Income Tax of Earlier Years

3.10

15.97

3.10

15.97

Minority Interest and share of loss of associate

0.00

0.00

0.00

0.00

Net Profit After Tax

1,850.07

1,448.95

4,911.79

3,636.11

Add: Surplus from Previous Period

4,758.03

3,309.08

9,857.49

6,595.13

Profit Available for Appropriation

6,608.11

4,758.03

14,769.28

10,231.24

Appropriation

0.00

0.00

(529.78)

(373.75)

Dividend on Equity Shares

(164.26)

0.00

(164.26)

0.00

Dividend Tax

0.00

0.00

0.00

0.00

Adjustment relating to Minority Interest

0.00

0.00

0.00

0.00

Transfer to Statutory Reserve

0.00

0.00

0.00

0.00

Balance carried to Balance Sheet

6,443.85

4,758.03

14,075.25

9,857.49

2. HIGHLIGHTS OF PERFORMANCE

- Total Consolidated Income for the year increased by 16.03% to Rs. 4,55,672.82 Lacs as compared to Rs. 3,92,711.41 Lacs in Previous year.

- Total Consolidated Net Sales for the year were Rs. 4,54,574.55 Lacs as compared to Rs. 3,91,532.95 Lacs in Previous year, a growth of 16.10%.

- Total Consolidated Profit before Tax for the year was Rs. 5,863.04 Lacs as compared to Rs. 4,460.62 Lacs in Previous year, a growth of 31.46%.

3. MANAGING DIRECTOR CERTIFICATION

Certificate from Mr. Saurabh Malhotra, Managing Director, pursuant to provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for the year under review was placed before the Board of Directors of your Company at its meeting held on 28th May, 2018.

4. BUSINESS OPERATIONS REVIEW AND FUTURE PROSPECTS

It was a transformative year with the introduction of Goods & Services Tax (GST), an important development that has created a single national market and will benefit both consumer and the trade including the Agri commodities and consumer goods sector. While commodity trade conditions remained volatile during early implementation, it has since stabilized and gradual improvement is being seen in overall demand in Agri commodities. The year witnessed the implementation of GST across country on 01st July 2017, followed by the second round of tax slab reductions implemented by the Government in November. This was a year of uncertainty in the commodity markets and hence, there was a cautious sentiments in commodity trade.

Your Company was agile in transitioning to the new tax regime, given the backdrop of this large transition that the country underwent, the operating environment for your Company throughout the year remained challenging.

The Indian economy witnessed another challenging year with real GDP growth declining to 6.6% vis-a-vis 7.1% in 2016-17, reflecting short term disruption caused by GST implementation, residual impact of cash crunch & deceleration in net exports.

While the global economy continued to witness slow growth during the current year as well, the Indian economy on a macro level stayed fairly robust. Weak performance seen in global economy resulting to slowdown in growth in most emerging and developing economies , driven by weaker capital inflow and a depressed global trade. Imposition of anti-dumping duties and higher tariff between USA-EU & USA-China would result to negative impact on the global trade in short term.

India, however was one of the faster growing economy in the World with a currency that performed better than most other emerging market currencies.

At around 5% growth in 2018, the strong growth momentum in the emerging markets & developing economies is likely to sustain and improve marginally mainly due to robust performance of Agri commodity exporting countries such as Brazil, USA, Argentina, Thailand, Malaysia etc. and an anticipated pick-up in growth in India. Growth in China, however, is projected to slow down in 2018 following tariff issues, reflecting on-going rebalancing of economy towards a more sustainable and broad based commodity consumption and services led growth.

Year in retrospect - Company Performance:

In this challenging business environment, your Company delivered a strong performance despite continuance of export duty barrier throughout the year on export of Sugar from India. This segment contributes a major share in export business of the Company. The Company continued to strive sourcing cargoes from other competitive origins but due to logistic constraints & limitations, the volume of business could not be fully replenished. At the fag end of the year, the Government rolled back much needed export duty on Sugar to clear the glut.

On the domestic front normal & satisfactory monsoon helped higher Sugarcane production in the major Sugar producing states which resulted in higher Sugar output but owing to deterrent of export duty, Indian Sugar prices continued to remain un-competitive in the global markets which deprived the Company to regain it’s export market share.

