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Directors Report of Soma Textiles & Industries Ltd.
Mar 31, 2025
Your Directors have pleasure in presenting their Eighty-Seventh (87th) Annual Report of the Company, together with the
audited financial statements for the financial year ended 31st March, 2025.
1. FINANCIAL PERFORMANCE
The Financial Year 2024-25 remained challenging in the business scenario of the Textile Industry due to combination
of global and domestic factors.
The revenue from operations for the year 2024-25 was '' 948.75 lakhs as compared to Rs 572.68 lakhs in previous
year, an increase of 65.71 %.
The Loss before Exceptional item and Tax was Rs 131.66 lakhs against the previous year profit of Rs 173.05 lakhs.
The net profit for the year was ''6926.87 lakhs against the previous year net profit of '' 2109.23 lakhs.
2. DIVIDEND
The Board of directors of your company have not recommended any dividend for the Financial Year ended 31st March,
2025, considering the needs for capital conservation and appreciation/ conserving the profit.
3. PRESENT STATUS OF THE UNIT
The Company was primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings
and Garments. The Hon''ble Gujarat High Court directed to close down the operations of polluting industries in and
around Ahmedabad in the state of Gujarat and the decision of the High Court was upheld by Hon''ble Supreme Court
of India, due to which the Company has discontinued its core manufacturing operations and disposed of the plant and
Machinery of the Company.
In order to sustain the business, preserve shareholder value, and utilize existing expertise, the Company strategically
engaged in trading of cotton from the month of November, 2022.
4. EXPORT
The FOB value of the exports during the Year under review was Nil against zero export in the previous year due to the
closure of the manufacturing operation as detailed in point No 3.
5. CHANGE IN NATURE OF BUSINESS
During the year under review, there was no change in the nature of business of the Company.
6. ANALYSIS AND REVIEW
India''s textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries.
The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, while
the capital-intensive sophisticated mills sector on the other end. The decentralized power looms/ hosiery and knitting
sector forms the largest component in the textiles sector. The close linkage of textiles industry to agriculture (for raw
materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique
in comparison to other industries in the country. India''s textiles industry has a capacity to produce wide variety of
products suitable for different market segments, both within India and across the world.
7. OPPORTUNITIES AND CHALLENGES
The future for the Indian textiles industry looks promising. The Indian textile industry has vast potential for growth,
buoyed by strong domestic consumption as well as export demand. However, to get maximum advantage of the
vast potential of this vibrant industry, the Government and Industry need to work towards addressing key challenges
including obsolete machinery and technology, threats to handloom sector, power shortage, illicit markets, labour-
related concerns, raw materials shortage.
8. EXPANSION AND MODERNISATION
Company is no more in manufacturing activities, hence the Company did not go for expansion and modernization.
9. CONSOLIDATED FINANCIAL STATEMENT
As required by Regulation 33 of the SEBI (LODR) Regulations, 2015, the Consolidated Audited Financial Statements
have been prepared in accordance with the requirements under Accounting Standard AS-21 on âConsolidated
Financial Statementsâ read with AS-23 on the âAccounting for Investment in Associatesâ read with the provisions of
Companies Act, 2013, are provided, forming part of the Annual Report.
10. CASH FLOW STATEMENT
In compliance with the requirement of Section 34 of the SEBI (LODR) Regulations, 2015, the Cash Flow Statement for
the year ended 3151 March, 2025 prepared in accordance with the applicable Accounting Standard, is annexed to the
financial statement, which forms part of the Annual Report.
11. INSURANCE
The Company''s properties including its Building, Plant & Machinery and Stocks among others continue to be
adequately insured against fire, flood, earthquake, explosive and other such risks, as considered to be prudent and
necessary.
12. INTERNAL FINANCIAL CONTROL
The Company has in place internal financial control systems commensurate with the size, nature and complexity of
its operations ensuring proper recording of financials and monitoring of operational effectiveness and efficient conduct
of its business including adherence to the Company''s Policies, safeguarding of its assets, prevention and detection of
frauds and errors, accuracy and completeness of accounting records and compliance of various applicable regulatory
and statutory requirements.
The Internal Auditor monitors and evaluates the efficiency and adequacy of Internal Control System. Based on
their report, corrective actions are undertaken by the concerned departments and thereby strengthen the Controls.
Significant audit observations corrective measures and actions thereon are presented to the Audit Committee of the
Board.
During the year such controls were tested and no reportable material weaknesses were observed.
The Audit Committee comprises the majority of Independent Directors in terms of the applicable provisions of the
Companies Act, 2013 and SEBI (LODR) Regulations, 2015.
13. FIXED DEPOSITS
Your Company has not accepted any deposit from the Public/Members under Section 73 of the Companies Act, 2013,
read with Companies (Acceptance of Deposit) Rules, 2014 during the year under review and there are no deposits
pending with the Company as on the Balance Sheet closure date.
14. SHARE CAPITAL
There has been no change in the Company''s Issued, Subscribed and Paid-up Equity Share Capital in between the
end of financial year 31st March, 2025 and 31st March, 2024. On 31st March, 2025, the Equity Share Capital stood at ''
3303.30 Lacs, divided in to 33033000 Equity Shares of '' 10 each.
15. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment
The appointment of Mrs Rita Chatterjee (DIN: 07973942) as an independent Director, not liable to retire by rotation, by
the board of Directors, to fill the casual vacancy, caused by resignation of Mrs. Nisha Singh, with effect from June 10,
2024, confirmed and approved to hold office for a term of five consecutive years i.e., from June 10, 2024 till June 09,
2029 in the 86th Annual general Meeting of the company held on 7th September, 2024.
Shri Omprakash Laxminarayan Kabra (DIN: 10636063), was appointed as an Independent Director (under Non¬
Executive category) of the Company, to hold office for a term of five consecutive years i.e., from August 29, 2024 till
August 28, 2029 in 86th Annual general Meeting of the company held on 7th September, 2024.
Shri Amit Nandkishore Shah (DIN: 00915449), was appointed as an Independent Director (under Non-Executive
category) of the Company, to hold office for a term of five consecutive years i.e., from February 10, 2025 till February
09, 2030 through Postal Ballot on 28th march, 2025.
Independent Directors hold office for a fixed term of five years and are not liable to retire by rotation
Re-appointment
The term of Office of Shri Arvind Kumar Somany (Shri Somany) (DIN: 00024903), as a Managing Director, designated
as Key Managerial Personnel of the Company, will end owing to efflux of time from the close of business on 21st
January, 2026.
Pursuant to Section 196 and 197, read with Schedule V and other relevant provisions of the Act and based on
recommendation of the Nomination and Remuneration Committee, the Board of Directors has considered and
recommends the re-appointment of Shri Somany, as Managing Director, for further term of three years effective from
22nd January, 2026, well in advance to seek Shareholders approval at the forthcoming AGM of the Company. An
appropriate resolution, to this effect is being proposed to the Members of the Company at the forth-coming 87th AGM.
Cessation
Shri Brij Kishore Hurkat (DIN: 02005896) and Shri Malaybhai Harshad Bhai Shah (DIN: 01394920), Independent
Directors of the Company upon completion of their second and final term as Independent Directors, ceased to be the
Directors of the Company w.e.f. the close of business hours on August 28, 2024 and February 09, 2025 respectively.
The Board places on record the valuable services rendered by Shri B K Hurkat and Shri M H Shah during their tenure
as Director of the company and expresses its deep sense of appreciation and gratitude for the same.
Rotation
At the forthcoming 87th Annual General Meeting (AGM) of the Company, Shri S. K. Somany (DIN: 00001131) retires by
rotation and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act,
2013 (âthe Actâ), and Articles of Association of the Company. The Board recommends his re-appointment.
Brief resume, nature of expertise and details of directorship held in other companies of Shri S. K. Somany, proposed
to be appointed is given in the Notice of the Ensuing General Meeting (AGM), as stated under Secretarial Standard 2
and Regulation 36 of the SEBI (LODR) Regulations, 2015
None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section
164(2) of the Companies Act, 2013.
Key Managerial Personnel
Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of the Act read with the Rules framed
thereunder, the following persons are the Key Managerial Personnel of the Company as on March 31,2025 are Shri S.
K. Somany, Non-Executive Chairperson, Shri A. K. Somany, Managing Director & CEO, Shri Shrikant Bhairaveshwar
Bhat, Whole-time Director & Chief Financial Officer and Mrs. Reena Prasad, Company Secretary & Compliance
Officer.
16. DECLARATION OF INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors, under Section 149(7) of the
Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies
Act, 2013 and Regulation 25 of the SEBI (LODR) Regulations, 2015.
17. CORPORATE SOCIAL RESPONSIBILITY
The Company does not fall within the ambit of Section 135 of the Companies Act, 2013, read with the Companies
(Corporate Social Responsibilities Policy) Rules, 2014. Therefore the Annual Report on Corporate Social Responsibility
initiatives as required under the said act is not applicable to the Company. In view thereof, the Annual Report on CSR
activities is not annexed.
18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE
COMPANIES ACT, 2013
The Company has not provided any loan to any person or body corporate or given any guarantee or provided security
in connection with such loan or made any investment in the securities of any Body Corporate pursuant to Section 186
of the Companies Act, 2013, during the financial year ended 31st March, 2025.
19. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY
The âPolicy on Related Party Transaction'', dealing with the review and approval of related party transactions, was
amended in line with the requirements of SEBI (Listing Obligations and Disclosure Requirements) (Amendment)
Regulations, 2018. The policy is available on the Company''s website at the web link: www.somatextiles.com/home.
php/investors/policies.
All contracts/ arrangements/ transactions entered into by the Company, during the financial year, with related parties,
as defined under Section 188 of the Companies Act, 2013 and the relevant rules made thereunder, were in ordinary
course of business and on arm''s length.
During the year under review, all RPTs entered by the Company were in the ordinary course of business and in respect
of transactions with related parties under Section 2(76) of the Act, are at arm''s length basis and were approved by
the members of the Audit Committee including Independent Directors. The Company had sought the approval of
shareholders through Postal Ballot dated 12th November, 2024 pursuant to Sections 110 and 108 of the Companies
Act, 2013 for material RPT as per Regulation 23 of the SEBI Listing Regulations. Similarly, the Company intends
seeking approval of its Members for material related party transactions for FY 2026 at its ensuing AGM to be held on
September 26, 2025.
All related party transactions were in compliance with the applicable provisions of the Companies Act 2013 and SEBI
Listing Regulations. Details with respect to transaction(s) with the Related Party(ies) entered into by the Company
during the reporting period are disclosed in the accompanying Financial Statements and the details pursuant to clause
(h) of Section 134(3) of Act and Rule 8(2) of the Companies (Accounts), Rules 2014 are given in the form AOC-2
which is annexed to this Report and forms an integral part of this Report.
20. LISTING ON STOCK EXCHANGES
The Equity Shares of the Company are listed at the following Stock Exchanges:-
(a) BSE Limited (BSE).
Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001
(b) National Stock Exchange of India Limited (NSE).
Address: Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai-400051.
NOTE:
(i) Listing fees have been paid to the Stock Exchanges for the year 2025-26.
(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No. CSEA/ID/223/2008 dated 16th April, 2008,
confirmed the delisting of Company''s Shares from the official List of their exchange. However Equity Shares
have been allowed to be traded under the âPermitted Categoryâ on the Exchange considering the interest of
General Investors in the Company.
