TO THE MEMBERS,
SUTLEJ TEXTILES AND INDUSTRIES LIMITED
The Directors are pleased to present the Thirteenth Annual Report, together with the audited financial statements of your Company for the year ended 31st March, 2018.
1. Financial Results
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with The Companies (Accounts) Rules, 2014. The financial statements for the financial year ended 31st March, 2018 as well as comparative figures for the year ended 31st March, 2017 are Ind AS compliant.
The financial highlights of your Company for the financial year ended 31st March, 2018 are summarized as follows:
1.1 Highlights of Standalone Performance
- Revenue from operations (Gross) stood at RS,2,453.94 crore as compared to RS,2249.62 crore in FY 2016-17;
- Profit before Tax for FY 2017-18 was RS,156.88 crore as compared to RS,188.46 crore in FY 2016-17;
- Profit after Tax for FY 2017-18 was RS,113.13 crore as compared to RS,157.94 crore in FY 2016-17.
This performance was achieved as cumulative outcome of multiple factors such as product rationalization, capacity optimization, cost control measures, etc. taken by the management of your Company. The benefits of recently completed expansion and modernization programmes in the current financial year, shall accrue in the current and future years.
1.2 Financial Results (RS, in crore)
Year ended 31st March, 2018
Year ended 31st March, 2017
Revenue from Operations
Less: Total expenses
Less: Depreciation and Amortisation Expenses
- Deferred (net)
Profit after Tax
Your Directors are pleased to recommend a dividend of RS,1.30 per share for the year ended 31st March, 2018, subject to shareholders'' approval at the forthcoming 13th Annual General Meeting (AGM) of the Company. The total outgo on account of dividend to the shareholders will be RS,25.67 crore (inclusive of dividend distribution tax).
3.1 Your Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through a process of continuous monitoring.
As at the end of the financial year, your Company has been assigned a rating of:
i. CARE AA (Double A) for Long Term Bank Facilities (Term Loan) and for Long Term Bank Facilities (Fund Based) signifying high degree of safety regarding timely servicing of financial obligations. Such facilities carry very low credit risk.
ii. CARE A1 (A One Plus) for Short Term Bank Facilities (Fund and Non-Fund based) and Commercial Paper is affirmed signifying very strong degree of safety regarding timely payment of financial obligations. Such facilities carry lowest credit risk.
Your Company has discontinued its Fixed Deposit Scheme with effect from 31st March, 2014 and has not accepted any public deposits during the year under review. As on 31st March, 2018, there were no unclaimed/ outstanding deposits or accrued interest with respect to deposits.
3.4 Particulars of Loans, Guarantees or Investments
Details of Loans, Guarantees and Investments made by your Company and covered under the provisions of Section 186 of the Companies Act, 2013 are appended as notes to the financial statements.
4. Issuance of securities
Your Directors have approved raising of funds by way of one or a combination of : issue of unsecured / secured, redeemable, non-convertible debentures / bonds, issuance of equity shares, GDR''s, ADR''s, Foreign Currency Convertible bonds or by any other permitted mode; for long term working capital requirements, growth plans, etc. for an aggregate amount not exceeding RS,500,00,00,000/-(Rupees Five Hundred Crore only) as permitted under applicable laws and subject to such approvals as may be required. This proposal is subject to approval by the members at the ensuing 13th Annual General Meeting and all statutory and regulatory compliances.
5. Expansion, Modernisation and other Capital Projects
The financial year under review witnessed substantial expansion activities carried out by your Company through organic means.
5.1 Expansion Projects
The details of the expansion projects undertaken are given below:
5.1.1 Home Textiles Division - Acquisition of business in USA
Your Company acquired the Design, Sales and Distribution (DS&D) business along with brands of America Silk Mills LLC (ASM). The acquisition will enable your Company to leverage on the experience and expertise of ASM by increasing its foot-print in the US market and will add strength of ASM to our home textile portfolio.
5.1.2 Brownfield project - capacity expansion of value added products at Bhawanimandi, Rajasthan
- Commenced commercial production of 35,280 spindles at Bhawanimandi, Rajasthan facility which was set up at a project cost of RS,270 crore.
- Dedicated capacity focused on production of value added Cotton and Cotton Blended Dyed and Melange Yarn.
5.1.3 Greenfield project - Setting up of a Green Fibre project to manufacture polyester staple fibre by recycling of pet bottles
Your Board proposes to set up a facility for producing polyester staple fibre by recycling of pet bottles with a capacity of 80 mt/day at an estimated capital outlay of around H110 crore. The project is expected to be completed in FY 2020.
