Dear Members,
Your Directors are pleased to present the 34th Directors' Report and the
Management Discussion and Analysis Report, on the business and operations of your Company
along with the audited standalone financial statements for the year ended 31st
March, 2019.
FINANCIAL PERFORMANCE
The salient features of the Company's financial results during the year are as under:
(Rs in Lacs)
Particulars |
For the year ended on 31st March, 2019 |
For the year ended on 31st March, 2018 |
Sales / Revenue from Operations |
4090.78 |
3732.83 |
Profit/(Loss) before Interest, Depreciation & Tax |
(197.37) |
(332.26) |
Less: Interest |
0.07 |
0.39 |
Profit/(Loss) before Depreciation & Tax |
(197.44) |
(332.65) |
Less: Depreciation |
396.95 |
400.84 |
Profit/(Loss) before Tax |
(594.39) |
(733.49) |
Less - Provision for Taxes (including Deferred) |
- |
- |
Profit/(Loss) After Tax |
(594.39) |
(733.49) |
Paid Up Share Capital |
2900.00 |
2900.00 |
Adjusted Net Worth of the Company |
(2128.06) |
(1533.67) |
EPS (In Rs.) Basic & Diluted |
(2.05) |
(2.53) |
As mandated by the Ministry of Corporate Affairs, the financial statements for the year
ended on March 31, 2019 has been prepared in accordance with the Indian Accounting
Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (hereinafter
referred to as "The Act") read with the Companies (Accounts) Rules, 2014 as
amended from time to time. The estimates and judgments relating to the Financial
Statements are made on a prudent basis, so as to reflect in a true and fair manner, the
form and substance of transactions and reasonably present the Company's state of affairs,
profits and cash flows for the year ended March 31, 2019. The Notes to the Financial
Statements adequately cover the standalone and consolidated Audited Statements and form an
integral part of this Report.
OPERATIONAL PERFORMANCE
During the financial year under review the turnover of your company stood at Rs.
4090.78 Lacs as against Rs.3732.83 Lacs in financial year ended on 31st March, 2018
registering an increase by 9.59%. PBIDT increased to Rs. (197.37) Lacs from Rs. (332.26)
Lacs in the previous year. Interest cost decreased to Rs. 0.07 Lacs from Rs. 0.39 Lacs in
the previous year. .
MATERIAL CHANGES FROM END OF FINANCIAL YEAR TO DATE OF REPORT
There are no material change and commitment, affecting the financial position of the
Company which has occurred between the end of the financial year of the Company to which
the financial statements relate and the date of this report other than those disclosed in
the financial statements.
DIVIDEND
Considering the accumulated losses, the Board of Directors does not recommend any
dividend for the year 31st March, 2019.
FIXED DEPOSITS
The Company has not accepted or renewed any deposit from the public during the year
under review and no amount of principle or interest was outstanding as on the balance
sheet date.
SHARE CAPITAL
The paid up equity share capital of the Company as on 31st March, 2019 stood
at Rs. 2900.00 Lacs. During the year under review, the Company has neither issued shares
with differential voting rights nor granted any stock options / sweat equity. None of the
Directors of the Company hold shares or any other securities of the Company as on the date
of this report.
During the year under review, no Stock Options were granted, vested or exercised. No
Stock Options are in force as on date. Hence, there are no disclosures required to be made
pursuant to the applicable requirements of the Securities and Exchange Board of India
(Share Based Employee Benefits) Regulations, 2014.
CHANGE IN NATURE OF BUSINESS
Company continues to operate only in one segment i.e. Textile and there is no change in
nature of Business of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment / Re-appointment Ms. Prachi Deshpande
In accordance with the provisions of Section 152 of the Companies Act, 2013 and the
Company's Article of Association, Ms. Prachi Deshpande, Director of the Company is liable
for retire by rotation at the ensuing Annual General Meeting and being eligible, offer
herself for re-appointment. The Board recommends her re-appointment.
Brief profile of Ms. Prachi Deshpande is given in the notice of Annual General Meeting
During the year under review, the non-executive directors of the Company had no
pecuniary relationship or transactions with the Company, other than sitting fees,
commission and reimbursement of expenses incurred by them for the purpose of attending
meetings of the Company.