Stock Code
(i) NSE - SOMATEX, (ii) BSE - 521034, (iii) CSE - 29067.
De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.
21. DELISTING FROM STOCK EXCHANGE
The Company had vide its application dated 31 st March, 2021 submitted an application for voluntary delisting of
its equity shares from BSE Limited pursuant to applicable regulations under the SEBI (Delisting of Equity Shares)
Regulations. However, after careful consideration, the Board of Directors has decided not to pursue the delisting
application any further. Accordingly, the Company has withdrawn/dropped the said application, and the equity shares
of the Company shall continue to remain listed on BSE Limited.
Further, the Equity Shares of the Company will continue to be listed on Bombay Stock Exchange Ltd and National
Stock Exchange of India Limited.
22. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR
DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR
REPORTS
The Auditors Report and Secretarial Auditors Report do not contain any reservation, qualification or adverse remark
and therefore need no explanations or comments from the Board of Directors.
23. BOARDâS EVALUATION OF THE PERFORMANCE
In compliance with the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations,
2015, the Board has carried out an annual evaluation of its own performance, and that of its Committees and Individual
Directors. Feedback was sought by way of a structured questionnaire covering various aspect of Board''s functioning,
such as adequacy of the Composition of the Board and its Committee, Board culture, execution and performance
of specific duties obligations and governance. The manner in which the evaluation has been carried out has been
provided in the Corporate Governance Report, forming part of Board''s Report.
24. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the year Four (4) Board Meetings were held, the details of which are given in the Report on Corporate
Governance, that forms part of the Board''s Report.
The maximum interval between the two meetings did not exceeded 120 days, as prescribed in the Companies Act,
2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
25. AUDIT COMMITTEE
The Audit Committee comprises of Four (4) members, Majority of them are Independent Directors namely; Shri O.
P. Kabra Chairman, Shri A. N. Shah, Mrs. Rita Chatterjee., and Shri S. K. Somany a Non-Independent & Promoter
Director, as other member of the Committee. Thus the composition is in conformity with the requirements of section
134(3) and section 177(8) of the Companies Act, 2013, read with the provisions of SEBI (LODR) Regulations, 2015.
Four (4) Meetings of the Audit Committee were held during the year under review, the details of which are given in the
Report on Corporate Governance, forming part of this Report. The Board of Directors accepted all recommendations
of the Audit Committee in the reporting period.
26. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER MECHANISM
The Company has in place a Whistle Blower Policy, as a part of Vigil Mechanism to provide appropriate avenues to
the Directors, employees and other Stakeholders of the Company to bring to the attention of the Management any
issue which is perceived to be in violation of or in conflict with the Code of conduct, values, principles and beliefs
of the Company. The established Vigil Mechanism helps to report concerns about any unethical conduct, financial
malpractices or any unhealthy practice prevalent in the Company.
The said Vigil Mechanism provides for adequate safeguards against victimization of persons who use such mechanism
and also provides for direct excess to the Chairman of the Audit Committee.
The details of this Policy is explained in the Corporate Governance Report forming part of Board''s Report and are also
available on the Company''s website; www.somatextiles.com/home.php/investors/policies.
27. REMUNERATION POLICY
The Board has, on recommendation of the Nomination & Remuneration Committee framed a policy for selection and
appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications,
positive attributes, independence of Directors and other matters as per Companies Act, 2013 and the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (âLODR Regulationsâ). The salient features of Company''s
Nomination and Remuneration Policy is stated in the Corporate Governance Report. The Policy is available on the
website of the Company viz. www.somatextiles.com.
28. CORPORATE GOVERNANCE
Your Company upholds the Standards of Governance and is compliant with the provisions of Corporate Governance,
as Stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (listing Regulations).
A Report on âCorporate Governance'' as well as the certificate from Company''s Statutory Auditors, confirming
compliance with the requirements of SEBI Listing Regulations, forms part of the Annual Report
29. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs, Government of India, had issued a set of Voluntary Guidelines 2009 on Corporate
Governance in December, 2009, for voluntary adoption of a set of good practices by the Corporate Sector. These
guidelines are expected to serve as a bench mark for the Corporate Sector and also help them in achieving the
highest Standard of Corporate Governance. Guidelines are reviewed by the Management from time to time to ensure
the adherence of the same voluntarily commensurate with the requirements, best suited to your Company gradually
in phases.
30. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report under review, as stipulated under SEBI (Listing Obligations &
Disclosure Requirements) Regulations, 2015 is presented by virtue of an Annexure, forming part of the Directors''
Report.
31. DIRECTORSâ RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Board of Directors of your Company to the best of
their knowledge and belief and on the basis of information and explanation obtained from the operating management,
hereby states and confirms: -
(a) that in the preparation of attached Annual Accounts for the Financial Year ended 31st March, 2025 the applicable
Accounting Standards have been followed along with proper explanation relating to material departures,
wherever, applicable;
(b) that they have selected the Accounting Policies described in notes to accounts, which have been consistently
applied, except where otherwise stated and made judgments and estimates that are reasonable and prudent so
as to give a true and fair view of the state of affairs of the Company as on 31st March, 2025 and of the loss of the
Company for the year ended on that day.
(c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance
with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities; and
(d) that they have prepared the attached Annual Accounts on a âgoing concern'' basis.
(e) that they had laid down internal financial controls to be followed by the Company and that such internal controls
are adequate and were operating effectively.
(f) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that
such systems were adequate and operating effectively.
32. STATUTORY AUDITORS
In compliance with the provisions of Section 139 and other applicable provisions of the Companies Act, 2013 and the
Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s)/ re-enactment(s)/ amendment(s)
thereof, for the time being in force), the Members at the Eighty-fourth (84th) Annual General Meeting held on 31st
August 2022, had appointed M/s. Pipara & Co.LLP, Chartered Accountants (ICAI Registration No. 107929W), as the
Statutory Auditors of the Company, to hold office for a term of five (5) consecutive years from the conclusion of the 84th
Annual General Meeting until the conclusion of the 89th Annual General Meeting of the Company.
However, with the Notification dated May 7, 2018 issued by the Ministry of Corporate Affairs (âMCA''), the first proviso
to section 139(1) of the Companies Act, 2013, pertaining to the requirement of annual ratification of appointment of
Auditors by Members is omitted.
Accordingly, as per the Companies (Amendment) Act, 2017, ratification of the appointment of Statutory Auditors during
their period of appointment will not be considered.
33. SECRETARIAL AUDITOR
The Board has appointed M/s. Drolia & Company, Company Secretaries, Kolkata, in practice having Certificate of
Practice No. 1362, as the Secretarial Auditors of the Company for carrying out the audit of secretarial and other
relevant records of the Company for a term of five years i.e. from the financial year 2025-26 upto the financial year
2029-30.
Necessary resolutions for obtaining approval of the Members in respect of the above appointment have been
incorporated in the notice of the forthcoming Annual General Meeting.
34. MANAGERIAL REMUNERATION
Details of the ratio of the remuneration of each director to the median employee''s remuneration and other details as
required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is attached to this Report.
35. SECRETARIAL AUDIT REPORT
A Secretarial Audit Report given by the Secretarial Auditors for the financial year ended 31 st March, 2025, in the
prescribed form MR-3 is annexed herewith as Annexure to this Report and forms an integral part of this Report.
There are no qualifications, reservations and adverse remarks made by the Secretarial Auditors in their Report.
36. INDUSTRIAL RELATIONS
Industrial relations in your Company, during the year under review continued to be cordial and harmonious.
37. COST AUDITORS
Manufacturing unit of the Company at Ahmedabad was closed as per the Order of Supreme Court following the order
of High Court, Gujarat. Therefore, there is no requirement to appoint Cost Auditor in terms of the applicable provisions
of the Companies Act, 2013, read with the Companies (Cost Records & Audit) Amendment Rules, 2014.
38. DEPOSITORY SYSTEMS
The Company''s Shares are currently traded in dematerialized form, as per the SEBI directives and the Company
has entered in to agreements with the following Depositories i.e. National Securities Depository Limited (NSDL) and
Central Depository Services (India) Limited (CDSL), for trading in dematerialized form.
Members are therefore advised to avail of the services either of the depositories, to dematerialize their physical
shares, if any held by them, for trading in Company''s shares smoothly and conveniently.
As on March 31, 2025, 32,547,305 Equity Shares are held in dematerialized form and represent 98.53% of the
Company''s total paid up Capital.
39. SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment
of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 to ensure harassment free workplace for
employees. Sexual harassment cases are dealt as per the Company''s Policy on âPrevention of Sexual Harassment''.
Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.
All employees (permanent, contractual, temporary, trainees) are covered under this policy.
Disclosure on such cases are as follows:-
a) Number of complaints of sexual harassment received in the year 2024-25: NIL
b) Number of complaints disposed off during the year 2024-25: NIL
c) Number of cases pending for more than 90 days: NIL
40. ACCOUNTS OF THE SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES
The statement containing the silent features of the financial statement of the company''s associate companies under
the first proviso to sub-section (3) of section 129 of Companies Act, 2013 is enclosed as AOC-1 in the Annexure.
41. PARTICULARS OF EMPLOYEES
None of the employees of the Company was in receipt of remuneration for the year or part of the year under review, in
excess of the amount of remuneration prescribed under Section 197 of the Companies Act, 2013 read with Rule 5(2)
and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended upto
date.
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and
Remuneration) Rules, 2014 is annexed and forms a part of this Report.
42. EXTRACT OF ANNUAL RETURN
In accordance with the provisions of Section 134(3)(a) of the Companies Act, 2013, the Annual Return in prescribed
format may be accessed on the Company''s website at www.somatextiles.com.
43. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND
OUTGO
The Company is primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings and
Garments.
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be
disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts)
Rules, 2014, as amended is given in the Annexure and forms part of this Report.
44. RISK MANAGEMENT
The Company has in place mechanism to inform Board Members about the Risk Assessment and Risk Minimization
procedures which are periodically reviewed to ensure that risks and uncertainties are systematically identified,
prioritized and initiated on constant basis.
The risk management procedure is reviewed by the Audit Committee from time to time to ensure that the executive
management controls the risks and uncertainties through a proper defined framework and major risks, are properly
and systematically addressed through mitigation actions on continuing basis.
45. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report as per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, describing the initiatives taken by them from an environmental, social and governance perspective
is not applicable to the Company, for the financial year 2024-25 as per the SEBI Notification dated 22nd December,
2015 and Frequently Asked Questions issued by SEBI on SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 dated 29th January, 2016.
46. CAUTIONARY STATEMENT
Statements in the Board''s Report and the Management Discussion & Analysis describing Company''s objectives,
expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations.
Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future
performance and outlook.
47. VARIATION IN VALUATION
During the year under review, there was no instance of one-time settlement with any bank or financial institution
necessitating disclosure or reporting in respect of difference in valuation done by the Company.
48. COMPLIANCE OF SECRETARIAL STANDARDS
The Company complies with all applicable Secretarial Standards as mandated by the Institute of Company Secretaries
of India.