5.2 Modernisation, up gradation and debottlenecking projects
Your Company has invested an amount of H58 crore on technology up-gradation and debottlenecking. This will result in further improvement in efficiency and sustaining plant utilization.
During the year the Company has set up a wholly owned subsidiary in the USA viz. Sutlej Holdings Inc., which in turn has a wholly owned subsidiary viz. American Silk Mills, LLC. The acquired business of ASM is housed in American Silk Mills, LLC.
Further, pursuant to the provisions of Indian Accounting Standard 110 (Ind AS - 110) prescribed under the Companies (Accounting Standards) Rules 2006, the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations, 2015) and as prescribed by the Securities and Exchange Board of India, consolidated financial statements presented by the Company include financial information of subsidiary companies, which forms a part of the Annual Report. Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of subsidiaries in Form AOC-1 is attached. Your Company has also formulated a policy for determining material subsidiaries, which is uploaded on the website of the Company at the web link: http:// www.sutlejtextiles.com/assets/pdf/policy/Material%20 Subsidiary%20Policy.pdf
7. Share Capital and Sub-Division
The nominal value of the equity shares of your Company was sub-divided from H10/- each to H1/- each subsequent to the approval by the members at the 12th AGM of the Company. Equity shares of the nominal value of H1/- were credited to the demat account of the members of the Company through corporate actions. The physical share certificates were also dispatched to all the members at the address registered with the Company. Your Company has not issued any further shares. Your Company''s equity shares are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).
8. Management Discussion and Analysis Report
The Management Discussion and Analysis Report as required under Regulation 34 of the Listing Regulations is given separately by way of Annexure I to this report.
9. Directors & Key Managerial Personnel
9.1 Change in Directors and Key Managerial Personnel
a) The Board of Directors accepted the resignation of Mr. Sukhvir Singh, as Director of the Company w.e.f. 25th October, 2017.
b) Mr. M. H. Rahman ceased to be a Director of the Company w.e.f. 09th July, 2017 due to his demise.
c) Mr. Rohit Dhoot was appointed by the Board as an Additional Director (Non - Executive Independent) w.e.f. 25th October, 2017.
d) Mr. D. R. Prabhu superannuated from the services of the Company as Company Secretary and Compliance Officer (KMP) of the Company w.e.f. 25th October, 2017.
e) The Board of Directors appointed Mr. Manoj Contractor, as Company Secretary and Compliance Officer (KMP) of the Company w.e.f. 25th October, 2017.
The Board places on record its appreciation for the valuable services rendered by Mr. M. H. Rahman - Independent Director, Mr. Sukhvir Singh - Non Executive Director and Mr. D. R. Prabhu - Company Secretary and Compliance Officer during their tenure with the Company.
9.2 Re-appointment of Director:
In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. C. S. Nopany is proposed to be re-appointed as the Executive Chairman at the forthcoming 13th AGM.
Mr. Bipeen Valame, Whole-time Director and CFO retires by rotation and being eligible offers himself for reappointment.
Mr. Rohit Dhoot was appointed by the Board as an Additional Director (Non - Executive Independent) w.e.f. 25th October, 2017. The Company has received a notice from a member with a deposit of H1 lac proposing his candidature as a Non - Executive Non - Independent Director at the forthcoming AGM.
Necessary resolutions seeking approval of the members for proposed re-appointment / appointment of directors along with the respective brief profile of the Directors, have been incorporated in the Notice of the ensuing AGM.
9.3 Independent Directors
All the Independent Directors of the Company have been appointed for a fixed term of 5 consecutive years from the date of their respective appointment / regularization in the AGM and they are not liable to retire by rotation. 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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations, 2015).
9.4 Board Effectiveness
9.4.1 Familiarization Policy
Pursuant to Regulation 25(7) of Listing Regulations,
2015, the Board has framed a policy to familiarize the Independent Directors about the Company. The policy is available on the website of the Company at the weblink: http: / / Sutlej textiles. com/assets/pdf/policy/ Familiarisation%20Programe-%20Final_20.2.2016.pdf.
The familiarization policy of the Company seeks to familiarize the Independent Directors with the working of the Company, their roles, rights and responsibilities, vis a vis the Company, the industry in which the Company operates, business model, etc.
9.4.2 Board Evaluation
Pursuant to the provisions of the Act and Listing Regulations, 2015, the Board has carried out an evaluation of its own performance and of the directors individually, as well as the evaluation of the working of the Board Committees. The manner of evaluation has been explained in the Corporate Governance Report.
9.5 Criteria for selection of Directors, KMPs and Senior leadership positions and their remuneration
The Board on the recommendation of the Nomination & Remuneration Committee has framed a policy for selection and appointment of Directors, Senior Management personnel and their remuneration. The policy is available on the Company''s Website at the web link: http: / / Sutlej textiles. com/assets/pdf/ policy/ remuneration-policy.pdf. The policy contains, inter-alia, principles governing directors'' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of director, etc.