To sustain the pace of growth, the Company is continuing to increase it’s market share in Edible Oil, Grain and other business segments over previous year with increased top and bottom lines. New locations opened last year to expand Edible Oil business have been contributing good business volume with increased market share and trade margins. The Company also forayed into new business segment of ‘Petrochemicals & Minerals’ during the year by importing some trial shipments to test the domestic markets and to explore opportunities of business in this new vertical. The Government also increased import duties on various edible oils in a phased manner during the year to support domestic oilseed prices in order to protect farmers’ interest in the face of declining prices of the products in the global markets. To support higher indigenous production, hike in MSP of Oilseeds, Grain & Pulses for the ensuing Kharif season is also expected which is likely to boost the production of these commodities and surplus will offer an opportunity to export at competitive prices.

In the year under review, overall business grew by 16.03 % driven by better product mix and higher volume. Overall turnover on consolidated basis was at Rs. 4,556.73 Crores (Previous year Rs. 3,927.11 Crores) with EBITDA at Rs. 68.29 Crores (Previous year Rs. 56.44 Crores). PAT at Rs. 49.01 Crores (Previous year Rs. 36.32 Crores). On Standalone basis turnover was at Rs. 2,198.87 Crores (previous year 2,028.68 Crores) with PAT at Rs. 18.40 Crores (previous year 14.45 Crores).

Your Company’s performance for the year 2017-18 has to be viewed in the context of the aforesaid challenging economic and market environment.

Going forward, on the positive side India remains the fastest growing major economy in the World. The pace of GDP growth is to gather momentum in the medium term on the back of favorable global economies tailwinds, pick up in private investment and implementation of key policy reforms. India continues to be one of the largest Sugar producer in the World with estimated

Sugar production of about 32.50 Million Tonnes during season 2017-18 & about 35.50 Million Tonnes in 2018-19 season, which will leave an estimated export surplus of about 13.50 Million Tonnes during 2018 — 19 season, considering huge opening stock of 10.50 Million Tonnes. Since the roll-back of export duty on Sugar, the Company has secured sizable export order which will add to the top & bottom lines of the current year working.

In India, favourable demographics, rise in income, growing awareness due to technology, easy access to products & services and changing lifestyles are contributing to major shifts in consumer behaviour and offering immense potential for the Agri commodities and food related business. Your Company is fully geared up to capture business opportunities in the changing environment and confident to keep the trajectory of growth in the years to come.

- Working of Subsidiaries:

The overall performance of 2 major subsidiary Companies has been good and in line with the expectation.

Sakuma Exports Pte Ltd., Singapore posted a turnover of USD 16,93,60,764 during the year as against USD 13,21,08,355 recorded in the previous year. A growth of 28.20% in topline on y-o-y basis. Net Profit after tax of this subsidiary for the year rose to USD 7,26,556 (Previous Year USD 6,78,860).

The performance of another subsidiary in Dubai namely, Sakuma Exim DMCC has shown growth in 2017 post the improvement in liquidity condition in Gulf and African markets towards the end of 2016. The Geopolitical scenario of west Asian economies is also showing promising growth which has led to improvement in demand in the global trade. This subsidiary clocked a turnover of AED 72,24,64,108 during the year (Previous Year AED 57,60,44,219). A growth of 25.41% with an increase of 21.76% in Net Profit of AED to 1,33,91,388 from AED 1,09,98,333 in previous year.

5. APPLICABILITY OF INDIAN ACCOUNTING STANDARDS

Your Company had adopted Ind-AS with effect from 01st April, 2017 pursuant to a notification dated 16th February, 2015, issued by the Ministry of Corporate Affairs, notifying the Companies (Indian Accounting Standard) Rules, 2015. Your Company has published Ind-AS Financials (Standalone and Consolidated) for the financial year ended 31st March, 2018 along with comparable as on 31st March, 2017 and Opening Statement of Assets and Liabilities as on 1st April, 2016.

Your Company has shared all four quarters re-stated Ind-AS Profit and Loss Statement with investors along with quarterly results for comparison.

6. GOODS AND SERVICES TAX (GST)

The Goods and Services Tax (GST) is a landmark reform which will have a lasting impact on the economy and on businesses. Implementation of a well-designed GST model that applies to the widest possible base at a low rate can provide stimulus to the business and contribute to the Hon’ble Prime Minister’s mission of ‘Make in India’.

Your Company has successfully implemented and migrated to GST with effect from 01st July, 2017 and changes across IT systems, Supply Chain and operations have been made keeping in mind the sweeping changes that GST has brought in.