49. OTHER DISCLOSURES/REPORTING:
Your Directors state that no disclosure and/or reporting is required in respect of the following items as there were no
transactions on these items during the year under review:
⢠Issue of equity shares with differential rights as to dividend, voting or otherwise;
⢠Issue of shares (including sweat equity shares) to employees of the Company under any scheme;
⢠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;
50. ACKNOWLEDGEMENT
Your Directors place on record their sincere thanks and appreciation for the continuing support and assistance received
from the financial institutions, banks, government as well as non-government authorities, customers, vendors, stock
exchange and members during the period under review.
Your Company takes pride in all of its dedicated officers, employees and workers, who have been wholeheartedly
supporting and sincerely contributing their best for the success and growth of your Company as well as maintaining
harmonious relations throughout the Company.
On behalf of the Board
Place : Ahmedabad (S. K. SOMANY)
Date : 30th May, 2025 Chairman
Mar 31, 2024
The Directors have pleasure in presenting their Eighty-Sixth (86th) Annual Report of the Company, together with the audited financial statements for the financial year ended 31st March, 2024.
1. FINANCIAL PERFORMANCE
There was no improvement in the business scenario of the Textile Industry and is continued to remain challenging.
The revenue from operations for the year 2023-24 was '' 572.68 lakhs as compared to '' 519.73 lakhs in previous year, an increase of 10.19 %.
The profit before Exceptional item and Tax was '' 173.05 lakhs against the previous year loss of '' 215.73 lakhs.
The net profit for the year was '' 2112.63 lakhs against the previous year net profit of ''16547.42 lakhs.
2. DIVIDEND
The Board of Directors of your Company have not recommended any dividend for the Financial Year ended 31st March, 2024, considering the loss during the year and brought forward losses.
3. PRESENT STATUS OF THE UNIT
The unit as other industrial units in Ahmedabad city was discharging treated liquid effluents through its normal ETP in to the sewer lines of AMC as a result of directions issued by High court of Gujarat in the suo motu writ petition (PIL) No.98 of 2021 to severe the industrial effluent sewage connection. The court directed the AMC to disconnect the water and drainage connections of industrial units which release partially treated/untreated water and added that no re-connection shall be granted by AMC without prior approval of GPCB.
On January 28, 2022 the high court of Gujarat had rejected applications filed by 11 industrial units against the AMC and GPCB after they snapped drainage connections of 393 industrial units during the drive following the High court order. The industries had raised the issue of the right to discharge treated effluents in to the AMC sewage lines but he court discussed the law in detail and concluded that industries do not have a right to release their treated effluents in sewage lines and mix them with domestic waste water. The industrial units filed an appeal against the High Court order in the Supreme Court but the same was rejected by Supreme Court on 25.3.2022 and upheld the high court order by which it refused to allow the industrial units to discharge their treated effluents into the AMC sewage lines. Due to this Manufacturing operation of the company is discontinued.
4. EXPORT
The FOB value of the exports during the Year under review was Nil against zero export in the previous year due to the closure of the manufacturing operation as detailed in point No 3.
5. ANALYSIS AND REVIEW
India''s textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries.
The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital-intensive sophisticated mills sector on the other end. The decentralized power looms/ hosiery and knitting sector forms the largest component in the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. India''s textiles industry has a capacity to produce wide variety of products suitable for different market segments, both within India and across the world.
6. OPPORTUNITIES AND CHALLENGES
The future for the Indian textiles industry looks promising. The Indian textile industry has vast potential for growth, buoyed by strong domestic consumption as well as export demand. However, to get maximum advantage of the vast potential of this vibrant industry, the Government and Industry need to work towards addressing key challenges including obsolete machinery and technology, threats to handloom sector, power shortage, illicit markets, labour-related concerns, raw materials shortage.
7. EXPANSION AND MODERNISATION
Company''s manufacturing operation is closed due to the reason mentioned in point no 3 hence the Company did not go for expansion and modernization.
8. CONSOLIDATED FINANCIAL STATEMENT
As required by Regulation 33 of the SEBI (LODR) Regulations, 2015, the Consolidated Audited Financial Statements have been prepared in accordance with the requirements under Accounting Standard AS-21 on âConsolidated Financial Statementsâ read with AS-23 on the âAccounting for Investment in Associatesâ read with the provisions of Companies Act, 2013, are provided, forming part of the Annual Report.
9. CASH FLOW STATEMENT
In compliance with the requirement of Section 34 of the SEBI (LODR) Regulations, 2015, the Cash Flow Statement for the year ended 31st March, 2024 prepared in accordance with the applicable Accounting Standard, is annexed to the financial statement, which forms part of the Annual Report.
10. INSURANCE
The Company''s properties including its Building, Plant & Machinery and Stocks among others continue to be adequately insured against fire, flood, earthquake, explosive and other such risks, as considered to be prudent and necessary.
11. INTERNAL FINANCIAL CONTROL
The Company has in place internal financial control systems commensurate with the size, nature and complexity of its operations ensuring proper recording of financials and monitoring of operational effectiveness and efficient conduct of its business including adherence to the Company''s Policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and compliance of various applicable regulatory and statutory requirements.
The Internal Auditor monitors and evaluates the efficiency and adequacy of Internal Control System. Based on their report, corrective actions are undertaken by the concerned departments and thereby strengthen the Controls. Significant audit observations corrective measures and actions thereon are presented to the Audit Committee of the Board.
During the year such controls were tested and no reportable material weaknesses were observed.
The Audit Committee comprises the majority of Independent Directors in terms of the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.
12. FIXED DEPOSITS
Your Company has not accepted any deposit from the Public/Members under Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposit) Rules, 2014 during the year under review and there are no deposits pending with the Company as on the Balance Sheet closure date.
13. SHARE CAPITAL
There has been no change in the Company''s Issued, Subscribed and Paid-up Equity Share Capital in between the end of financial year 31st March, 2024 and 31st March, 2023. On 31st March, 2024, the Equity Share Capital stood at '' 3303.30 Lacs, divided in to 33033000 Equity Shares of '' 10 each.
Board of Directors of the Company in their meeting held on 12â February, 2024, had redeemed 9,75,000, 0.01% NonConvertible Cumulative Redeemable Preference Shares of '' 100 each aggregating to '' 9,75,00,000/- (Rupees Nine Crore Seventy Five Lacs Only) out of the profit of the company.
14. DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment
Shri Omprakash Laxminarayan Kabra and Mrs Rita Chatterjee are Non-Executive Directors, designated as Independent Director on the Board of Directors (âthe Board'') of the Company. With the enactment of the Companies Act, 2013 (âthe Act''), it is now incumbent upon every listed company to have the requisite number of Independent Directors on the Board. Shri Omprakash Laxminarayan Kabra is being appointed as Additional Directors, designated as Independent Director of the Company under the Act and Mrs Rita Chatterjee is being appointed as Independent Director in casual vacancy, caused by the resignation of Mrs. Nisha Singh.
The Board recommends the appointment of Shri Omprakash Laxminarayan Kabra and Mrs Rita Chatterjee, as Independent Directors of the Company, not liable to retire by rotation, to hold office for a term of five consecutive years with effect from 29th August, 2024 and 10th June, 2024 respectively.
Shri Omprakash Laxminarayan Kabra and Mrs Rita Chatterjee satisfies the criteria of independence prescribed under the Companies Act, 2013 and SEBI LODR. In accordance with the circular dated June 20, 2018, issued by the Stock
Exchanges, we confirm that they are not debarred from holding the office of Director by virtue of any order passed by SEBI or any other such authority.
Necessary resolutions for obtaining approval of the Members in respect of the above appointments have been incorporated in the notice of the forthcoming Annual General Meeting.
Independent Directors hold office for a fixed term of five years and are not liable to retire by rotation Re-appointment
Shri S. B. Bhat (Shri Bhat), who is also a whole-time Director, designated as Executive Director of the Company. The term of Office of Shri Bhat (DIN: 00650380), as a Whole-time Director, designated as Executive Director of the Company, will end owing to efflux of time from the close of business on 17th January, 2025.
Pursuant to Section 196 and 197, read with Schedule V and other relevant provisions of the Act and based on recommendation of the Nomination and Remuneration Committee, the Board of Directors has considered and recommends the re-appointment of Shri S. B. Bhat, as Whole-time Director, for further term of three years effective from â18th January, 2025, well in advance to seek Shareholders approval at the forthcoming AGM of the Company. An appropriate resolution, to this effect is being proposed to the Members of the Company at the forth-coming 86th AGM.
Cessation
Mrs. Nisha Singh (DIN: 07094208) has tendered her resignation as Non-Executive and Independent Director of the Company with effect from close of business hours on 23rd March, 2024 and confirmed to the Board that there are no other material reasons for other than those mentioned in resignation letter .
The Board places on record the valuable services rendered by Mrs. Nisha Singh during her tenure as Director of the Company and expresses its deep sense of appreciation and gratitude for the same.
Rotation
At the forthcoming 86th Annual General Meeting (AGM) of the Company, Shri S. B. Bhat (DIN: 00650380) retires by rotation and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 2013 (âthe Actâ), and Articles of Association of the Company. The Board recommends his re-appointment.
Brief resume, nature of expertise and details of directorship held in other companies of Shri S. B. Bhat, proposed to be appointed is given in the Notice of the Ensuing General Meeting (AGM), as stated under Secretarial Standard 2 and Regulation 36 of the SEBI (LODR) Regulations, 2015.
None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 164(2) of the Companies Act, 2013.
Key Managerial Personnel
Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of the Act read with the Rules framed thereunder, the following persons are the Key Managerial Personnel of the Company as on March 31,2024 are Shri S. K. Somany, Non-Executive Chairperson, Shri A. K. Somany, Managing Director & CEO, Shri Shrikant Bhairaveshwar Bhat, Whole-time Director & Chief Financial Officer and Mrs. Reena Prasad, Company Secretary & Compliance Officer.
15. DECLARATION OF INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Directors, under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the SEBI (LODR) Regulations, 2015.
16. CORPORATE SOCIAL RESPONSIBILITY
The Company does not fall within the ambit of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibilities Policy) Rules, 2014. Therefore the Annual Report on Corporate Social Responsibility initiatives as required under the said act is not applicable to the Company. In view thereof, the Annual Report on CSR activities is not annexed.
17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
The Company has not provided any loan to any person or body corporate or given any guarantee or provided security in connection with such loan or made any investment in the securities of any Body Corporate pursuant to Section 186 of the Companies Act, 2013, during the financial year ended 31st March, 2024.
18. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY
The âPolicy on Related Party Transaction'', dealing with the review and approval of related party transactions, was amended in line with the requirements of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018. The policy is available on the Company''s website at the web link: www.somatextiles.com/home. php/investors/policies.
All contracts/ arrangements/ transactions entered into by the Company, during the financial year, with related parties, as defined under Section 188 of the Companies Act, 2013 and the relevant rules made thereunder, were in ordinary course of business and on arm''s length.
Further no material contract/ arrangement/ transaction, with related parties were entered during the financial year under review, in accordance with policy of the Company on materiality of related party transactions. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013, in form AOC-2 is not applicable to your Company. However, members may refer to the notes to the financial statements, which sets out disclosure on related parties and transactions entered into with them pursuant to Accounting Standards.
19. LISTING ON STOCK EXCHANGES
The Equity Shares of the Company are listed at the following Stock Exchanges:-
(a) BSE Limited (BSE).
Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001
(b) National Stock Exchange of India Limited (NSE).
Address: Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai-400051.
NOTE:
(i) Listing fees have been paid to the Stock Exchanges for the year 2024-25.
(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No. CSEA/ID/223/2008 dated 16th April, 2008, confirmed the delisting of Company''s Shares from the official List of their exchange. However Equity Shares have been allowed to be traded under the âPermitted Categoryâ on the Exchange considering the interest of General Investors in the Company.
Stock Code
(i) NSE - SOMATEX, (ii) BSE - 521034, (iii) CSE - 29067.
De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.
20. DELISTING FROM STOCK EXCHANGE
The Company vide its application dated 31st March, 2021 applied for Voluntary Delisting of its Equity Shares from BSE Limited in terms of Regulation 6 (a) and Regulation 7 of SEBI (Delisting of Equity Shares) Regulations, 2009, as approved by the Board of Directors of the Company at its meeting held on 30th March, 2021. However, confirmation/ approval for the same, from BSE Limited are awaited.
Further, the Equity Shares of the Company will continue to be listed on National Stock Exchange of India Limited.
21. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
The Auditors Report and Secretarial Auditors Report do not contain any reservation, qualification or adverse remark and therefore need no explanations or comments from the Board of Directors.
22. BOARDâS EVALUATION OF THE PERFORMANCE
In compliance with the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, and that of its Committees and Individual Directors. Feedback was sought by way of a structured questionnaire covering various aspect of Board''s functioning, such as adequacy of the Composition of the Board and its Committee, Board culture, execution and performance of specific duties obligations and governance. The manner in which the evaluation has been carried out has been provided in the Corporate Governance Report, forming part of Board''s Report.
23. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the year Four (4) Board Meetings were held, the details of which are given in the Report on Corporate Governance, that forms part of the Board''s Report.
The maximum interval between the two meetings did not exceeded 120 days, as prescribed in the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
24. AUDIT COMMITTEE
The Audit Committee comprises of Four (4) members, Majority of them are Independent Directors namely; Shri B. K. Hurkat Chairman, Shri M. H. Shah, Mrs. N. Singh, and Shri S. K. Somany a Non-Independent & Promoter Director, as other member of the Committee. Thus the composition is in conformity with the requirements of section 134(3) and section 177(8) of the Companies Act, 2013, read with the provisions of SEBI (LODR) Regulations, 2015.
Mrs. N. Singh resigned as Non-Executive and Independent Director of the Company with effect from close of business hours on 23rd March, 2024. Consequently upon her cessation as a Director from the Board of Directors of the Company, she automatically ceased to be a Member of Audit Committees of the Board w.e.f. closure of business hours on March 23rd, 2024.
Four (4) Meetings of the Audit Committee were held during the year under review, the details of which are given in the Report on Corporate Governance, forming part of this Report. The Board of Directors accepted all recommendations of the Audit Committee in the reporting period.
25. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER MECHANISM
The Company has in place a Whistle Blower Policy, as a part of Vigil Mechanism to provide appropriate avenues to the Directors, employees and other Stakeholders of the Company to bring to the attention of the Management any issue which is perceived to be in violation of or in conflict with the Code of conduct, values, principles and beliefs of the Company. The established Vigil Mechanism helps to report concerns about any unethical conduct, financial malpractices or any unhealthy practice prevalent in the Company.
The said Vigil Mechanism provides for adequate safeguards against victimization of persons who use such mechanism and also provides for direct excess to the Chairman of the Audit Committee.
The details of this Policy is explained in the Corporate Governance Report forming part of Board''s Report and are also available on the Company''s website; www.somatextiles.com/home.php/ investors/policies.
26. REMUNERATION POLICY
The Board has, on recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters as per Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âLODR Regulationsâ). The salient features of Company''s Nomination and Remuneration Policy is stated in the Corporate Governance Report. The Policy is available on the website of the Company viz. www.somatextiles.com.
27. CORPORATE GOVERNANCE
Your Company upholds the Standards of Governance and is compliant with the provisions of Corporate Governance, as Stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (listing Regulations).
A Report on âCorporate Governance'' as well as the certificate from Company''s Statutory Auditors, confirming compliance with the requirements of SEBI Listing Regulations, forms part of the Annual Report.
28. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs, Government of India, had issued a set of Voluntary Guidelines 2009 on Corporate Governance in December, 2009, for voluntary adoption of a set of good practices by the Corporate Sector. These guidelines are expected to serve as a bench mark for the Corporate Sector and also help them in achieving the highest Standard of Corporate Governance. Guidelines are reviewed by the Management from time to time to ensure the adherence of the same voluntarily commensurate with the requirements, best suited to your Company gradually in phases.
29. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report under review, as stipulated under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is presented by virtue of an Annexure, forming part of the Directors'' Report.
30. DIRECTORSâ RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Board of Directors of your Company to the best of their knowledge and belief and on the basis of information and explanation obtained from the operating management, hereby states and confirms: -
(a) that in the preparation of attached Annual Accounts for the Financial Year ended 31st March, 2024 the applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever, applicable;
(b) that they have selected the Accounting Policies described in notes to accounts, which have been consistently applied, except where otherwise stated and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2024 and of the loss of the Company for the year ended on that day.
(c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
(d) that they have prepared the attached Annual Accounts on a âgoing concern'' basis.
(e) that they had laid down internal financial controls to be followed by the Company and that such internal controls are adequate and were operating effectively.
(f) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
31. STATUTORY AUDITORS
In compliance with the provisions of Section 139 and other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s)/ re-enactment(s)/ amendment(s) thereof, for the time being in force), the Members at the Eighty-fourth (84th) Annual General Meeting held on 31st August 2022, had appointed M/s. Pipara & Co.LLP, Chartered Accountants (ICAI Registration No. 107929W), as the Statutory Auditors of the Company, to hold office for a term of five (5) consecutive years from the conclusion of the 84th Annual General Meeting until the conclusion of the 89th Annual General Meeting of the Company.
However, with the Notification dated May 7, 2018 issued by the Ministry of Corporate Affairs (âMCA''), the first proviso to section 139(1) of the Companies Act, 2013, pertaining to the requirement of annual ratification of appointment of Auditors by Members is omitted.
Accordingly, as per the Companies (Amendment) Act, 2017, ratification of the appointment of Statutory Auditors during their period of appointment will not be considered.
32. SECRETARIAL AUDITOR
The Board has appointed M/s. Drolia & Company, Company Secretaries, Kolkata, in practice having Certificate of Practice No. 1362, as the Secretarial Auditor, to carry out Secretarial Audit for the year ending 31st March, 2025, pursuant to the provisions of Section 204 of the Companies Act, 2013, read with the corresponding rules framed thereunder.
33. MANAGERIAL REMUNERATION
Details of the ratio of the remuneration of each director to the median employee''s remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached to this Report.
34. SECRETARIAL AUDIT REPORT
A Secretarial Audit Report given by the Secretarial Auditors for the financial year ended 31st March, 2024, in the prescribed form MR-3 is annexed herewith as Annexure to this Report and forms an integral part of this Report.
There are no qualifications, reservations and adverse remarks made by the Secretarial Auditors in their Report.
35. INDUSTRIAL RELATIONS
Industrial relations in your Company, during the year under review continued to be cordial and harmonious.
36. COST AUDITORS
Manufacturing unit of the Company at Ahmedabad was closed as per the Order of Supreme Court following the order of High Court, Gujarat. Therefore, there is no requirement to appoint Cost Auditor in terms of the applicable provisions of the Companies Act, 2013, read with the Companies (Cost Records & Audit) Amendment Rules, 2014.
37. DEPOSITORY SYSTEMS
The Company''s Shares are currently traded in dematerialized form, as per the SEBI directives and the Company has entered in to agreements with the following Depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), for trading in dematerialized form.
Members are therefore advised to avail of the services either of the depositories, to dematerialize their physical shares, if any held by them, for trading in Company''s shares smoothly and conveniently.
As on March 31, 2024, 32,543,105 Equity Shares are held in dematerialized form and represent 98.51% of the Company''s total paid up Capital.
38. SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 to ensure harassment free workplace for employees. Sexual harassment cases are dealt as per the Company''s Policy on âPrevention of Sexual Harassment''. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
No sexual harassment complaint was received during the year under review.
39. ACCOUNTS OF THE SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES
The statement containing the silent features of the financial statement of the company''s associate companies under the first proviso to sub-section (3) of section 129 of Companies Act, 2013 is enclosed as AOC-1 in the Annexure.
40. PARTICULARS OF EMPLOYEES
None of the employees of the Company was in receipt of remuneration for the year or part of the year under review, in excess of the amount of remuneration prescribed under Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended upto date.
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration) Rules, 2014 is annexed and forms a part of this Report.
41. EXTRACT OF ANNUAL RETURN
In accordance with the provisions of Section 134(3)(a) of the Companies Act, 2013, the Annual Return in prescribed format may be accessed on the Company''s website at www.somatextiles.com.
42. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company is primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings and Garments.
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts) Rules, 2014, as amended is given in the Annexure and forms part of this Report.
43. RISK MANAGEMENT
The Company has in place mechanism to inform Board Members about the Risk Assessment and Risk Minimization procedures which are periodically reviewed to ensure that risks and uncertainties are systematically identified, prioritized and initiated on constant basis.
The risk management procedure is reviewed by the Audit Committee from time to time to ensure that the executive management controls the risks and uncertainties through a proper defined framework and major risks, are properly and systematically addressed through mitigation actions on continuing basis.
44. BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report as per Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, describing the initiatives taken by them from an environmental, social and governance perspective is not applicable to the Company, for the financial year 2023-24 as per the SEBI Notification dated 22nd December, 2015 and Frequently Asked Questions issued by SEBI on SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 dated 29th January, 2016.
45. CAUTIONARY STATEMENT
Statements in the Board''s Report and the Management Discussion & Analysis describing Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook.
46. VARIATION IN VALUATION
During the year under review, there was no instance of one-time settlement with any bank or financial institution necessitating disclosure or reporting in respect of difference in valuation done by the Company.
47. COMPLIANCE OF SECRETARIAL STANDARDS
The Company complies with all applicable Secretarial Standards as mandated by the Institute of Company Secretaries of India.
48. OTHER DISCLOSURES/REPORTING:
Your Directors state that no disclosure and/or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
⢠Issue of equity shares with differential rights as to dividend, voting or otherwise;
⢠Issue of shares (including sweat equity shares) to employees of the Company under any scheme;
⢠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;
49. ACKNOWLEDGEMENT
Your Directors place on record their sincere thanks and appreciation for the continuing support and assistance received from the financial institutions, banks, government as well as non-government authorities, customers, vendors, stock exchange and members during the period under review.
Your Company takes pride in all of its dedicated officers, employees and workers, who have been wholeheartedly supporting and sincerely contributing their best for the success and growth of your Company as well as maintaining harmonious relations throughout the Company.
Mar 31, 2016
To
The Members,
The Directors have pleasure in presenting their Seventy-eighth (78th) Annual Report of the Company, together with the audited financial statements for the financial year ended 31st March, 2016.
1. FINANCIAL PERFORMANCE
There was no improvement in the business scenario of the Textile Industry and is continued to remain challenging.