Except above, there is no change in the Board of Directors of the Company till the date
of this report.
KEY MANAGERIAL PERSONNEL
In terms of section 203 of the Companies Act, 2013, the following are the Key
Managerial Personnel (KMP) of the Company:
01. Mr. Prashant Agrawal |
: Managing Director |
02. Mr. Mukesh Maheshwari |
: Chief Financial Officer |
03. Mr. Deepesh Kumar Nayak |
: Company Secretary |
No KMP has been appointed, retired or resigned during the year.
DECLARATION FROM INDEPENDENT DIRECTORS
The Independent Directors have submitted their declaration to the Board that they
fulfill the criteria as stipulated in Section 149(6) of the Companies Act, 2013 and
Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015, read with amendment(s) therein (if any),
(hereinafter referred to as "Listing Regulations"), so as to qualify themselves
to be appointed/continued as Independent Directors.
In the opinion of the Board, the Independent Directors, fulfill the conditions of
independence Specified in Section 149(6) of the Act and Regulation 16(1) (b) of the
Listing Regulations. The Independent Directors have also confirmed that they have complied
with the Company's Code of Business Conduct & Ethics. There has been no change in the
circumstances affecting their status as independent directors of the Company.
BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the
Board has carried out an annual performance evaluation of its own performance, the
directors individually as well as the evaluation of the working of its Committees.
A separate exercise was carried out to evaluate the performance of directors
individually, including Chairman of the Board, who were evaluated on parameters such as
level of engagement and contribution, independence of judgment, safeguarding the interest
of the Company and its minority members etc. The Performance evaluation of the Independent
Directors was carried out by the entire Board. The performance evaluation of the Chairman
and Non-executive Independent Directors was also carried out by the Independent Directors
at their separate meeting. The Directors expressed their satisfaction with the evaluation.
INDEPENDENT DIRECTOR'S FAMILIARIZATION PROGRAMME
The Company continued with its Independent directors' familiarization program, when
needed, for familiarizing them with company's operations, regulatory and critical aspects
which would enable them to effectively discharge responsibilities and functions conferred
on them. Policy about familiarization Programme is placed on the Company's website and its
web link is http://www.stitextile.net.
CRITERIA AND POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS
The Nomination and Remuneration Committee (NRC) is responsible for developing
competency requirements for the Board based on Industry and Strategy of the Company. The
Board composition analysis reflects in depth understanding of the Company's strategies,
environment, operations, financial conditions, compliance requirements, etc. In terms of
Section 178(3), (4) of the Companies Act, 2013 and LODR Regulations, NRC has formulated
criteria for determining qualifications, positive attributes and Independence of Directors
which are as follows:
a. Qualifications: The Board nomination process encourages diversity of thought,
experience, knowledge, age and gender. It also ensures that the Board has an appropriate
blend of functional and industry expertise, personal, professional or business standing.
b. Expertise: The person to be chosen as a Director shall have relevant expertise in
the fields of textile, information technology, sales /marketing, finance, taxation, law,
governance and general management.
c. Positive Attributes: Apart from the duties of Directors as prescribed in the
Companies Act, 2013 and Listing Regulations, Directors are expected to demonstrate high
standards of integrity, ethical behavior and independent judgment. The Directors are also
expected to abide by the applicable code of conduct.
d. Independence: The Committee satisfies itself with regard to the criteria for
independence of the Directors as required under applicable statutes in order to enable the
Board to discharge its function and duties effectively.
e. Reappointment: In case of reappointment of Non-Executive and Independent Directors,
the NRC and the Board takes into consideration the performance evaluation of the Director
and his/her engagement level.
The Company has formulated and adopted the Nomination and Remuneration Policy in
accordance with the provisions of Companies Act, 2013 read with the Rules issued
thereunder and the Listing Regulations.
The said Policy of the Company, inter alia, provides that the Nomination and
Remuneration Committee shall formulate the criteria for appointment of Executive,
Non-Executive and Independent Directors on the Board of Directors of the Company and
persons in the Senior Management of the Company, their remuneration including
determination of qualifications, positive attributes, independence of Directors and other
matters as provided under sub-section (3) of Section 178 of the Companies Act, 2013
(including any statutory modification(s) or re-enactment(s) thereof for the time being in
force).