7. DIVIDEND

Your Directors are of the view that your Company is currently on the path of growth which requires higher capital deployment to fund the businesses hence need to conserve resources. Keeping in view the objective, Directors are pleased to recommend a final dividend of Re. 1/- per share of Rs. 10/- each for the year 2017-18. The outgo of dividend for the current year amounts to Rs. 2,13,25,943/-.

8. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

During the year 2017 — 18, unclaimed Dividend on Preference Shares of Rs. 49,203/- was transferred to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016. The said amount represent Dividend for the year 2009 — 10 which remain unclaimed for a period of 7 years from its due date of payment.

During the year 2017 — 18, unclaimed amount out of redemption of Preference shares carried out in the financial year 201011 of Rs. 4,17,360/- was transferred to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016. The said amount represents redemption of preference shares in the year 2010 — 11 which remain unclaimed for a period of 7 years from its due date of payment.

9. TRANSFER TO RESERVES

Your Company does not propose to transfer any amount to the General Reserves.

10. CAPITAL EXPENDITURE

Capital Expenditure during the year, towards Tangible & Intangible Assets, amounted to Rs. 4.55 Lacs, a major part of which was spent on Office Equipment and Computers and Intangible Assets.

11. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of your Company and its subsidiaries are prepared in accordance with applicable provisions of the Companies Act, 2013, Indian Accounting Standard (Ind — AS 110) issued by the Institute of Chartered Accountants of India as well as the SEBI (LODR) Regulations, 2015 together with Auditors’ Report thereon form part of this Annual Report.

12. SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2018 was Rs. 21.32 Crores. During the year under review, your Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. The Promoter and Promoter Group are holding 1,23,63,425 shares equivalent to 57.97% of the total Issued and Paid-up Share Capital.

The Company has increased its Authorized Share Capital from Rs. 30,00,00,000 to Rs. 40,00,00,000. The appropriate fees and stamp duty has been paid to Registrar of Companies, Mumbai. The necessary forms MGT-14 and SH-7 has been filed with Registrar of Companies, Mumbai and approval from Registrar of Companies, Mumbai for the same has been received.

Your Company has issued 49,00,000 equity shares on preferential basis of Rs. 10/- each at a premium of Rs. 97/- to the allottees for which your Company has filed Return of Allotment (form PAS-3) with Registrar of Companies, Mumbai. The said shares were listed on BSE Ltd. and National Stock Exchange of India.

13. CHANGE OF OBJECT CLAUSE

Your Company has changed its Main object by inserting 3 new main objects in the Memorandum of Association of your Company to commence the business of manufacturing of commodities by acquiring an Undertaking / Plant on lease or ownership through Postal Ballot. Your Company has received the Registration Certificate for registration of alteration of object clause from Registrar of Companies, Mumbai, Maharashtra dated 09th February, 2018.

14. DEPOSITS

Your Company has not accepted deposit from the public and shareholders falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Hence, the requirement for furnishing details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

16. SUBSIDIARY COMPANIES

As on 31st March, 2018, your Company has following five subsidiaries:

1. Sakuma Exim DMCC

2. Sakuma Exports PTE Limited

3. Sakuma Exports (Ghana) Ltd — Step Down Subsidiary

4. Sakuma Exports Tanzania Pvt. Ltd — Step Down Subsidiary

Audited Financial statement of your Company’s Subsidiaries

The Statement containing the salient features of financial statement of Subsidiaries in Form AOC-1 pursuant to Section 129(3) read with Rule 5 of the Companies (Accounts) Rules, 2014 are given below:

(Rs. in Lakhs)

Sr. No.

Particulars

Sakuma Exim DMCC

Sakuma Exports PTE Limited

Sakuma Exports (Ghana) Ltd

Sakuma Exports Tanzania Pvt. Ltd

1.

Reporting Period

Apr - Mar

Apr - Mar

Apr - Mar

Apr - Mar

2.

Reporting Currency

AED

USD

GHC

TZS

3.

Country

U.A.E

Singapore

Ghana

Tanzania

4.

Exchange Rate

17.71

65.14

14.76

65.14

5.

Share Capital

8.86

107.48

0.00

0.98

6.

Reserves and Surplus

7448.46

1245.83

0.87

0.00

5.

Total Assets

28126.85

14893.90

0.00

0.00

8.

Total Liabilities

28126.85

14893.90

0.00

0.00

9.

Investment other than Investment in subsidiary

0.00

0.00

0.00

0.00

10.

Turnover

126826.25

109107.30

0.00

0.00

11.

Profit Before Taxation

2760.30

552.10

0.00

0.00

12.