The revenue from operations for the year 2015-16 was Rs.17,024 lacs as compared to Rs.22,554 lacs in previous year, a decline by 24.52%.
The loss before Prior period, Exceptional item and tax was Rs.2,347 lacs against the previous year loss of Rs.4,764 lacs. The net loss for the year was Rs.1,423 lacs against the previous year net loss of Rs.3,358 lacs.
2. DIVIDEND
The Board of Directors of your Company have not recommended any dividend for the Financial Year ended 31st March, 2016, considering the loss during the year and brought forward losses.
3. COTTON
India''s cotton production in the current season 2015-2016 is likely to be 341 lac bales. Decline in domestic yarn production, an unlikely recovery in cotton exports will keep domestic cotton prices under pressure; however quality of output has declined.
4. EXPORT
Your Company''s export performance in the year under review has decreased from the last year mainly on account of reduction in the denim fabric export due to cut throat competition. The FOB value of the exports during the Year under review was Rs.1,956 lacs against Rs.4,842 lacs in the previous year.
5. ANALYSIS AND REVIEW
Indian Textiles industry is one of the leading sectors of the Indian economy and contributes significantly to the country''s industrial output as well as on employment generation and brings valuable foreign exchange by exporting Textile fabrics, yarns and Garments.
6. OPPORTUNITIES AND CHALLENGES
India''s textile sector is aided by several key advantages, in terms of availability of adequate raw material, entrepreneurial skills, large domestic market, presence of supporting industries and supporting policy initiatives from the government. The Government has introduced the Amended Technology Up gradation Fund Scheme (ATUFS) to give a further boost for technology investment in the textile industry.
The major challenge that the textile industry is facing is rising production costs, arising out of rising wages, power and interest costs. Currently the Indian Denim Industry is going through sluggish phase due to exponential capacity expansion which has created a huge oversupply situation.
7. EXPANSION AND MODERNISATION
In view of financial constraint company did not go for modernization, though minor balancing equipments were installed costing Rs.80 lacs.
8. CONSOLIDATED FINANCIAL STATEMENT
The Consolidated Audited Financial Statements prepared in accordance with the requirements under Accounting Standard AS-21 on âConsolidated Financial Statementsâ read with AS-23 on the âAccounting for Investment in Associatesâ read with the provisions of Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, are provided in the Annual Report.
9. CASH FLOW STATEMENT
The Cash Flow Statement for the year ended 31st March, 2016 prepared in accordance with the applicable Accounting Standard, is annexed to the financial statement and statement of profit and loss as required under Regulation 34 of the SEBI (LODR) Regulations, 2015.
10. INSURANCE
Your Company has adequately insured its properties including its Buildings, Plant & Machinery and Stocks among others against fire, flood, earthquake, explosive and other such risks as considered necessary.
11. INTERNAL CONTROL
Your Company has in place adequate internal control systems covering all financial and operating functions commensurate with the size, nature and complexity of operations and are designed to provide reasonable assurance with regard to effectiveness and efficiency of operations, safeguard for assets, internal control over financial reporting and compliance with applicable statute, laws and regulations.
Internal Audits are conducted by the Internal auditors and they directly report to the Audit Committee of the Board, thus ensuring the independence of the process. The Audit Committee oversees the functions of internal auditors and provides necessary oversight and directions to the internal audit functions and periodically reviews the findings and ensures corrective measures are taken. Besides, the Audit Committee keeps a watch on the effectiveness of internal control system and looks into all aspect of internal control system and procedure to further strength the internal control system and procedure.
The Audit Committee comprises the majority of Independent Directors in terms of the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.
12. FIXED DEPOSITS
Your Company has not accepted any fixed deposit during the year from public falling within the meaning of Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposit) Rules, 2014.
13. DIRECTORS AND KEY MANAGERIAL PERSONNEL Rotation
Shri S. B. Bhat, Director retires by rotation at the forthcoming Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 2013, and Articles of Association of the Company. The Board recommends his re-appointment.
The term of Shri A. K. Somany (âShri Somanyâ) as Managing Director is due to expire on 21st January, 2017; the Board is seeking re-appointment of Shri Somany as Managing Director not liable to retire by rotation for a further period of 3 years with effect from 22nd January, 2017.
None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 164(2) of the Companies Act, 2013.
14. DECLARATION OF INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Directors under section 149(7) of the Companies Act, 2013, confirming that he/she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Listing Regulations, 2015.
15. CORPORATE SOCIAL RESPONSIBILITY
Your Company does not come within the purview of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibilities Policy) Rules, 2014. Thus, Corporate Social Responsibility initiatives as required under the said act are not applicable to the Company.
16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
The Company has not, given loans, made investments or given guarantees under the provisions of Section 186 of the Companies Act, 2013 during the year under review.
17. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY
All contracts/arrangement/transactions entered by the Company with related parties during the financial year under review, were on arm''s length basis and were in ordinary course of business and therefore the provisions of Section 188 of the Companies Act, 2013 do not attract. Further the Company has not entered in to any contract/arrangement/ transactions with related parties which could be considered material in accordance with the Policy of the Company on Materiality of Related Party Transactions. In view thereof the disclosure of Related Party Transactions in Form AOC-2 as required under Section 134(3)(h) and Rule 8(2) of the Companies (Accounts) Rule, 2014, is not required,
The Policy on Materiality of Related Party Transactions and dealing with the related party transactions as approved by the Board has been uploaded on the Company''s website at the web link: www.somatextiles.com/home.php/investors/ policies and may be accessed on the Company''s website.
None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.
18. LISTING ON STOCK EXCHANGES
The Equity Shares of the Company are listed at the following Stock Exchanges:-
(a) BSE Limited (BSE).
Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001
(b) National Stock Exchange of India Limited (NSE).
Address: Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai-400051.
NOTE:
(i) Listing fees have been paid to the Stock Exchanges for the year 2014-15.
(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No. CSEA/ID/223/2008 dated 16th April, 2008, confirmed the delisting of Company''s Shares from the official List of their exchange. However Equity Shares have been allowed to be traded under the âPermitted Categoryâ on the Exchange considering the interest of General Investors in the Company.
Stock Code
(i) NSE - SOMATEX, (ii) BSE - 521034, (iii) CSE - 29067.
De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.
19. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
The Auditors Report and Secretarial Auditors Report do not contain any reservation, qualification or adverse remark and therefore need no explanations or comments from the Board of Directors.
20. BOARDâS EVALUATION OF THE PERFORMANCE
In compliance with the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, and that of its Committees and individual Directors. The manner in which the evaluation has been carried out has been given in the Corporate Governance Report.
21. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
Four (4) Meetings of the Board were held during the year under review, the details of which are given in the Report on Corporate Governance, forming part of this Report.
The intervening gap between the Two Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
22. AUDIT COMMITTEE
The Audit Committee comprises of total four (4) members, namely Shri B. K. Hurkat, as Chairman and Shri S. K. Somany, Shri M. H. Shah and Ms. N. Loyalka as Members, in conformity with the requirements of section 134(3) and section 177(8) of the Companies Act, 2013, read with the provisions of SEBI (LODR) Regulations, 2015. Majority of its members are Non-executive Independent Directors.
Four (4) Meetings of the Audit Committee were held during the year under review, the details of which are given in the Report on Corporate Governance, forming part of this Report. The Board of Directors accepted all recommendations of the Audit Committee in the reporting period.
23. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER MECHANISM
The Company has formulated a whistle Blower Policy to establish a Vigil Mechanism for Directors/ Employees and other Stakeholders of the Company to report concern about illegal or unethical behavior and practices, actual or suspected fraud or violation of the Company''s Code of Conduct. The Mechanism provides for adequate safeguards against victimization of Directors, employees and others who use such mechanism and makes provisions for direct excess to the Chairman of the Audit Committee. The details of the Whistle Blower Policy have been provided in the Corporate Governance Report forming part of this Report.
The Whistle Blower Policy is available on the website of the Company; www.somatextiles.com/home.php/investors/ policies.
24. REMUNERATION POLICY
The Board has, on recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters as per section 178 and Clause 49(IV)(B) of Listing Agreement. The Nomination & Remuneration Policy is stated in the Corporate Governance Report. The Policy is also available on the website of the Company i.e. http://www.somatextiles.com.
25. CORPORATE GOVERNANCE
Your Company has complied with requirements under the Corporate Governance as stipulated in the revised Clause 49 of the Listing Agreement with the Stock Exchange(s).
A detailed reports on âCorporate Governance'' pursuant to revised Clause 49 of the Listing Agreement along with an Auditors'' Certificate on Compliance with the conditions of Corporate Governance, is annexed and forms part of the Annual Report.
26. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs, Government of India, had issued a set of Voluntary Guidelines 2009 on Corporate Governance in December, 2009, for voluntary adoption of a set of good practices by the Corporate Sector. These guidelines are expected to serve as a bench mark for the Corporate Sector and also help them in achieving the highest Standard of Corporate Governance. Guidelines are reviewed by the Management from time to time to ensure the adherence of the same voluntarily commensurate with the requirements, best suited to your Company gradually in phases.
27. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report under review, as stipulated under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, is presented by virtue of an Annexure, forming part of the Directors'' Report.
28. DIRECTORSâ RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Board of Directors of your Company to the best of their knowledge and belief and on the basis of information and explanation obtained from the operating management, hereby states and confirms: -
(a) that in the preparation of attached Annual Accounts for the Financial Year ended 31st March, 2016 the applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever, applicable;
(b) that they have selected the Accounting Policies described in notes to accounts, which have been consistently applied, except where otherwise stated and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2016 and of the loss of the Company for the year ended on that date;
(c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
(d) that they have prepared the attached Annual Accounts on a âgoing concern'' basis.
(e) that they had laid down internal financial controls to be followed by the Company and that such internal controls are adequate and were operating effectively.
(f) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
29. AUDITORS
M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration No.107929W), Statutory Auditors of Company hold office till the conclusion of the ensuing Annual General Meeting and being eligible offer themselves re-appointment.
We have received a certificate from the Auditor confirming that they are eligible for re-appointment as Auditors of the Company under Sub-Section (1) of Section 139 of the Companies Act, 2013 and that they meet the criteria for appointment stipulated in section 141 of the said Act.
The Board recommends their re-appointment, as the Company''s Statutory Auditors on the recommendation of Audit Committee from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting of the Company on such remuneration, as may be fixed by the Board of Directors of the Company.
30. SECRETARIAL AUDITOR
The Board of Directors of the Company have appointed M/s. Drolia & Company, Company Secretaries, Kolkata, having certificate of Practice No. 1362, as the Secretarial Auditor, to conduct Secretarial Audit for the year ended 31st March, 2016, in terms of the provisions of Section 204 of the Companies Act, 2013 and the Companies (appointment and Remuneration of Managerial Personnel) Rules, 2014.
31. MANAGERIAL REMUNERATION
Details of the ratio of the remuneration of each director to the median employee''s remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached to this Report.
32. SECRETARIAL AUDIT REPORT
The Report of the Secretarial Audit for the financial year ended 31st March, 2016, as given by the Secretarial Auditor in the prescribed form MR-3 is annexed as Annexure to this Report and forms an integral part of this Report.
The Report does not contain any qualification, reservation and adverse remark.
33. AUDITORSâ REPORT
There are no qualifications, reservation or adverse remark of the Auditor in their Auditors'' Report that may call for any clarifications/explanations.