DIRECTOR'S RESPONSIBILITY STATEMENT
In terms of Section 134(5) of the Companies Act, 2013, your Directors would like to
state:
(a) that in the preparation of the annual financial statements for the year ended 31st
March, 2019, the applicable accounting standards read with requirements set out under
schedule III to the Act, have been followed along with proper explanation relating to
material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements
have been selected and applied consistently and judgments 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, 2019 and of the profit/(loss) 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.
MEETING OF BOARD OF DIRECTORS
During the year under review, 04 (Four) Board Meetings were convened and held on 08th
May, 2018, 14th August, 2018, 30th October, 2018 and 01st
February, 2019. The details in respect of attendance of directors, sitting fees etc. are
given in the Corporate Governance Report which forms part of the Annual Report.
The intervening gap between the above said meetings was within the timelines as
stipulated under the Companies Act, 2013 and Regulation 17 of the Listing Regulations.
COMMITTEES OF THE BOARD
The Board of Directors has the following mandatory Committees:
1. Audit Committee;
2. Nomination and Remuneration Committee;
3. Stakeholders' Relationship Committee; and
4. Corporate Social Responsibility Committee.
COMPOSITION OF AUDIT COMMITTEE
The Audit Committee consists of the following members:
Mr. A. Arumugham |
: Chairman Independent Director |
Mr. John Mathew |
: Member Independent Director |
Mr. Suresh Shankar Vishwasrao |
: Member Independent Director |
Mr. A. R. Mundra |
: Member Non-executive Director |
The composition of the Audit Committee is in alignment with provisions of Section 177
of the Companies Act, 2013 read with the Rules issued thereunder and Regulation 18 of the
Listing Regulations. The members of the Audit Committee are financially literate and have
experience in financial management.
There are no qualifications and observations raised by Audit Committee which required
any comments from the Board or Management of the Company.
Further detail on the Audit Committee is being provided in the Report on Corporate
Governance forming part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE
In compliance with the requirements of Section 135 of the Companies Act, 2013, the
Company has constituted Corporate Social Responsibility (CSR) Committee, which is
responsible for fulfilling the CSR objectives. The Composition of committee is as under:
Mr. Aman Agrawal |
: Chairman Non-executive Director |
(w.e.f. 08th May, 2018) |
|
Mr. A. R. Mundra |
: Member Non-executive Director |
Ms. Prachi Deshpande |
: Member Non-executive Director |
As the Company has no average net profit during the immediately preceding last three
financial years, the provisions of section 135 of the Companies Act, 2013 with respect to
contribution for CSR activities were not applicable to the Company during the financial
year under review.
The details of the other Committees along with their composition, number of meetings
held, attendance at the meetings etc. are provided in the Corporate Governance Report.
AUDITORS
Statutory Auditor
M/s V. K. Beswal & Associates, Chartered Accountants, Mumbai were appointed as
Statutory Auditors of the Company at the 30th AGM. M/s V. K. Beswal & Associates have
confirmed their eligibility and qualification required under section 139, 141 and other
applicable provisions of the companies act, 2013 and rules issued thereunder (including
any statutory modification(s) or re-enactment(s) thereof for the time being in force).
The statutory auditors have confirmed that they satisfy the independence criteria as
required under the Companies Act, 2013, Code of Ethics issued by Institute of Chartered
Accountants of India.
Pursuant to Notification issued by the Ministry of Corporate Affairs on 07th
May, 2018 amending section 139 of the Companies Act, 2013 and the Rules framed thereunder,
the mandatory requirement for ratification of appointment of Auditors by the Members at
every Annual General Meeting ("AGM") has been omitted, and hence the Company is
not proposing an item on ratification of appointment of Auditors at this AGM.
The Auditor's Report does not contain any qualification, reservation or adverse remark
on the financial statements for the year ended March 31, 2019. The statements made by the
Auditors in their Report are self - explanatory and do not call for any further comments.
The statutory auditors have not reported any incident of fraud under section 143(12) of
the Companies Act, 2013, to the Audit Committee of the Company during the year under
review.
Secretarial Auditor
As per requirements of Section 204(1) of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors
of the Company has appointed Raghav Panchal & Co., Practicing Company Secretary,
Indore (C.P. No. 16463) as the Secretarial Auditor of the Company to conduct Secretarial
Audit of the compliance of applicable statutory provisions and adherence to good corporate
governance practice by the Company.