Provision for Taxation

0.00

(73.18)

0.00

0.00

13.

Profit After Taxation

2760.30

478.92

0.00

0.00

14.

Dividend Paid

(178.12)

0.00

0.00

0.00

17. DIRECTORS

17.1 Appointment of Director

Your Company has at its Board Meeting held on 29th May, 2017 appointed Mr. Vivek Grover as Director (Non Executive Non Independent) of your Company w.e.f. 29th May, 2017. The approval from Members has been taken at Item No. 5 in Notice of 12th Annual General Meeting held on 26th September, 2017.

17.2 Retirement by Rotation

Pursuant to Section 152 (6) of the Companies Act, 2013 and in terms of the Articles of Association of your Company, Ms. Shipra Malhotra (DIN: 01236811), Director, retires by rotation at the forthcoming Annual General Meeting. Being eligible, she offers herself for re-appointment.

17.3 Declaration by Independent Directors

Your Company has received declarations from the Independent Directors of your Company confirming that they meet with the criteria of independence as prescribed both, under Section 149(6) of the Companies Act, 2013 and under Regulation 17 of the SEBI (LODR) Regulations, 2015.

17.4 Familiarization Programme for Independent Directors

The Program intends to provide insights into your Company so that the Independent Directors can understand your Company’s business in depth and the roles, rights, responsibility that they are expected to perform / enjoy in your Company to keep them updated on the operations and business of your Company thereby facilitating their active participation in managing the affairs of your Company. In addition to the above, Directors are periodically advised about the changes effected in the Corporate Law, SEBI (LODR) Regulations, 2015 with regards to their roles, rights and responsibilities as Directors of your Company.

17.5 Annual Board Evaluation

According to Regulation of 25(3) of the SEBI (LODR) Regulations, 2015 and Circular No. SEBI/HO/CFD/CMD/ CIR/P/2017/004 dated 05th January, 2017 issued by SEBI on Guidance Note on Board Evaluation, a meeting of the Independent Directors was held on 12th February, 2018 to inter alia, evaluate the performance of the Board as a Whole, Non-Independent Directors, including the Chairman. Before the Meeting of Independent Directors, the Board in its meeting held on the same day evaluated the performance of the Independent Directors and Committees of the Board.

17.6 Key Managerial Personnel

The following persons have been designated as Key Managerial Personnel of your Company pursuant to Section 2(51) and Section 203 of the Act, read with Rule 8(5)(iii) of the Companies (Accounts) Rules, 2014 framed thereunder:

1. *Mr. Chander Mohan, Executive Chairman — WTD

2. Mr. Saurabh Malhotra — Chairman & Managing Director

*Ceased to be Director w.e.f. 4th May, 2017

None of the Key Managerial Personnel has resigned during the year under review.

17.7 Remuneration Policy

The Board has in accordance with the provisions of Section 178(3) of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and Senior Management Employees. The detail of the same has been disclosed in the Corporate Governance Report.

17.8 Change of Compliance Officer

Your Company has at its Board Meeting held on 12th February, 2018 accepted the resignation of Mr. Raju Pillai w.e.f. 12th February, 2018. Your Company has at its Board Meeting held on 12th February, 2018 appointed Mr. Prakash Taparia as Compliance Officer in place of Mr. Raju Pillai w.e.f. 12th February, 2018.

Your Company has intimated the same to the necessary authorities such as the Stock Exchange(s) where the securities of Company are listed i.e. BSE Ltd. and National Stock Exchange of India, Depositories i.e. National Securities Depository Limited and Central Depository Services (India) Limited and the Registrar and Share Transfer Agent (RTA) of your Company i.e. Bigshare Services Private Limited regarding the change of Compliance Officer.

17.9 Board Meetings

A calendar of Board Meetings is prepared and circulated in advance to the Directors.

During the year your Company has held 7 (Seven) Board Meetings which were held on 29th May, 2017; 24th August, 2017; 13th September, 2017; 14th October, 2017; 12th December, 2017; 29th December, 2017 and 12th February, 2018. The maximum interval between any two meetings did not exceed 120 days.

18. DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the Annual Financial Statements for the year ended 31st March, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31st March, 2018 and of the profit of your Company for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

d) that the Annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

19. PLEDGE OF SHARES

During the year, the following promoters have pledged the shares with the Banks and Financial Institutions:

Name of the Promoter

No. of Shares pledged

As a % of total shares held

Late Chander Mohan

3,10,000

20.22

Saurabh Malhotra

9,10,000

28.19

Total

12,20,000

7.43

20. RELATED PARTY TRANSACTIONS

A Related Party Policy has been adopted by the Board of Directors at its meeting held on 14th August, 2014 for determining the materiality of transactions with related parties and dealings with them. The said policy may be referred to, at your Company’s official website at the web link http://www.sakumaexportsltd.com/policies.html. The Audit Committee reviews all related party transactions quarterly.

Further, the members may note that your Company has not entered into the following kinds of related party transactions:

— Contracts/arrangement/transactions which are not at arm’s length basis

— Any Material contracts/arrangement/transactions

21. COMPLIANCE OF SECRETARIAL STANDARDS

During the year under review, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

22. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of your Company and its future operations.

23. DISCLOSURES UNDER SECTION 134 (3) (l) OF THE COMPANIES ACT, 2013

No material changes and commitments which could affect your Company’s financial position have occurred between the end of the financial year of your Company and date of this report.

24. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company firmly believes in providing a safe, supportive and friendly workplace environment — a workplace where our values come to life through the supporting behaviours. Positive workplace environment and a great employee experience are integral part of our culture. Your Company believes in providing and ensuring a workplace free from discrimination and harassment based on gender.

Your Company educates its employees as to what may constitute sexual harassment and in the event of any occurrence of an incident constituting sexual harassment, your Company provides the mechanism to seek recourse and redressal to the concerned individual subjected to sexual harassment.

Your Company has a Sexual Harassment Prevention and Grievance Handling Policy in place to provide clarity around the process to raise such a grievance and how the grievance will be investigated and resolved. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

No complaint has been raised during the year ended 31st March, 2018.

25. COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

There are no companies which have become or ceased to be its Subsidiaries, Joint Venture or Associate Companies during the financial year 2017 - 18.

26. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

A Corporate Social Responsibility (CSR) Committee has been constituted in accordance with Section 135 of the Companies Act, 2013. The details required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in CSR Report appended as “Annexure A” to this Report.

27. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The nature of business is export and trading in commodities. The inherent risks to the business of your company are as follows:

a. Foreign Exchange risk

b. Commodity Price risk

c. Risk elements in business transactions

d. Physical risk to cargo

All the above risk have been discussed in the Management Discussion and Analysis Report. The Executive Chairman & Managing Director mitigate the risk with the help of their depth of knowledge of market, assistance of senior management and forecast based on various data available with your Company. Your Company has developed the analysis of market data which helps in decision making and to ensure the mitigation of the risk.

Your Company has not formed Risk Management Committee as it is not applicable under Regulation 21 of the SEBI (LODR) Regulations, 2015.

28. INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY

Your Company maintains an adequate and effective Internal Control System commensurate with its size and complexity. We believe that these internal control systems provide, among other things, a reasonable assurance that transactions are executed with Management authorization and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safe-guarded against significant misuse or loss.

An independent Internal Audit function is an important element of your Company’s internal control system. The internal control system is supplemented through an extensive internal audit programme and periodic review by Management and Audit Committee.

Your Company has in place, adequate Internal Financial Controls with reference to Financial Statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

The Audit Committee reviewed the audit program and findings of the Internal Audit department and your Company when needed takes corrective actions.

29. INFORMATION SYSTEM

In a business where information is critical, Information Technology plays a vital role, facilitating informed decision making to grow the business. Over the years, your Company has invested extensively in infrastructure, people and processes with the objective to capture, protect and transmit information with speed and accuracy.

30. VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy are explained in the Corporate Governance Report.

31. AUDITORS

31.1 Statutory Auditors

Your Company’s Auditors, M/s. M. L. Sharma & Co., Chartered Accountants, who retire at the forthcoming Annual General Meeting of your Company, are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as Auditors of your Company. As required under Regulation 33 of the SEBI (LODR) Regulations, 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

31.2 Statutory Auditors’ Observations

The Report given by the Auditors on the financial statements of your Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report except as qualified in Secretarial Audit Report.

31.3 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. P. P. Shah & Co., Practicing Company Secretary to undertake the Secretarial Audit of your Company. The Report of the Secretarial Audit Report is annexed herewith as “Annexure B” to this Report.

31.4 Qualifications in Secretarial Audit Report

A. Appointment of Company Secretary & Chief Financial Officer:

As per Section 203 (1) (ii) & (iii), the Company is required to appoint Company Secretary & Chief Financial Officer.