9.6 Key Managerial Personnel
Pursuant to the provisions of Sections 2(51) and 203 of the Act read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following are the Key Managerial Personnel of the Company:
- Mr. S. K. Khandelia, President & C.E.O.;
- Mr. Bipeen Valame, Wholetime Director & C.F.O.; and
- Mr. Manoj Contractor, Company Secretary & Compliance Officer.
10. Meetings of the Board
A calendar of prospective meetings is prepared and circulated in advance to the Directors. The details of Board and Committee meetings held during the year under review, are given in the Corporate Governance Report forming part of this Annual Report. The gap between these meetings was within the prescribed period under the Act and Listing Regulations, 2015.
11. Related Party Transactions
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. Your Company did not enter into any material related party transactions with Promoters, Directors, Key Managerial Personnel or other designated persons.
All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for transactions which are of a foreseeable and repetitive nature. A detailed statement of such Related Party Transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee and the Board of Directors for their review on a quarterly basis. Suitable disclosures as required by the Indian Accounting Standards (Ind AS 24) have been made in the notes to Financial Statements.
The Company has formulated a Related Party Transactions Policy for the purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website and is available at the web link: http://sutlejtextiles.com/assets/pdf/policy/policy-on-related-party-transactions.pdf.
12. Internal Financial Control Systems
Your Company''s Internal Financial Control Systems are robust, comprehensive and commensurate with the nature of its business and size, scale and complexity of its operations. The system covers all major processes including operations, to ensure reliability of financial reporting, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources.
The Internal Auditors continuously monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organisation''s risk management with regard to internal control framework.
The policies and procedures adopted by the Company ensures orderly and efficient conduct of its business and adherence to the Company''s policies, prevention and detection of frauds and errors, accuracy and completeness of the records and the timely preparation of reliable financial information.
The Audit Committee actively reviews adequacy and effectiveness of internal control systems and suggests improvements, for strengthening them in accordance with the business dynamics, if necessary. The Audit Committee also meets the Company''s Statutory Auditors to ascertain their views on the financial statements, including the financial reporting system and compliance to accounting policies and procedures followed by the Company.
13. Auditors Report
The Board has duly reviewed the Statutory Auditors'' Report on the financial statements including notes to the financial statements. The observations of the Auditors in their report on the financial statements of the Company are self-explanatory and in the opinion of the Directors, do not call for any further clarification.
14.1 Statutory Auditor
The Company''s Auditors, M/s. BSR & Co., LLP, Chartered Accountants, (ICAI Firm Registration Number: 101248W/ W-100022), were appointed as the Statutory Auditors of the Company for a period of five years commencing from the Company''s financial year 2017-18 to hold office from the conclusion of the 12th Annual General Meeting of the Company till the conclusion of the 17th Annual General Meeting to be held in the year 2022. The Auditors have confirmed their eligibility under Section 141 of the Act and the Rules framed thereunder for re-appointment as Auditors of the Company. As required under Regulation 33 of the Listing 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.
The Auditors'' Report for the financial year ended 31st March, 2018 has been issued with an Unmodified Opinion.
14.2 Internal Auditors
The Board of Directors upon the recommendation of the Audit Committee of the Board has appointed M/s. Singhi & Co., Chartered Accountants (FRN:302049E) as Internal Auditors of the Company. M/s. Singhi & Co. had confirmed their eligibility and have granted their consent to act as Internal Auditors of the Company.
14.3 Cost Auditors
In conformity with the provisions of Section 148 of the Act read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Board on the recommendation of the Audit Committee, has appointed
M/s. K. G. Goyal & Associates, Jaipur, Cost Accountants (FRN-000024) to audit the cost records relating to the Company''s units viz. Rajasthan Textile Mills, Chenab Textiles Mills, Birla Textile Mills, Damanganga Home Textiles and Damanganga Process, for the financial year ending on 31st March, 2019, at a remuneration as specified in the Notice convening the 13th AGM.
As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking member''s ratification for the remuneration payable to M/s. K. G. Goyal & Associates, Cost Auditors is included in the Notice convening the 13th AGM.
14.4 Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. R. Chouhan & Associates, Company Secretary in Practice, to undertake the Secretarial Audit of the Company for the year under review. The Report of the Secretarial Auditor annexed to this Report is self-explanatory and does not call for any further clarification.
15. Compliance of Secretarial Standards
The Company has complied with the secretarial standards issued by the Institute of Company Secretaries of India and forming part of the Act, on meetings of the Board of Directors and General Meetings.