The Notes on financial statement, referred to in the Auditors'' Report are self-explanatory and do not require any elucidation and comments thereof.
34. INDUSTRIAL RELATIONS
Industrial relations in your Company, during the year under review continued to be cordial and harmonious.
35. COST AUDITORS
Pursuant to Section 148 of the Companies Act, 2013, read with the Companies (Cost Records & Audit) Amendment Rules, 2014, the cost records maintained by the Company in respect of its products are required to be audited. Your Directors, on the recommendation of the Audit Committee, appointed M/s. N. D. Birla & Co., Cost Accountants, as Cost Auditors of the Company to conduct the Audit of the Cost Accounts in respect of manufacturing of Textile for the Financial Year ending 31st March, 2016 on a remuneration fixed by the Board and has recommended their remuneration to the Shareholders for their ratification, in the forthcoming Annual General Meeting. Accordingly, a resolution seeking Members'' ratification for payment of remuneration to M/s N. D. Birla & Co., Cost Accountants, is included in the Notice convening the Annual General Meeting.
36. DEPOSITORY SYSTEMS
The Company''s Shares are currently traded in dematerialized form, as per the SEBI directives and the Company has entered in to agreements with the following Depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), for trading in dematerialized form.
Members are therefore advised to avail of the services either of the depositories, to dematerialize their physical shares, if any held by them, for trading in Company''s shares smoothly and conveniently.
As on 31st March, 2016 32501013 Equity Shares are held in dematerialized form and represent 98.39% of the Company''s total paid up Capital.
37. SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
The Company has in place as Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
No sexual harassment complaint was received during the year under review.
38. ACCOUNTS OF THE SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES
The statement containing the silent features of the financial statement of the company''s associate companies under the first proviso to sub-section (3) of section 129 of Companies Act, 2013 is enclosed as AOC-1 in the Annexure.
39. PARTICULARS OF EMPLOYEES
During the year under report, none of the employees of the Company was in receipt of remuneration for any part of the year, in excess of the amount of remuneration prescribed under Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended up to date.
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration) Rules, 2014 is Annexed and forms a part of this Report.
40. EXTRACT OF ANNUAL RETURN
The extracts of Annual Return in form no. MGT-9 are attached in accordance with Section 134(3)(a), read with Section 92 of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 and form part of this Report.
41. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company is primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings and Garments.
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts) Rules, 2014, as amended is given in the Annexure and forms part of this Report.
42. RISK MANAGEMENT
The Company has in place mechanism to inform Board Members about the Risk Assessment and Risk Minimization procedure which is periodically reviewed to ensure that risks and uncertainties are systematically identified, prioritized and initiated on constant basis.
The risk management procedure is reviewed by the Audit Committee from time to time to ensure that the executive management controls the risks and uncertainties through a proper defined framework and major risks, are properly and systematically addressed through mitigation actions on continuing basis.
43. CAUTIONARY STATEMENT
Statements in the Board''s Report and the Management Discussion & Analysis describing Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Many factors may affect the actual results, which could be different from what the Directors'' envisage in terms of future performance and outlook.
44. ACKNOWLEDGEMENT
Your Directors thanks all the valued Customers, Suppliers, Shareholders, Business Associates, Financial Institutions, Bankers, Government Agencies and other Stakeholders, for their patronage and support and look forward to their continued support in future. We also thank the dedicated and committed team of employees of the Company for their contribution to the Company.
On behalf of the Board
Place : Ahmedabad (S. K. SOMANY)
Date : 27th May, 2016 Chairman
Mar 31, 2015
Dear Members,
The Directors are pleased to present their Seventy Seventh (77th)
Annual Report of the Company, together with the audited financial
statements for the financial year ended 31st March, 2015.
1. FINANCIAL PERFORMANCE
There was no improvement in the business scenario of the Textile
Industry and is continued to remain challenging.
The revenue from operations for the year 2014-15 was Rs. 22,554 lacs as
compared to Rs. 27,292 lacs in the previous year. The same is not
strictly comparable due to the sale of Baramati Unit during the
previous year.
The Financial position of the Company severely affected due to non
availability of adequate working capital from the Banks as loans were
classified by Banks as non performing assets as Company failed to pay
interest and installments consecutively for more than 90 days. This
also affected the top line growth of Company.
The loss before Prior period, Exceptional item and tax was Rs. 4,764
lacs against the previous year's loss of Rs. 2,945 lacs.
The net loss for the year was Rs. 3,358 lacs against the net loss of
Rs. 1,334 lacs.
2. DIVIDEND
The Board of Directors of your Company do not recommend any dividend
for the Financial Year ended March 31, 2015 due to the loss incurred
during the year.
3. COTTON
India's cotton production in the current year 2014-2015 estimated as
Rs. 380 lac is expected to be highest production in our country. Export
of cotton is likely to come down as China, our biggest importer has
decided to first consume its reserve stock as a result cotton prices
remain reasonably steady.
4. EXPORT
Your Company's export performance in the year under review has improved
from the last year mainly on account of denim fabric export. The FOB
value of the exports during the Year was Rs. 4,842 lacs against Rs.
5,083 lacs in the previous year.
5. ANALYSIS AND REVIEW
The Indian Textiles industry remains one of the leading sector of the
Indian economy in terms of employment and brings valuable foreign
currency by exporting Textiles and Garments.
6. OPPORTUNITIES AND CHALLENGES
The government of India has in principle decided to further increase
the production of fabrics and garments by way of value addition
interest of depending mostly on cotton export. To bring about
modernization and competitiveness the government is providing necessary
infrastructure to achieve the above objective..
7. EXPANSION AND MODERNISATION
In view of financial constraints equipment valuing Rs. 64 lacs, was
mostly spent on balancing production.
8. CASH FLOW STATEMENT
As required under Clause 32 of the Listing Agreement with the Stock
Exchange(s), in India, a Cash Flow Statement, as prepared in accordance
with the Accounting Standard on Cash Flow Statement (AS 3) issued by
the Institute of Chartered Accountants of India (ICAI), is given along
with Financial Statement and Statement of Profit and Loss.
9. INSURANCE
Your Company's, properties including its Buildings, Plant & Machinery
and Stocks among others are adequately insured against fire, flood,
earthquake, explosive and other such risks as considered necessary.
10. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has a proper and adequate internal control procedure
commensurate with its nature of business and the size of operations to
ensure the timely and accurate recordings of financial transactions and
adherence, to applicable Accounting Standards, optimum utilization &
safety of assets, complying with applicable statutes and compliance with
Corporate policy(ies). The Audit Committee periodically interacts with
the Management, Internal Auditors and Statutory Auditors and tracks the
implementation of corrective actions. The Audit Committee oversees the
functions of internal auditor and reviews the audit plans, internal
control and internal audit reports, submitted by the internal auditors,
to examine and evaluate the adequate and effectiveness of the internal
control system to further strengthen the internal control systems and
procedures. Significant observations, emanating from the audit are acted
upon. The Audit Committee of the Board of Directors comprises the
majority of Independent Directors.
11. FIXED DEPOSITS
The Company has not accepted deposit from public falling within the
ambit of Section 73 of the Companies Act, 2013 and the Companies
(Acceptance of Deposit) Rules, 2014, during the year under report.
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTMENT
Shri M. H. Shah and Smt. N. Loyalka are Non-Executive Directors,
designated as Independent Director on the Board of Directors ('the
Board') of the Company. With the enactment of the Companies Act, 2013
('the Act'), it is now incumbent upon every listed company to have the
requisite number of Independent Directors on the Board. Shri M. H.
Shah has been appointed as an Additional Director, designated as
Independent Director of the Company and Smt. Nisha Loyalka has been
appointed as an Independent Director in casual vacancy, caused by death
of Late Shri B. L. Dhoot, under the Act.
The Company has received two separate Notices in writing from Members
along with requisite deposits of money proposing the aforesaid two
directors to the office of Directors under the applicable provisions of
the Act. The Board recommends the appointment of Shri M. H. Shah and
Smt. N. Loyalka, as an Independent Directors of the Company, not liable
to retire by rotation, to hold office for a term of five consecutive
years with effect from their respective date of appointment.
Necessary resolutions for obtaining approval of the Members in respect
of the above appointments have been incorporated in the notice of the
forthcoming Annual General Meeting.
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 Clause 49 of the Listing Agreement. The terms
and conditions of appointment of the Independent Directors are
incorporated on the website of the Company at http://
www.somatextiles.com.
As per the requirement under the Listing Agreement, particulars of
Directors seeking re-appointment at the ensuing
Annual General Meeting form part of the Notice of the Meeting.
With the enactment of the Companies Act, 2013 ('the Act'), it is now
incumbent upon every listed company to have the requisite number of Key
Managerial Personnel Shri M. B. Parakh, Deputy General Manager (Head of
Finance), has been appointed as Chief Financial Officer (CFO),
designated as Key Managerial Personnel by the Board of Directors at
their Meeting held on 10th February, 2015, as prescribed under the Act
with effect from 10.02.2015.
Cessation
The Company lost one of the guiding Member Late Shri B. L. Dhoot, on
31st October, 2014. He was a Director of the Company since 24th August,
2009. The Company appreciates the invaluable contribution, guidance and
inspiration given by Late Shri Dhoot in directing the destiny of the
Company.
Shri S. C. Mathur, resigned from the Board of the Company with effect
from 9th February, 2015, upon withdrawal of his nomination by IDBI from
the Board of Directors of the Company vide its letter no.
CBG-SSCB.53/373/Nom.8 dated 5th February, 2015.
The Board recorded its appreciation for the services rendered by Late
B. L. Dhoot, as a Non-executive Independent Director and Shri S. C.
Mathur, as a Nominee Director on behalf of IDBI, during their
association with the Company.
Rotation
Shri S. K. Somany, Director retires by rotation at the forthcoming
Annual General Meeting, and being eligible, offers himself for
re-appointment in accordance with the provisions of the Companies Act,
2013 and Articles of Association of the Company. The Board recommends
his re-appointment.
None of the Directors are disqualified from being appointed or holding
office as Directors as stipulated under Section 164(2) of the Companies
Act, 2013.
13. DECLARATION OF INDEPENDENT DIRECTORS
The provisions of Section 149 pertaining to the appointment of
Independent Directors apply to our Company. The Independent Directors
have submitted their disclosures to the Board that they fulfill all the
requirements as stipulated in Section 149(6) of the Companies Act,
2013, so as to qualify themselves to be appointed as Independent
Directors under the provisions of the Companies Act, 2013 and the
relevant rules.
14. CORPORATE SOCIAL RESPONSIBILITY
The Company does not fall within the ambit of Section 135 of the
Companies Act, 2013, read with the Companies (Corporate Social
Responsibilities Policy) Rules, 2014. Hence, Corporate Social
Responsibility initiatives as required under the said act is not
applicable.
15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION
186 OF THE COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company
under Section 186 of the Companies Act, 2013 during the year under
review and hence the said provision is not applicable.
16. RELATED PARTY TRANSACTIONS
All related party transactions were entered on arm's length basis and
were in the ordinary course of business in compliance with the
applicable provisions of the Companies Act, 2013 and the Listing
Agreement. During the year under review, the Company has not entered
into any contract or arrangement or transaction with related parties,
which could be considered material in accordance with the policy of the
Company on related party transactions. Accordingly no transactions are
being reported in Form No. AOC-2 in terms of section 134 of the
Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules,
2014.