The statements, observations made by the Secretarial Auditors in their Report are self
- explanatory and do not call for any further comments.
The secretarial auditors have not reported any incident of fraud under section 143(12)
of the Companies Act, 2013, to the Audit Committee of the Company during the year under
review.
The report of the Secretarial Auditor for the financial year 2018-19 is annexed to this
report as Annexure - I.
In compliance of the SEBI Circular No. CIR/CFD/CMD1/27/2019 dated 08th
February, 2019, Secretarial Auditor has done the Annual Secretarial Compliance for the
financial year 2018-19 and the Company has submitted the report to the stock exchanges
within the stipulated timeframe.
Internal Auditor
As per requirements of Section 138(1) of the Companies Act, 2013 read with rule 13 of
the Companies (Accounts) Rules, 2014, the Board of Directors of the Company has appointed
M/s Fadnis & Gupte, Chartered Accountants, Indore as Internal Auditor of the Company
to conduct Internal Audit of business processes, financial reporting & controls,
compliance with applicable laws, regulations etc. During the year under review, no
material or serious observation has been received from the Internal Auditors of the
Company.
Cost Auditor
The Ministry of Corporate Affairs (MCA) vides Notification dated 31st
December, 2014 made amendment in the Companies (Cost Records and Audit) Rules, 2014,
through Companies (Cost Records and Audit) Amendment Rules, 2014. As per the said
amendment rules, our Company is exempted from the requirement to conduct Cost Audit.
Therefore, the Company did not appointed Cost Auditor for financial year 2018-19.
CEO / CFO CERTIFICATION
In terms of Regulation 17 of the Listing Regulations, a Compliance Certificate duly
signed by the Managing Director and Chief Financial Officer of the Company, on the
financial statements and internal controls relating to financial reporting has been
obtained and annexed with the corporate governance report.
INDUSTRIAL RELATIONS AND CORPORATE GOVERNANCE
The company provides a congenial and friendly atmosphere to its employees to maintain
cordial relations and motivate them to develop their full potential. Industrial Relations
throughout the year were very peaceful & cordial.
To upgrade human skills and improve their efficiencies, the Programs like Safety First,
various sports tournaments, inbound & outbound training programs, recreational and
team building activities, etc. are part of the total employee experience helping to
promote individual wellness while balancing the needs of the work, family and society.
Your directors are also committed to good corporate governance as a policy. As per
Regulation 34(3) read with schedule V of the Listing Regulations, a detailed report on
Corporate Governance is given in the annexure which forms part of this report as Annexure
II.
The requisite certificate from the Statutory Auditors of the Company confirming
compliance with the conditions of corporate governance is annexed with the report on
corporate governance.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The informations on conservation of energy, technology absorption and foreign exchange
earnings and outgo as stipulated under Section 134(3)(m) of the Companies Act, 2013 read
with Rule, 8 of the Companies (Accounts) Rules, 2014, is annexed and marked as Annexure
- III.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9, as required
under Section 92 of the Act, is available on the Company's website viz. www.stitextile.net
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on
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, Key Managerial
Personnel or other designated persons which may have potential conflict with interest of
the company at large.
As per provisions of sub-section (1) of Section 188 read with the Companies (Meeting of
Board and its Powers) Rules, 2014 and further amendment thereof, the Company has obtained
the prior omnibus approval of Audit Committee and Board of Directors for all related party
transactions to be held during the financial year 2019-20. The approval of members for all
material related parties' transactions is being sought in this Annual General Meeting.
Further, the statement giving details of all related party transactions entered into
pursuant to the omnibus approval so granted has been placing before the Audit Committee
and the Board of Directors for review on a quarterly basis.
The details of the related party transactions as per Indian Accounting Standards (IND
AS) - 24 are set out in Note No. 36 to the Standalone Financial Statements of the Company.
Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of
the Companies (Accounts) Rules, 2014, particulars of contracts or arrangements with
related party (ies) are given in the prescribed Form AOC 2 which is annexed
and marked as Annexure - IV.
