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SRF Directors Report, SRF Reports by Directors


BSE: 503806|NSE: SRF|ISIN: INE647A01010|SECTOR: Textiles - Manmade
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Directors Report Year End : Mar '18    Mar 17

Dear Members,

The Directors are pleased to present the 47th Annual Report for the year ended March 31, 2018.

Financial Results

(Rs. in Crores)




Revenue from operations



Other income



Total Income



Profit Before Interest, Depreciation & Tax (PBIDT)



Less: Interest & Finance Charge



Gross Profit



Less: Depreciation and amortisation charge



Profit Before Tax (PBT)



Less: Provision For Taxation including Deferred Tax Charge



Profit After Taxation (PAT)



Add: Profit Brought Forward







(Rs. In Crores)



Interim dividend on Equity Shares



Corporate Tax on Dividend



Other comprehensive income arising from remeasurement of defined benefit obligation



Amount transferred to Debenture Redemption Reserve



Profit carried to Balance Sheet



Equity Dividend

During the year, your Company has paid two interim dividends of Rs.6 per share each aggregating to Rs.12 per share, amounting to Rs.82.93 Crores (inclusive of taxes). The Board of Directors of the Company has not recommended any final dividend.

Operations Review

Total revenue from operations of the Company on standalone basis increased by 11.44 per cent from Rs.4197.82 Crores in 2016-17 to Rs.4677.93 Crores in 2017-18 mainly due to increase in revenue from operations, the profit before interest, depreciation and tax (PBIDT) including ‘other income’ on a standalone basis increased from Rs.867.58 Crores in 2016-17 to Rs.888.72 Crores in 2017-18.

Profit before tax (PBT) on a standalone basis decreased by 6.46 per cent from Rs.548.07 Crores in 2016-17 to 512.64 Crores in 2017-18. After accounting for the provision for taxation of Rs.106.98 Crores, profit after tax (PAT) on a standalone basis decreased by 3.14 per cent from Rs.418.82 Crores in 2016-17 to Rs.405.66 Crores in 2017-18.

Management Discussion and Analysis

A detailed section of the Management Discussion and Analysis forms part of the Annual Report. A review of the Businesses is also given in that section.

Business Responsibility Report

As stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective has been prepared for 201718 and forms a part of the Board’s Report. However, as a green initiative the Business Responsibility Report for 2017-18 has been hosted on the website of the company at investors.html#reports and shareholder who wants to obtain a physical copy of the same may send a request to the Company at its registered office.

Subsidiaries, Joint Ventures and Associate companies

As on March 31, 2018, your Company had 5 (five) wholly owned subsidiary companies whereby 1 (one) wholly owned subsidiary company is registered in India and remaining 4 (four) are registered outside India. 2 (two) of these are direct wholly owned subsidiaries and rest 3 (three) are step-down wholly owned subsidiaries. The consolidated profit and loss account for the period ended March 31, 2018 includes the profit and loss account for these 5 (five) wholly owned subsidiaries for the complete Financial Year ended March 31, 2018.

These subsidiaries are:-

1. SRF Global B.V. is a wholly owned subsidiary of the Company incorporated in the Netherlands. This entity is an SPV formed for the purpose of holding investments and mobilizing funds for the 3 (three) step-down subsidiaries of the Company.

2. SRF Industries (Thailand) Ltd. (a wholly owned subsidiary of SRF Global BV) is incorporated in Thailand engaged in the manufacture and distribution of nylon tyre cord and packaging films.

3. SRF Flexipak (South Africa) (Pty) Ltd.(a wholly owned subsidiary of SRF Global BV) is incorporated in South Africa engaged in manufacture and distribution of packaging films.

4. SRF Industex Belting (Pty) Ltd. (a wholly owned subsidiary of SRF Global BV) is incorporated in South Africa and was engaged in the business of manufacture and distribution of belting fabrics which business was wound up during the year. This Company is exploring the possibility to enter into the business of trading in refrigerant gases in South Africa and other neighboring countries.

5. SRF Holiday Home Ltd. is a wholly owned subsidiary of the Company incorporated in India. This company is engaged in the business of acquisition and renting of real estate properties.

The consolidated financial statements of the Company prepared in compliance with applicable Accounting Standards and other applicable laws including all the above subsidiaries duly audited by the statutory auditors are presented in the Annual Report.

No subsidiaries were divested during the year. No company has become/ceased to be a joint venture or associate during the year. A report on performance and financial position of each of the subsidiaries and associates is presented in a separate section in this Annual Report. Please refer (AOC-1) annexed to the financial statements in the Annual Report at page no. 236. The Policy for determining material subsidiaries as approved may be accessed on the Company’s website at the link: (10)%2028%20-%20Policy%20on%20material%20 subsidiary%20companies%20-%20v2%20-%20 Oct14.pdf

SRF Europe Kft has been incorporated in Hungary as a wholly owned subsidiary of SRF Global BV on 25th April 2018 to undertake the manufacture of packaging films in Hungary.