Related Party Transactions Policy as approved by the Board has been
uploaded on the Company's website at the web link:
www.somatextiles.com/home.php/investors/policies.
None of the Directors has any pecuniary relationships or transactions
vis-a-vis the Company.
17. LISTING ON STOCK EXCHANGES
The Equity Shares of the Company are listed at the following Stock
Exchanges:-
(a) BSE Limited (BSE).
Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001
(b) National Stock Exchange of India Limited (NSE).
Address: Exchange Plaza, Bandra Kurla Complex, Bandra (East),
Mumbai-400051.
NOTE:
(i) Listing fees have been paid to the Stock Exchanges for the year
2013-14.
(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter
No. CSEA/ID/223/2008 dated 16th April, 2008, confirmed the delisting of
Company's Shares from the official List of their exchange. However
Equity Shares have been allowed to be traded under the "Permitted
Category" on the Exchange considering the interest of General Investors
in the Company.
Stock Code
(i) NSE - SOMATEX, (ii) BSE - 521034, (iii) CSE - 29067.
De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.
18. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE
REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY
SECRETARY IN THEIR REPORTS
There were no qualifications, reservations or adverse remarks made in
the Auditors Report and Secretarial Auditors Report.
19. BOARD'S EVALUATION OF THE PERFORMANCE
In compliance with the Companies Act, 2013, and Clause 49 of the
Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, the executive and non-executive
Directors individually as well as the evaluation of the working of its
Audit, Nomination & Remuneration and Stakeholders Relationship
Committee.
The manner in which the evaluation has been carried out has been given
in the Corporate Governance Report.
20. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
During the financial year under review four (4) Board Meetings were
convened and held. Details of which are given in the Corporate
Governance Report, forming part of this Report.
The intervening gap between the Meetings was within the period
prescribed under the Companies Act, 2013 and revised Clause
49(II)(D)(1) of the Listing Agreement.
21. AUDIT COMMITTEE
Pursuant to section 134(3) and section 177(8) of the Companies Act,
2013 the Audit Committee comprises of total four (4) members, namely
Shri B. K. Hurkat, as Chairman and Shri S. K. Somany, Shri M. H. Shah
and Smt. N. Loyalka as Members. Majority of its members are
Non-executive Independent Directors.
During the reporting period under review four (4) Audit Committee
Meetings have been convened and held. Details are given in the
Corporate Governance Report, forming part of this Report. The Board of
Directors accepted all recommendations of the Audit Committee in the
reporting period.
22. VIGIL MECHANISM / WHISTLE BLOWER MECHANISM
The Company has established a vigil mechanism, as required under
section 177(9) of the Companies Act, 2013 and Clause 49(II)(F), for
directors and employees to report genuine concerns about unethical
behavior, actual or suspected fraud or violation of the company's code
of conduct or ethics policy. The Policy of such mechanism has been
circulated to all employees within the Company, which provides a
framework to the employees for guide & proper utilization of the
mechanism. The Whistle Blower Policy has been published on the
Company's website http:// www.somatextiles.com.
The Company has also provided adequate safeguards against victimization
of employees and Directors who express their concerns. The Company has
also provided direct access to the Chairman of the Audit Committee on
reporting issues concerning the interests of company's employees and
the Company. More details about the Whistle Blower Policy (Vigil
Mechanism) has been provided in the Corporate Governance Report,
forming part of this Report.
The details of the policy have been posted on the website of the
Company.
23. REMUNERATION POLICY
The Board has, on recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration including criteria for
determining qualifications, positive attributes, independence of
Directors and other matters as per section 178 and Clause 49(IV)(B) of
Listing Agreement. The Nomination & Remuneration Policy is stated in
the Corporate Governance Report. The Policy is also available on the
website of the Company i.e. http://www.somatextiles.com.
24. CORPORATE GOVERNANCE
Your Company has complied with requirements under the Corporate
Governance as stipulated in the revised Clause 49 of the Listing
Agreement with the Stock Exchange(s).
A detailed reports on 'Corporate Governance'pursuant to revised Clause
49 of the Listing Agreement along with an Auditors' Certificate on
Compliance with the conditions of Corporate Governance, is annexed and
forms part of the Annual Report.
25. CORPORATE GOVERNANCE - VOLUNT ARY GUIDELINES 2009
The Ministry of Corporate Affairs, Government of India, has issued a
set of Voluntary Guidelines 2009, for voluntary adoption of a set of
good practices by the Corporate Sector in addition to the existing laws
for further improvement of Corporate Standards and practices. These
guidelines are recommendatory in nature and are expected to serve as a
bench mark for the Corporate Sector and help them in achieving the
highest Standard of Corporate Governance. These guidelines are
reviewed by the Management from time to time to ensure the adherence of
the same voluntarily commensurate with the requirements, best suited to
your Company gradually in phases.
26. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report under review, as
stipulated under revised Clause 49 of the Listing Agreement with the
Stock Exchange(s), is presented by virtue of an Annexure, forming part
of the Directors' Report.
27. DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Board
of Directors of your Company to the best of their knowledge and belief
and on the basis of information and explanation obtained from the
operating management, hereby states and confirms: -
(a) that in the preparation of attached Annual Accounts for the
Financial Year ended 31st March, 2015 the applicable Accounting
Standards have been followed along with proper explanation relating to
material departures, wherever, applicable;
(b) that they have selected the Accounting Policies described in notes
to accounts, which have been consistently applied, except where
otherwise stated and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as on 31st March, 2015 and of the loss of the Company
for the year ended on that date;
(c) that they have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) that they have prepared the attached Annual Accounts on a 'going
concern'basis;
(e) that they had laid down internal financial controls to be followed
by the Company and that such internal controls are adequate and were
operating effectively; and
(f) that they had devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
28. AUDITORS
M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration
No.107929W), are holding office as the Statutory Auditors of Company up
to the conclusion of the ensuing Annual General Meeting and they are
eligible for re-appointment.
In terms of Clause 41(1)(g) of the Listing Agreement the Statutory
Auditors are subjected to the Pear Review Process of the Institute of
Chartered Accountants of India (ICAI) and to hold a valid certificate
issued by "Pear Review of the Board" of ICAI and our Statutory Auditors
hold a valid certificate by the Pear Review Board of ICAI.
A written consent and a certificate from them has been received to the
effect that their re-appointment, if made, would be in accordance with
the conditions as may be prescribed under Sub-Section (1) of Section
139 of the Companies Act, 2013 and that they are satisfying the
criteria provided in section 141 of the said Act.
The Board proposes the re-appointment of M/s Pipara & Company,
Chartered Accountants, as Statutory Auditors of your Company based on
the recommendation of Audit Committee to hold office from the
conclusion of the ensuing Annual General Meeting until the conclusion
of next Annual General Meeting.
29. SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Rules made thereunder M/s. Drolia & Company, Company
Secretaries, Kolkata, having certificate of Practice No. 1362, has been
appointed as the Secretarial Auditor, to conduct a Secretarial Audit of
the Company's Secretarial and related records for the year ended 31st
March, 2015.
30. MANAGERIAL REMUNERATION
Details of the ratio of the remuneration of each director to the median
employee's remuneration and other details as required pursuant to Rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is attached to this Report.
31. SECRETARIAL AUDIT REPORT
Details forming part of Secretarial Audit Report in Form MR-3 is given
in the Annexure and forms part of this Report for financial year
2014-15. There are no reservations, qualification, adverse remark or
disclaimer contained in the Secretarial Audit Report.
32. AUDITORS' REPORT
Notes on accounts, forming part of the Audited Accounts are
self-explanatory and do not call for any further comments. There are
no qualifications or adverse remarks in the Auditors' Report which
require any clarifications/explanations thereof.
33. INDUSTRIAL RELATIONS
Industrial relations, during the year under review continued to remain
cordial and harmonious.
34. COST AUDITORS
Pursuant to Section 148 of the Companies Act, 2013, read with the
Companies (Cost Records & Audit) Amendment Rules, 2014, the cost records
maintained by the Company in respect of its products are required to be
audited. Your Directors, on the recommendation of the Audit Committee,
appointed M/s. N. D. Birla & Co., Cost Accountants, as Cost Auditors of
the Company to conduct the Audit of the Cost Accounts in respect of
manufacturing of Textile for the Financial Year ending 31st March, 2015
on a remuneration fixed by the Board and has recommended their
remuneration to the Shareholders for their ratification, in the
forthcoming Annual General Meeting. Accordingly, a resolution seeking
Members' ratification for payment of remuneration to M/s N. D. Birla &
Co., Cost Accountants, is included in the Notice convening the Annual
General Meeting.
The Company has e-filed the Cost Audit Report for the financial year
ended 31st March, 2014 vide SRN. S31325384 on 23rd September, 2014,
with Ministry of Corporate Affairs (Cost Audit Branch), New Delhi.
35. DEPOSITORY SYSTEMS
As the Members are aware that the Company's Shares are compulsory
traded in dematerialized form. The Company has arrangements with both
the Depositories National Securities Depository Limited (NSDL) and
Central Depository Services (India) Limited (CDSL), to establish
electronic connectivity of its Shares, for trading in dematerialised
form.
As on 31st March, 2015, 98.38% of the Company's total paid up Capital
representing 32,497,249 Equity Shares are in dematerialized form.
In view of the numerous advantages offered by the Depository System,
Members holding Shares in Physical mode are advised to avail of the
facility of dematerialization from either of the depositories.
36. PARTICULARS OF EMPLOYEES
During the year under report, none of the employees of the Company was
in receipt of remuneration for any part of the year, in excess of the
amount of remuneration prescribed under Section 197 of the Companies
Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, as amended upto
date.
The information required under Section 197 of the Act read with Rule
5(1) of the Companies (Appointment and Remuneration) Rules, 2014 is
Annexed and forms a part of this Report.
37. EXTRACT OF ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92
read with Rule 12 of the Companies (Management and Administration)
Rules, 2014, in From No. MGT-9 are attached and forms part of this
Report.
38. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
The Company is primarily engaged in the business of manufacturing of
Cotton Yarn, Denim Fabrics, Shirtings and Garments.
Information on conservation of energy, technology absorption, foreign
exchange earnings and outgo, required to be disclosed pursuant to
Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of
the Companies (Accounts) Rules, 2014, as amended is given in the
Annexure and forms part of this Report.
39. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK
MANAGEMENT POLICY OF THE COMPANY
Risk Management includes identifying types of risks and its assessment,
risk handling, monitoring and reporting. The Company has adopted the
measures concerning the development and implementation of a Risk
Management Policy after identifying the elements of risks which in the
opinion of the Board may threaten the very existence of the Company
itself.
The Company has framed a policy and process to help identify, assess
and manage risks, pursuant to section 134(3)(n) of the Companies Act,
2013 and clause 49(VI) of the listing agreement. The policy and process
has been in place throughout the reporting period.
40. CAUTIONARY STATEMENT
Statements in the Board's Report and the Management Discussion &
Analysis describing Company's objectives, expectations or forecasts may
be forward-looking within the meaning of applicable securities laws and
regulations. Many factors may affect the actual results, which could
be different from what the Directors' envisage in terms of future
performance and outlook.