The policy on Related Party Transactions as approved by the Board is hosted on the
Company's website www.stitextile.net.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view
to regulate trading in securities by the Directors and designated employees of the
Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits
the purchase or sale of Company's shares by the Directors and the designated employees
while in possession of unpublished price sensitive informations in relation to the Company
and during the period when the Trading Window is closed. The Board is responsible for
implementation of the Code.
All Directors and the designated employees have confirmed compliance with the Code.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year under review, the Company has provided corporate guarantee in
connection with credit facilities availed by its holding company from banks and financial
institutions. The terms and conditions of the guarantee so given are not prejudicial to
the interest of the Company and in line with the provisions of the act. There is no
transaction of loan and investment during the year under review.
HOLDING, SUBSIDIARY, JOINT VENTURES & ASSOCIATES COMPANIES.
Your Company continues to be the subsidiary of Bombay Rayon Fashions Limited (BRFL).
The Company does not have any Subsidiary, Joint Venture and Associates Company.
INTERNAL CONTROL SYSTEM AND AUDIT
The Company has appropriate Internal Control System for business processes, financial
reporting & controls, compliance with applicable laws, regulations etc. The Internal
Control System of the Company is designed to prevent operational risks through a framework
of internal controls and processes. Our internal control system ensures that all business
transactions are recorded in a timely manner, the financial records are complete,
resources are utilized effectively and our assets are safeguarded. We have developed
robust policies, procedures, checks and balances to bring in discipline in day-to-day
functions, for accurately and timely compilation of data.
In addition, the Company has appointed M/s Fadnis & Gupte, Chartered Accountants,
Indore as the Internal Auditors of the company. The Internal Audit conducts on monthly
basis and the reports of auditor is placed before the Audit Committee in its next meeting.
The internal audit ensures safeguarding the assets of the Company, review of operational
efficiency, effectiveness of systems and processes and assessing the internal control
strengths in all areas. Further, Internal Auditors observations and findings are discussed
with the concerned departments head and suitable corrective actions are taken as per the
directions of Audit Committee on an ongoing basis to improve efficiency in operation.
During the year under review, no material or serious observation has been received from
the Internal Auditors of the Company for inefficiency or inadequacy of such controls.
RISK MANAGEMENT
The Company has in place a mechanism to inform Board Members about the risk assessment
and minimization procedures and periodical review to ensure that executive management
controls risks by means of a properly defined frame work. As required under Regulation 17
of Listing Regulations, the Company has formulated a Policy on Risk Management.
CASH FLOW ANALYSIS
In conformity with the provisions of Regulation 34 of the Listing Regulations, the Cash
Flow Statement forms part of annual report.
ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and safe
operations. The 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.
In order to prevent sexual harassment of women at work place, a new act the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has
been notified on 9th December, 2013. As per the said act, every company is required to set
up an Internal Complaints Committee (ICC) to look into complaints relating to sexual
harassment at work place of any women employee.
Accordingly, the Company has adopted a policy for prevention of Sexual Harassment of
Women at workplace and has set up an Internal Complaints Committee for implementation of
said policy.
There were no incidences of sexual harassment reported during the year under review.
WHISTLE BLOWER POLICY
In compliance of the requirements of Section 177 of the Companies Act, 2013 and as a
measure of good corporate governance practice, the Board has formulated a Whistle Blower
Policy. The policy comprehensively provides an opportunity for any employee / director of
the Company to raise any issue concerning breaches of law, accounting policies or any act
resulting in financial or reputation loss and misuse of office or suspected or actual
fraud. The policy provides for adequate safeguard against victimization of employees and
directors who avail of vigil mechanism and also provide for direct access to the Audit
Committee.
POLICIES AS PER SEBI LISTING REGULATIONS
As per requirements of provisions of Listing Regulations the Company has adopted the
following policies:
Policy for Preservation of Documents. (Regulation 9)
Policy for Determination and Disclosure of Material Events. (Regulation
30(4)(ii)) ?
Archival Policy, (Regulation 30(8))
Policy on Material Related Party Transactions. (Regulation 23)
Familiarization Programme for independent directors as per Regulation 25 of the
Listing Regulations.
As, the Company does not have any subsidiary, hence not formulated policy on material
subsidiary as stipulated under regulation 16(1)(c).