The Company shall make available the annual accounts of the subsidiary companies to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered office of the Company and of respective subsidiary companies. Further, the annual accounts of the subsidiaries are also available on the website of the Company viz.

Directors & Key Managerial Personnel

Dr Meenakshi Gopinath, (Director CSR) is retiring by rotation and being eligible, offers herself for re-appointment.

The Members of the Company at the 43rd Annual General Meeting held on August 4, 2014 had appointed Vinayak Chatterjee, Lakshminarayan Lakshman, Tejpreet Singh Chopra, Vellayan Subbiah and Pramod Bhasin as Independent Director(s) of the Company, whose terms are due to expire on March 31, 2019.

All the Independent Director(s) have submitted the declaration of meeting the criteria for independence as provided in Section 149(6) of the Companies Act, 2013 and rules applicable thereunder and as per the SEBI Regulations and are eligible for reappointment. They are also independent of the management.

The Board has recommended the proposal for reappointment of Vinayak Chatterjee, Lakshminarayan Lakshman, Tejpreet Singh Chopra, Vellayan Subbiah and Pramod Bhasin for approval of the shareholders through special resolution(s) for a further period of 5 years w.e.f. 01.04.2019 to 31.03.2024.

Brief resume of the Directors who are proposed to be re-appointed is furnished in the explanatory statement to the notice of the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act and the Listing Regulations.

Sushil Kapoor, President & CEO (Technical Textiles Business), who has been appointed as a Key Managerial Personnel by the Board, retired on 30.09.2017. Sanjay Chatrath was appointed as President & CEO (Technical Textiles Business) and designated as a Key Managerial Personnel wef 01.10.2017.

During the year, Prashant Mehra , President & CEO (Packaging Film Business), who has been appointed as a Key Managerial Personnel, was redesignated as President & CEO (Packaging Films Business, Laminated Fabrics & Coated Fabrics) and Anurag Jain, President & CEO (Specialty Chemicals Business), who has been appointed as a Key Managerial Personnel, was redesignated as President & CEO (Specialty Chemicals Business & Chemicals Technology Group).

In accordance with the requirements of the Companies Act and the Listing Regulations, the Company has formulated a Nomination, Appointment and Remuneration Policy. A copy of the Policy is enclosed as Annexure I.

In accordance with the aforesaid Policy, the Nomination and Remuneration Committee evaluates the performance of the Executive Directors, NonIndependent non- executive Director and Independent Directors. Board evaluates, its own performance on criteria like discharge of duties and responsibilities under the Companies Act and Listing Regulations, fulfilment of its role with respect to guiding corporate strategy, risk policy, business plans, corporate performance, monitoring company’s governance practices etc. and number of meetings held during the year and the performance of its Committees on the criteria like fulfilment of role of the Committee with reference to its terms of reference, the Companies Act and the Listing Regulations and the number of committee meetings held during the year.

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link investor-relations/investors.html#governance

During the year 2017-18, five meetings of the Board of Directors were held. For further details, please refer to report on Corporate Governance on page no. 66 of this Annual Report.

Directors’ Responsibility Statement

Pursuant to the requirements of Section 134(3)(c) of the Companies Act, 2013, it is hereby confirmed:

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 ; and

(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.

Contracts and Arrangements with Related Parties

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 arms’ length basis and in accordance with the Transfer Pricing Policy/basis approved by the Audit Committee and/or in accordance with the Omnibus approval of the Audit Committee. 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 on Materiality of Related Party Transactions.

Your Directors draw attention of the members to Note 33 to the notes to accounts forming part of the financial statements which sets out related party transaction disclosures.

Particulars of Loans given, Investments made, Guarantees given and Securities provided

Particulars of loans given, investments made, guarantees given and securities provided alongwith the purpose for which the loan or guarantee or security was proposed to be utilised by the recipient are provided in the standalone financial statement (Please refer to Note 39(d) of Additional Disclosures forming part of the standalone financial statement).

Corporate Social Responsibility (CSR)

As per the requirements of the Companies Act, 2013, the Board has constituted a Corporate Social Responsibility Committee comprising of Dr. Meenakshi Gopinath, Director (CSR) (Chairperson of the Committee), Kartik Bharat Ram, Deputy Managing Director and Lakshman Lakshminarayan, Independent Director as other members.

The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the projects to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Company’s website at the link (05)%2011%20-%20SRF%20-%20CSR%20Policy%20 -%20Board%20approved.pdf

The Company would also undertake other need- based initiatives in compliance with Schedule VII to the Act.