The Company has not appointed Company Secretary & Chief Financial Officer, consequently the Annual Audited Financial Statements are not signed by Company Secretary & Chief Financial Officer. In this regard the management of the Company has provided the following reply:

(i) The Company has appointed Mr. Raju Pillai, General Manager, Accounts & Treasury as Compliance Officer who resigned w.e.f. 12th February, 2018 and thereafter Mr. Prakash Taparia, General Manager was appointed as Compliance Officer who looks after the compliance of the Companies Act, 2013 and the SEBI Act and rules made thereunder.

(ii) The Company has availed the services of Practicing Company Secretary for advising on compliance of the Companies Act, 2013 and the SEBI Act and rules made thereunder.

(iii) The Volume and Scope of work for the Company Secretary & Chief Financial Officer are less and it is not a full time work and the job of Company Secretary & Chief Financial Officer are not attractive commensurate with the scope of work and salary.

B. Corporate Social Responsibility :

As per Section 135 of the Companies Act, 2013, the CSR is applicable to the Company. The Company is required to spend approximately Rs. 35.95 Lacs for the year 2017 — 18, Rs. 28.19 Lacs for the year 2016 — 17, Rs. 19.37 Lacs for the year 2015 — 16 and Rs. 17.79 Lacs for the year 2014 — 15. The total cumulative unspent amount is Rs. 101.31 Lacs, out of which the Company has spent a sum of Rs. 60 Lacs during the financial year to charitable trusts for education. In this regard the management of the Company has provided the following reply:

The Company has spent Rs. 60 Lacs in form of contributions to multiple trusts imparting education. Also the company has identified some schools for the purpose of making contributions in terms of resources like Furniture, Laptops and projectors etc. The unspent amount of CSR amounting to Rs. 41,31,516/- will be spend during the current financial year 2018 - 19.

32. CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors’ protection and maximizing long-term shareholders value. The certificate from M/s. M. L. Sharma & Co., Chartered Accountants confirming compliance of conditions of Corporate Governance as stipulated under Schedule V (E) of the Securities and Exchange Board of India (LODR) Regulations, 2015 of the Stock Exchanges is annexed.

33. MANAGEMENT DISCUSSION AND ANALYSIS

As required under the Schedule V (B) of SEBI (LODR) Regulations, 2015, report on “Management Discussion and Analysis” is attached and form part of this Annual Report.

34. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given below:

A. Conservation of Energy

The operations of your Company are not energy intensive. However, wherever possible your Company strives to curtail the consumption of energy on continued basis.

B. Technology absorption, adaptation and innovation

No expenditure has been incurred by your Company on research and Development activities during the year under review.

35. LISTING WITH STOCK EXCHANGES

Your Company is listed with BSE Limited and National Stock Exchange of India Limited and your Company has paid the listing fees to each of the Exchanges.

36. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as “Annexure C”.

37. PARTICULARS OF EMPLOYEES

During the year, there was no employee in receipt of remuneration in excess of limit as prescribed in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The prescribed particulars of Employees 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 is attached as “Annexure D” and form part of this Report.

38. HUMAN RESOURCES

The relations of the employees of your Company have been cordial during the year. Employees are considered to be team members being one of the most critical resources in the business which maximize the effectiveness of the Organization. Human resources build the Enterprise and the sense of belonging would inculcate the spirit of dedication and loyalty amongst them towards strengthening your Company’s Polices and Systems. Your Company maintains healthy, cordial and harmonious relations with all personnel and thereby enhancing the contributory value of the Human Resources.

39. ENVIRONMENT AND SAFETY

Your Company is conscious of the importance of environmentally clean and safe operations. Your Company’s policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

40. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company’s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

41. GREEN INITIATIVES

Electronic copies of the Annual Report 2017 — 18 and Notice of the 13th Annual General Meeting are sent to all members whose email addresses are registered with your Company/ Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2017 — 18 and Notice of the 13th Annual General Meeting under Section 101 of the Companies Act, 2013 are sent in the permitted mode. Members requiring physical copies can send a request to your Company.

Your Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to the Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Amendment Rules, 2015.

42. ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of your Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of your Company for their unstinted commitment and continued contribution to your Company.

43. CAUTIONARY STATEMENT

Statements in the Board’s Report and the Management Discussion & Analysis describing your Company’s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence your Company’s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

For and on behalf of the Board of Directors

Place: Mumbai Saurabh Malhotra

Date: 28th May, 2018 Chairman & Managing Director

Source : Dion Global Solutions Limited
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