SECRETARIAL STANDARDS
The Company complies with all applicable mandatory secretarial standards issued by the
Institute of Company Secretaries of India.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Reporting as required by Regulation 34(2)(f) of the Listing
Regulations, is not applicable to your Company for the financial year ending March 31,
2019.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS OF THE COMPANY
There are no significant material orders passed by the Regulators / Courts which would
impact the going concern status of the Company and its future operations.
PARTICULARS OF EMPLOYEES
The detail as required pursuant to Section 197(12) read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees
of the Company, is given in Annexure - V.
The information required under Section 197(12) of the Companies Act, 2013 read with
Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 and forming part of the Directors' Report for the year ended 31st March, 2019.
The said Annexure is not being sent along with this Report to the Members of the
Company in line with the provisions of Section 136 of the Companies Act, 2013. Members who
are interested in obtaining these particulars may write to the Company
Secretary/Compliance Officer at the Registered Office of the Company. The aforesaid
Annexure is also available for inspection by the Members at the Registered Office of the
Company, 21 days before the Annual General Meeting and up to the date of the said Annual
General Meeting during the business hours on working days.
None of the employees listed in the said Annexure is a relative of any Director of the
Company. None of the employees hold (by himself or along with his/her spouse and dependent
children) more than two percent of the equity shares of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report on the operations of the Company as
required under regulation 34(2)(e) of the Listing Regulations forms part of this report.
LISTING ON STOCK EXCHANGES
The Company's shares are listed on BSE Limited and National Stock Exchange of India
Limited.
PAYMENT TO STATUTORY AUTHORITIES
During the year under review, there were delays in payment of dues statutory
authorities.
DISCLOSURES
The Company does not have any scheme of provision of money for the purchase of its own
shares by employees or by trustees for the benefit of employees.
The Company has devised proper systems to ensure compliance with the provisions of all
applicable Secretarial Standards issued by the Institute of Company Secretaries of India
and that such systems are adequate and operating effectively.
The Board of Directors state that except disclosures as given above, no further
mandatory disclosure or reporting is required to give with this report.
GREEN INITIATIVE
The Ministry of Corporate Affairs had taken the Green Initiative in Report on Corporate
Governance by allowing paperless compliances by Companies through electronic mode.
Your Company supports the Green Initiative and has accordingly decided to send
necessary communications to its Shareholders to their respective registered E-mail
addresses.
Your Company appeals to its Shareholders, who are yet to register the E-mail addresses
that they take necessary steps for registering the same so that you can also become a part
of the initiative and contribute towards a Greener environment.
Industry Structure and Development:
India is the largest cotton producer contributing 31.05% to world cotton, the second
largest exporter next only to USA and the second largest consumer next only to China.
In the world, cotton is being cultivated in an area of 33.40 million hectares about 45%
of world fiber requirement fulfilled by the cotton with a production of 27.60 million tons
for 2018-19 season, which is 6% higher compared to the previous season. Global average
yield for 2018/19 is being estimated at 792 kilograms per hectare. The world cotton
consumption estimated at 26.8 million tons is likely to outpace production. Stock levels
in China and elsewhere in the world are expected to decrease from 18.8 million tons to
18.2 million tons, due to the huge decrease in stocks held by China.
Cotton production in India is estimated to be lower at 32.1 million bales in cotton
season 2018-19 as compared to 36.5 million bales in 2017-18 while the domestic consumption
is estimated at 31.5 Million bales. Cotton sown on 122.23 Lac hectares across the country
during the cotton season 2018-19 compared to 124.29 Lac hectares in period 2017-18.
India's average yield to decline to 501.47 kg per hectares for cotton season 201819
from 506.07 kg the previous year.
Among the states Gujarat stood first with 93 Lakh bales followed by Maharashtra with 76
Lakh bales and Telangana with 42.07 Lakh bales, above three states combined contributing
nearly 67% to total cotton production during 2018. Though, Tamil Nadu stands first in
productivity with 1214 kg per hectare cotton production.
Cotton arrival in all over India about 258 Lakh bales till end of March'2019 during the
cotton seasons 2018-19. The carry-over stock at the end of this season on September 30,
2019 is estimated to be 13 lakh bales, which is lower by 15 lakh bales than the previous
closing stock of 28 lakh bales.