During the year, the Company has spent Rs.5.00 Crores on CSR activities. The amount of CSR obligation under the Companies Act, 2013 was Rs.9.56 Crores. Annual Report on CSR activities is annexed herewith as Annexure II.

Risk Management

Enterprise Risk Management is a risk based approach to manage an enterprise, identifying events that may affect the entity and manage risks to provide reasonable assurance regarding achievement of entity’s objective.

The risks identified by the Company broadly fall into the following categories viz. strategic risks, operational risks, regulatory risks, financial and accounting risks, foreign currency and other treasury related risks and information systems risks. The risk management process consists of risk identification, risk assessment, risk prioritization, risk treatment or mitigation, risk monitoring and documenting the new risks.

Your Board has laid down a risk management framework and policy to address the above risks. The objective of the policy is to identify existing & emerging challenges that may adversely affect the company and manage risks in order to provide reasonable assurance to the various stakeholders. In the opinion of your Board, none of the risks which have been identified may threaten the existence of the Company.

Internal Financial Controls

The Company believes that Internal Control is a necessary concomitant of the principle of Governance. It remains committed to ensuring an effective Internal Control environment that provides assurance to the Board of Directors, Audit Committee and the management that there is a structured system for:

- close and active supervision by the Audit Committee

- business planning and review of goals achieved

- evaluating & managing risks

- policies and procedures adopted for ensuring orderly Financial Reporting

- timely preparation of reliable Financial Information

- accuracy and completeness of the Accounting Records

- ensuring legal and regulatory compliance

- protecting company’s assets

- prevention and detection of fraud and error

- validation of IT Security Controls

- Entity Level Controls

Interrelated control systems, covering all financial and operating functions, assure fulfilment of these objectives.

Significant features of these control systems include:

- the planning system that ensures drawing up of challenging goals and formulation of detailed strategies and action plans for achieving these goals.

- the risk assessment system that accounts for all likely threats to the achievement of the plans, and draws up contingency plans to mitigate them.

- the review systems track the progress of the plan and ensure that timely remedial measures are taken, to minimise deviations from the plan.

The Company uses Enterprise Resource Planning (ERP) supported by in-built controls that ensures reliable and timely financial reporting. Well-established & robust internal audit processes, both at the Corporate and the Business levels, continuously monitor the adequacy and effectiveness of the Internal Controls and status of compliance with operating systems, internal policies and regulatory requirements. All Internal Audit findings and control systems are periodically reviewed by the Audit Committee of the Board of Directors, which provides strategic guidance on Internal Controls.

The Company also has a robust & comprehensive framework of Control Self-Assessment (CSA) which continuously verifies compliance with laid down policies & procedures and help plug control gaps, CSA comprises Automated and Manual Controls. CSA Assurance Testing completes the control compliance loop. In addition to this, Compliance Manager (CM) a facilitating tool sends pre-emptive alert to meet specific calendared regulatory deadlines in the company.

Listing of Equity Shares

SRF’s equity shares are listed at the BSE Ltd. and the National Stock Exchange of India Ltd.

SRF Limited Long term Share based Incentives Plan, 2018

During this year, the Board had approved SRF Limited Long Term Share Based Incentives Plan, 2018 (“the Plan”) for grant of upto 3,00,000 equity shares and approached the shareholders for seeking their approval to the said Plan by way of special resolutions through postal ballot. The shareholders had accorded their approval through postal ballot on 26th March, 2018. Nomination and Remuneration Committee at its meeting held on 17th May, 2018 had recommended to the Board for issuance of 60,000 equity shares to the eligible employees as identified by the Committee and the Board had decided to issue the said equity shares to those employees under Part B-SRF ESPS 2018 of the Plan. The Company shall approach BSE Ltd. and The National Stock Exchange of India Ltd. seeking in principle approval for the listing of the shares to be issued under the Plan. The disclosures mandated by the applicable SEBI regulations and Companies Act, 2013 shall be made from time to time.

Dividend Distribution Policy In compliance with the Listing Regulations, your Board had formulated a Dividend Distribution Policy. A copy of the said policy is available on the website of the Company at Distribution%20Policy%2011.11.16.pdf.

Corporate Governance

Certificate of the auditors of your Company regarding compliance of the conditions of corporate governance as stipulated in regulation 34(3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to the report as Annexure III.

In compliance with the requirements of the regulation 17(8) of the aforesaid regulations, a certificate from Managing Director and President, CFO & Company Secretary was placed before the Board.

All Board members and Corporate Leadership Team (CLT) have affirmed compliance with the Code of Conduct for Board and Senior Management Personnel. A declaration to this effect duly signed by the Managing Director is enclosed as a part of the Corporate Governance Report. A copy of the Code is also placed at the website of the Company (

Consolidated Financial Statement

The consolidated financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 and other relevant amendments issued thereafter to the Act.