16. Business Risk Management
Pursuant to Regulation 17(9) of the Listing Regulations, 2015 the Company has laid down a robust risk management framework to inform the Board about the risk assessment and minimization procedures undertaken by the Company. Your Company has formed a Risk Management Committee, for timely identification and mitigation of risks as a better corporate governance practice.
The risk management framework is designed to identify, evaluate and assess business risks and their impact on Company''s business. The risk assessment and minimization procedures are reviewed by the Board annually to ensure that executive management controls risk through the mechanism of a properly defined framework. The framework is aimed at creating and protecting stakeholder value by minimizing threats and losses and identifying and maximizing opportunities.
17. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo
The requisite information with regard to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed pursuant to Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 is given to the extent applicable in Annexure II, to this report.
18. Corporate Governance
Your Company is committed to maintain the highest standards of ethics and governance, resulting in enhanced transparency for the benefit of all stakeholders. Your Company has implemented all the stipulations enshrined in the Listing Regulations, 2015, and the requirements set out by the Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Regulation 27 of the Listing Regulations, 2015 forms part of this report as Annexure III. The requisite Certificate from the Statutory Auditors of the Company, M/s. BSR & Co., LLP, Chartered Accountants, confirming compliance with the conditions of Corporate Governance stipulated under Regulation 27 of the Listing Regulations, 2015 is annexed to the Report on Corporate Governance, which forms part of this report.
19. Corporate Social Responsibility
In conformity with Section 135 of the Act and Rules made thereunder, your Company has formed a Corporate Social Responsibility (CSR) Committee to oversee the CSR activities initiated by the Company during the financial year under review. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board''s Report. Your Company has adopted a CSR Policy for the Company which provides a broad framework with regard to implementation of CSR activities carried out by the Company in accordance with Schedule VII of the Act. The CSR Policy may be accessed on the Company''s website at the link: http://sutlejtextiles.com/assets/pdf/ policyZcsr-policy-2014-adopted-13-05-2014.pdf. During the financial year 2017-18, your Company has spent H6.22 crore towards CSR activities. Your Company''s key objective is to make a difference to the lives of the underprivileged and is committed to CSR engagement. The activities undertaken by your Company have been duly acknowledged and appreciated by the concerned State Governments and local communities. A report on CSR activities as prescribed under the Act and Rules made thereunder is annexed herewith as Annexure IV.
20. Vigil Mechanism / Whistle Blower Policy
Your Company has in place a vigil mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of your Company''s Code of Conduct.
Under the vigil mechanism of the Company, which also incorporates a whistle blower policy in terms of Regulation 22 of the Listing Regulations, 2015, protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Chairman of the Audit Committee. Adequate safeguards are provided against victimization to those who avail of the vigil mechanism.
The policy on vigil mechanism and whistle blower policy may be accessed on the Company''s website at the link: http://sutlejtextiles.com/assets/pdf/policy/whistle-blower-policy-adopted-13-05-14.pdf
21. Prevention of Sexual Harassment at Workplace
As required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder, the Company has implemented a policy on prevention, prohibition and redressal of sexual harassment at the workplace. This has been widely communicated internally. Your Company has constituted an Internal Complaints Committees (ICC) as per the requirement of the Act to redress complaints relating to sexual harassment at its workplaces.
22. Significant and Material Orders Passed by Regulators or Courts
There are no significant or material orders passed by any Regulators / Courts which would impact the going concern status of the Company and its future operations.
23. Extract of Annual Return
In terms of the provisions of Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in form MGT-9 for the financial year ended 31st March, 2018 is provided herewith as Annexure V and forms part of the Report.
24. Particulars of Employees
Disclosures pertaining to remuneration and other required information pursuant to Section 197(12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company, is provided herewith as Annexure VI and forms part of the Report.
25. Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained, your Directors make the following statements in terms of Section 134(3)(c) of the Act:
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 have been selected and applied consistently and judgment 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 the Company as at 31st March, 2018 and of the profit of the 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 the 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; and
f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
Your Directors would like to express their sincere appreciation for the assistance and co-operation received from various stakeholders including financial institutions and banks, Government authorities and other business associates who have extended their valuable support and encouragement during the year under review.
Your Directors take this opportunity to place on record their deep appreciation for the committed services rendered by the employees of the Company at all levels, who have contributed significantly towards the Company''s performance and for enhancing its inherent strength. Your Directors also acknowledge with gratitude the encouragement and support extended by our valued shareholders.
For and on behalf of the Board
Place: New Delhi Executive Chairman
Dated: 11th May, 2018 DIN No. 00014587