India's cotton exports for the cotton season 2018-19 are estimated at 47 lakh bales
which are lower by 22 lakh bales compared to the export of 69 lakh bales during last year.
India has already shipped nearly 38 lakh bales in the current season and contracts have
been signed for another 5-6 lakh bales scheduled for shipment in April-June.
India's cotton imports are set to more than double to 31 lakh bales this year as
compared to 15 lakh bales reported last year. The imports this year will set a new
milestone after 2016 when the country imported a record 29 lakh bales of cotton.
The ICAC has predicted the average global cotton price for 2018-19 price range from a
low of 75.60 cents to a high of 100.21 cents, of which the midpoint price level will be 86
cents per pound, lower than its earlier projection of 89 cents, on a likely decline in
consumption.
Financial and Operational Performance of the Company
STI India Limited (STI) is situated amidst the cotton growing belt of Madhya Pradesh
having 71040 Spindles and 32 Knitting Machines and producing spun yarn and knitted grey
fabric. The Company is doing Job Work for Bombay Rayon Fashions Limited, the Holding
Company of the Company.
During the financial year under review the turnover of your company stood at Rs.
4090.78 Lacs as against Rs.3732.83 Lacs in financial year ended on 31st March, 2018
registering an increase by 9.59%. PBIDT increased to Rs. (197.37) Lacs from Rs. (332.26)
Lacs in the previous year. Interest cost decreased to Rs. 0.07 Lacs from Rs. 0.39 Lacs in
the previous year
RISKS AND CONCERNS:
The Company has laid down a well-defined Risk Management Framework covering the risk,
risk exposure, potential impact and risk mitigation process. Major risks identified by the
business and functions are systematically addressed through mitigating actions on
continuing basis. These are discussed at the meetings of the Audit Committee and the Board
of Directors of the Company.
The Company has framed Risk Management Policy. The Audit Committee and Board review the
risks and suggest steps to be taken to control and mitigate the same through a properly
defined framework.
The Company's Board of Directors perceives the following risks as high risks areas:-
1. Currency / Foreign Exchange Risks
2. Procurement Risks
3. Business Risks
The textile business, like other businesses, is susceptible to various risks. The
primary risk factor is raw material prices, mainly cotton which is the largest component
of cost. Since cotton is an agricultural produce, it suffers from climatic volatility in
the major cotton producing countries.
Other factors like shortage of skilled workers coupled with lack of uninterrupted
power, high transaction cost, and high cost of labour are hindering the progress.
However, we are making all our efforts to cope with all these challenges by continuous
efforts at cost reduction and modernization.
Opportunities:
Large potential in International Market.
Product development and diversification to cater global needs.
Elimination of Quota Restrictions leads to greater Market Access.
Market is gradually shifting towards Branded Readymade Garments.
Emerging Retail Industry and Malls provide huge opportunities for the Apparel,
Handicraft and other segments of the industry.
Greater Investment and FDI opportunities are available.
Large scope for technical textile linked with growing industrialization, large
infrastructure projects in stream.
Threats:
Competition from other developing countries, especially China in domestic market
also- will lead to consolidation.
Rising prices of inputs-raw material
Formation of trading blocks
Strengths:
Independent & Self-Reliant industry.
Availability of Low Cost and Skilled Manpower
Availability of large varieties of cotton fiber and has a fast Growing synthetic
fiber industry.
India has great advantage in Spinning Sector and has a Presence in complete
textile value chain
Weakness:
The fabric and garmenting sector need modernization, which is under process.
Infrastructural Bottlenecks and Efficiency such as, Transaction time at Ports
and transportation Time.
Unfavorable labor Laws.
Lack of Trade Membership, which restrict to tap other Potential market
Higher Indirect Taxes, Power and Interest Rates.
Segment-wise or Product-wise Performance
The Company is engaged in the business of manufacturing of Spun Yarn and knitted grey
fabrics and accordingly this is the only single reportable segment.
Internal Control System and their Adequacy
The Company has a proper and adequate system of internal controls to ensure that all
assets are safe guarded and protected against loss from unauthorized use or disposition,
and the transactions are authorized, recorded and reported correctly. The internal control
systems of the Company comprises of Statutory Audit, Secretarial Audit and Internal Audit.