Audit Committee

The Audit Committee comprises of Independent Directors namely Vinayak Chatterjee (Chairman of the Committee), Lakshman Lakshminarayan and Vellayan Subbiah as other members. All the recommendations made by the Audit Committee were accepted by the Board.

Accounts and Audit

The term of appointment of M/s Deloitte Haskins & Sells, Chartered Accountants (Registration No. 015125N), Statutory Auditors will expire on the conclusion of forthcoming 47th Annual General Meeting.

It is proposed to appoint BSR & Co. LLP, Chartered Accountants (Registration No. 101248W/W-100022) as Statutory Auditors for 5 years from the forthcoming annual general meeting till the conclusion of 52nd annual general meeting. Their appointment shall be as per the provisions of the Companies Act, 2013 and rules made thereunder. They have submitted their certificate to the effect that they fulfil the requirements of Section 141 of the Companies Act, 2013.

The observations of the auditors are explained wherever necessary in appropriate notes to the accounts. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer.

Vigil Mechanism

In compliance with the provisions of the Companies Act, 2013 and Listing Regulations, the company has established a vigil mechanism for directors, employees and other stakeholders to report concerns about unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct.

The Vigil Mechanism of the Company consists of Code of Conduct for employees, Policy against sexual harassment, Whistleblower Policy, Code of Conduct to Regulate, Monitor and Report Trading by Insiders and Code of Conduct for Directors and Sr. Management Personnel. These taken together constitute the vigil mechanism through which Directors, employees and other stakeholders can voice their concerns. The Whistle blower Policy, Code of Conduct to Regulate, Monitor and Report Trading by Insiders and Code of Conduct for Directors and Sr. Management Personnel can be accessed on the Company’s website at the link: http://www.srf. com/investor-relations/investors.html#governance

Cost Audit

Pursuant to the various circulars issued by Ministry of Corporate Affairs, the Company is required to maintain cost records for all the products being manufactured by it and get the relevant products audited by a cost auditor.

M/s. H. Tara & Co., Cost Accountants, was appointed to conduct cost audit of the accounts maintained by the Company for the financial year 2018-19 in respect of all the relevant product groups of Technical Textiles Business and Engineering Plastics Business of the Company.

M/s. Sanjay Gupta & Associates, Cost Accountant, was appointed to conduct cost audit of the accounts maintained by the Company for the financial year 2018-19 in respect of all the relevant product groups of Chemicals Business and Packaging Films Business of the Company.

M/s. H. Tara & Co., Cost Accountants, was nominated as the Company’s Lead Cost Auditor.

The remuneration of the cost auditors for financial year 2018-19 is subject to ratification by the shareholders. Accordingly a suitable item has been included in the notice of the ensuing annual general meeting.

The Cost Audit reports for audit of the said products for the financial year 2016-17, conducted by M/s. H. Tara, Cost Accountants (M. No. 17321) and M/s Sanjay Gupta & Associates, Cost Accountants (M. No. 18672), have been filed with the Ministry of Corporate Affairs on 4th September, 2017. The due date for filing was 7th September 2017.

Secretarial Auditor

The Board has appointed M/s Sanjay Grover & Associates, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith as Annexure IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.


In terms of the provisions of Section 197(12) of the Companies Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in Annexure V.

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 VI.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

The details as required under the Companies (Accounts) Rules, 2014 are given as Annexure VII to the Directors’ report.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure VIII to this Report.

Industrial Relations

The Company continued to generally maintain harmonious and cordial relations with its workers in all its businesses.

Secretarial Standards

Applicable Secretarial Standards, i.e. SS-1 SS-2 and SS-3, relating to ‘Meeting of the Board of Directors’, ‘General Meetings’ and Dividend respectively, have been duly followed by the Company.


Your Directors state that no disclosure or reporting is required in respect of the following items as there was no transactions on these items during the year under review :-

1. Details relating to deposits covered under Chapter V of the Companies Act, 2013.

2. Neither the Chairman, Managing/Deputy Managing Director nor Whole-time Director received any remuneration or commission from any of the Company’s subsidiaries.

3. No 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.

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’) and Rules made thereunder, your Company has constituted Internal Complaints Committees (ICC). During the year, one complaint was received and the same has been disposed off in accordance with the requirements of the Act.


Your Directors acknowledge with gratitude the cooperation and assistance received from various agencies of the Central Government and the Governments of Madhya Pradesh, Rajasthan, Tamil Nadu, Gujarat and Uttarakhand, financial institutions and banks. Your Directors thank the shareholders for their continued support. Your Directors also place on record their appreciation of the contribution made by employees at all levels.

For and on Behalf of the Board

Arun Bharat Ram

Date: May 17, 2018 Chairman

Place: Gurugram (DIN - 00694766)

Source : Dion Global Solutions Limited
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