The work of all the audits have been assigned to reputed, external, independent and
qualified firms.
The Company appointed M/s. Fadnis & Gupte, Chartered Accountants, as internal
auditors. The prime objective of this audit is to test the adequacy and effectiveness of
all internal control systems and suggest improvements.
The Audit Committee periodically reviews the adequacy and effectiveness of the internal
controls and suggests improvements so that the internal controls system be strengthened
further with commensurate growth and size of the Company and concentrated its efforts to
improve the system in such a way that the financial and other data should be reliable
while preparing the financial statements in accordance with the applicable laws and that
every transactions whether it is a financial nature or any other must describe its true
nature
Human Resource Management / Environmental Safety Measures.
Employees are the key to achievement of the Company's objective and strategies. The
Company takes pride in the commitment, competence and dedication shown by its employees in
all areas of business. Various HR initiatives are taken to align the HR Policies to the
growing requirement of the business by building trust, instilling loyalty and coaching for
results where best employees want to work. In our business context, the employees undergo
various training programmes including management development programmes to upgrade their
professional, inter-personal and management skills, covering the entire spectrum of
employees. Technical and safety training programmes are also conducted periodically. Our
relationship with the employees continues to remain cordial and harmonious throughout the
year.
Total employees strength of the company as on 31st March, 2019 was 591 (695
as on 31st March, 2018).
Your Company is fully committed to the safety, health and well-being of its employees
and to minimizing the environmental impact on its business operations. The Company has a
range of policies, including on quality, safety and health aspects to guide the employees
for better work practices, actions and decisions. The Company strives to continuously
improve the effectiveness of its policies and the employees are encouraged to contribute
their mite in this direction. All employees are obliged to ensure that they fully
understand and accept all policies and that they do fully comply with the requirements.
The Company is conscious of the importance of environmentally clean and safe
operations. The Company's policy requires the conduct of all operations in such manner so
as to ensure safety of all concerned, compliance of statutory and industrial requirements
for environment protection and conservation of natural resources to the extent possible.
The Company is known for developing unique and healthy human development and management
policies and their implementation in fair and transparent manner. Considering our
responsibility towards employees as well as society and in view of the present scenario of
the country wherein number of cases of sexual harassment against women are coming in to
light, the Company realizes its social responsibility in ensuring safe environment at the
work place free from sexual harassment to its female employees.
Internal Complaints Committee: Your Company has formulated an "Internal
Complaints Committee (ICC)" as per the Sexual Harassment of Woman at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, that will ensure a work environment
free of all forms of sexual harassment verbal, written, physical, visual or
otherwise.
The Committee is formed as per the statute and the majority of members of the Committee
are woman employees. The sole objective of the Committee is to address cases of sexual
harassment against women properly and judiciously. The Committee lays down the whole
procedure of filing complaints, enquiry, redressal of grievance and taking action against
those who are found guilty by the Committee in a fair and transparent manner.
Whistle Blower Policy
The Company has also formulated Whistle Blower Policy for vigil mechanism of Directors
and employees to report to the management about the unethical behavior, fraud or violation
of Company's Code of Conduct. The mechanism provides for adequate safeguards against
victimization of employees and Directors who use such mechanism and makes provision for
direct access to the chairperson of the Audit Committee in exceptional cases.
CAUTIONARY STATEMENT
Statements in the Board's Report describing the 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 the 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.
APPRECIATIONS AND ACKNOWLEDGEMENTS
The board would like to place on record its deep appreciation to the financial
institutions, banks, business partners, central and state government authorities, stock
exchanges and clients for their support and co-operation during the year.
We would also like to place on record our sincere appreciation for the commitment,
dedication and hard work put in by every employee of the Company. We are also deeply
grateful for the confidence and faith expressed by the stakeholders in the Company.
Your Directors would also like to take this opportunity to acknowledge the excellent
support given by Bombay Rayon Fashions Limited, the Holding Company of your company, in
providing the financial assistance and excellent management support and guidance at all
levels of business. This has enabled the Company to run its business smoothly and
effectively for the accomplishment of its objectives.
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For and on behalf of the Board |
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Of STI India Limited |
Place: Indore |
Mr. Aman Agrawal |
Date: 28th May, 2019 |
Chairman |
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DIN: 00019534 |
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