41. ACKNOWLEDGEMENT
Your Directors thanks all the valued Customers, Suppliers,
Shareholders, Business Associates, Financial Institutions, Bankers,
Government Agencies and other Stakeholders, for their patronage and
support and look forward to their continued support in future. They
also thank the dedicated and committed team of employees of the Company
for their contribution to the Company.
On behalf of the Board
Place : Ahmedabad (S. K. SOMANY)
Date : 30th May, 2015 Chairman
Mar 31, 2014
The Members,
The Directors have pleasure in presenting their 76th Annual Report of
the Company, together with the audited accounts for the Financial Year
ended 31st March, 2014.
1. FINANCIAL PERFORMANCE
During the Financial Year under review the business scenario for the
Textile Industry was extremely challenging.
The revenue from operations for the year 2013-14 was Rs. 27,292 lacs as
compared to Rs. 32,271 lacs in previous year, a decline by 15.43%.
The loss before Prior period, Exceptional item and tax was Rs. 2945 lacs
against the previous year loss of Rs. 419 lacs.
The net loss for the year was Rs. 1334 lacs against the previous year net
loss of Rs. 166 lacs.
2. DIVIDEND
The Board of Directors of your Company do not recommended any dividend
on the paid up Equity Share Capital of the Company for the Financial
Year under review considering the brought forward losses and loss
during the year.
3. COTTON
India''s cotton production in the current season 2013-2014 is likely to
be 382 lacs bales out of which expected exports will be about 112 lacs
bales. Availability of good quality fibre is restricted. There is lot
of uncertainty about price due to varying estimates about weather
conditions and un-certainty about cotton policies in China. There is
optimism that because of good quality of Indian yarn export will
continue and may grow.
4. EXPORT
Your Company''s export performance in the year under review has improved
from the last year mainly on account of denim fabric export. The FOB
value of the exports during the Financial Year was Rs. 5083 lacs against
Rs. 3,613 lacs in the previous year.
5. ANALYSIS AND REVIEW
Indian Textiles industry is one of the leading sectors of the Indian
economy and contributes significantly to the country''s industrial
output (14%). It employs 35 million people in direct employment and
another 20 million in indirect employment, and earns much needed
foreign currency with 17% of India''s exports coming from Textiles and
Garments. Overall, it contributes 4% to India''s GDP.
6. OPPORTUNITIES AND CHALLENGES
Textile industry is one of the largest employers in India and has
strong linkages with the rural economy. The growing young middle-class
population is a source of great potential and provides immense
opportunities to spur growth in the industry going forward.The major
challenge that the textile and apparel industry is facing is rising
production costs, arising out of rising wages, power and interest
costs.
7. EXPANSION AND MODERNISATION
During the year under review the Company has completed the Denim
expansion.
8. WITHDRAWL OF RIGHTS ISSUE
As you are aware that the Company had approved rights issue of equity
shares to meet the requirements of CDR sanction with regard to infusion
of Rs. 9.75 crores as equity capital by promoters. However, considering
the prevailing market conditions, regulatory constraints and the
current market quotation of our company''s shares besides the fact that
the promoters have already brought in the required funds to meet the
CDR stipulation, the Company has approached to CDR Empowered Group
(CDREG) to consider issue of Redeemable Preference Shares of an
aggregate value of Rs. 9.75 crores to the promoters of the company and
their group companies instead of making "Rights Issue" to shareholders.
The approval has since received by the Company from CDR Empowered Group
(CDREG) vide its letter no. CDR/(SSA)/No.183/2013-14 dated 3rd June,
2013, for issuance of 0.01% Cumulative Redeemable Non- convertible
Preference Shares in lieu of the "Rights Issue" of Equity Shares to the
Promoters & Promoters Group Companies , for funding the cost of Capital
Debt Restructuring (CDR) Package as stipulated by CDR-Cell, while
sanctioned the CDR Package vide its Letter of Approval (LOA) No.
BY-CDR(AG) No. 1110/2008-2009 dated 26th February, 2009, the Company
resolved to issue the said Preference Shares to the promoters and
promoters group companies, subject to Shareholders approval which was
subsequently obtained at the last Annual General Meeting held on 9th
September, 2013.
Your Directors therefore, withdraw and revoke the Special Resolutions
so passed by Members of the Company for Issue of Equity Shares on Right
Basis, at an EOGM held on 7th December, 2009.
8a ISSUE OF PREFERENCE SHARES
During the year under review, the Company had issued and allotted
975,000 Â 0.01% Cumulative Redeemable Non-convertible Preference Shares
of Rs.100/- each to the Promoters & Promoter Group Companies, in terms of
Letter of Approval No. BY-CDR/(SSA)/No.183/2013-14 dated 3rd June,
2013, received from Capital Debt Restructuring (Empowered Group), in
exercise of the authority and power conferred upon the Board by the
Members of the Company by a Special Resolution passed at the Annual
General Meeting held on 9th September, 2013.
9. SALE OF BARAMATI UNIT
As reported in our last year report that the Company has signed the
Business Transfer Agreement (BTA) on 1st April, 2013, with Messrs GTN
Engineering (India) Ltd., a Public Limited Company situated in
Hyderabad in the State of Andhra Pradesh, for sale of its cotton
spinning Unit at Baramati in Pune in the state of Maharashtra, at a
lump-sum consideration of Rs.29.80 Crore,of which sum of Rs. 24.75 crores
paid to term lenders to reduce the term debt and the balance amount was
used towards Gap funding of its modified capital expenditure and other
envisaged dues.
Your Company since obtained all the required permissions from the
concerned Authorities/Departments, has handed over the physical
possessions of its Baramati Unit to M/s. GTN (Energy (India) Ltd.) on
9th June, the closing date, as per the terms of BTA, signed by both the
parties and paid dues to its lenders and also made payments of other
dues, as per the commitment.
10. CASH FLOW STATEMENT
As required under Clause 32 of the Listing Agreement with the Stock
Exchange(s), in India, a Cash Flow Statement, as prepared in accordance
with the Accounting Standard on Cash Flow Statement (AS 3) issued by
the Institute of Chartered Accountants of India (ICAI), is given along
with Balance Sheet and Statement of Profit and Loss.
11. INSURANCE
Your Company''s, properties including its Buildings, Plant & Machinery
and Stocks among others are adequately insured against fire, flood,
earthquake, explosive and other such risks as considered necessary.
12. INTERNAL CONTROL SYSTEMS
Your Company has a proper and adequate internal control procedure
commensurate with its nature of business and the size of operations to
ensure the timely and accurate recordings of financial transactions and
adherence, to applicable Accounting Standards, optimum utilization &
safety of assets, complying with applicable statutes and compliance
with Corporate policy(ies). The Audit Committee periodically interacts
with the Management, Internal
Auditors and Statutory Auditors and tracks the implementation of
corrective actions. The Audit Committee oversees the functions of
internal auditor and reviews the audit plans, internal control and
internal audit reports, submitted by the internal auditors, to examine
and evaluate the adequate and effectiveness of the internal control
system to further strengthen the internal control systems and
procedures. Significant observations, emanating from the audit are
acted upon. The Audit Committee of the Board of Directors comprises the
majority of Independent Directors.
13. FIXED DEPOSITS
Your Company has not invited or accepted any fixed deposits from Public
under the provisions of Section 58A of the Companies Act, 1956 read
with the Companies (Acceptance of Deposit) Rules, 1975, during the year
under report and as such no amount of principal or interest was
outstanding on the date of Balance Sheet.
14. DIRECTORS
Appointment
Shri Sunil Chandra Mathur, has been nominated by IDBI Bank Ltd. as its
Nominee Director on the Board of the Company effective from 26th March,
2014 in place of Shri Anoop Sharma, IDBI''s existing nominee on the
Board of the Company.
Shri B. K. Hurkat and Shri B. L. Dhoot are Non-Executive Directors on
the Board of Directors (''the Board'') of the Company. With the enactment
of the Companies Act, 2013 (''the Act''), it is now incumbent upon every
listed company to have the requisite number of Independent Directors on
the Board. The above Directors are being appointed as Independent
Directors of the Company under the Act. The Company has received two
separate Notices in writing from a Member alongwith requisite deposits
of money proposing the aforesaid two directors to the office of
Directors under the applicable provisions of the Act. The Board
recommends the appointment of Shri B. K. Hurkat and Shri B. L. Dhoot as
Independent Directors of the Company, not liable to retire by rotation,
to hold office for a term of five consecutive years from the conclusion
of Seventy-sixth Annual General Meeting to the conclusion of
Eighty-first Anuual General Meeting i.e. from the date of this Annual
General Meeting upto 28th August, 2019.
Necessary resolutions for obtaining approval of the Members in respect
of the above appointments have been incorporated in the notice of the
forthcoming Annual General Meeting.
Cessation
IDBI Bank Ltd. (IDBI) has withdrawn Shri Anoop Sharma, as its Nominee
Director from the Board of Directors of the Company with effect from
26th March, 2014 by simultaneously appointing Shri Sunil Chandra Mathur
as its nominee on the Board of the Company.
The Board recorded its appreciation for the services rendered by Shri
Anoop Sharma during his association with the Company, as a nominee
Director on the Board for and on behalf of IDBI.
Rotation
Shri Shrikant Bhat, Director and the Executive Director of the Company
retires at the forthcoming Annual General Meeting, and being eligible,
offers himself for re-appointment. The Board recommends the
re-appointment of Shri Shrikant Bhat at the ensuing AGM.
A brief profile of Shri Bhat has been provided in the notice of AGM.
None of the Directors are disqualified from being appointed or holding
office as Directors as stipulated under Section 274(1)(g) of the
Companies Act, 1956.
15. CORPORATE GOVERNANCE
Your Company has complied with the requirements under the Corporate
Governance reporting system as stipulated in Clause 49 of the Listing
Agreement.
A detailed reports on ''Corporate Governance'' pursuant to Clause 49 of
the Listing Agreement along with an Auditors'' Certificate on Compliance
with the conditions of Corporate Governance, is annexed to this report,
forming part of the Annual Report.
16. CORPORATE GOVERNANCE Â VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs, Government of India, has issued a
set of Voluntary Guidelines 2009, for voluntary adoption of a set of
good practices by the Corporate Sector in addition to the existing laws
for further improvement of Corporate Standards and practices. These
guidelines are recommendatory in nature and are expected to serve as a
bench mark for the Corporate Sector and help them in achieving the
highest Standard of Corporate Governance. These guidelines are
reviewed by the Management from time to time to ensure the adherence of
the same voluntarily commensurate with the requirements, best suited to
your Company gradually in phases.
17. MANAGEMENT DISCUSSION AND ANALYSIS
As required by Clause 49 of the Listing Agreement, the Management
Discussion and Analysis Report is annexed and forms part of the
Directors'' Report.
18. DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 217(2AA) of the Companies Act, 1956, the
Board of Directors of your Company to the best of their knowledge and
belief and on the basis of information and explanation obtained from
the operating management, hereby states and confirms: Â
(i) that in the preparation of attached Annual Accounts for the
Financial Year ended 31st March, 2014 the applicable Accounting
Standards have been followed along with proper explanation relating to
material departures, wherever, applicable;
(ii) that they have selected the Accounting Policies described in notes
to accounts, which have been consistently applied, except where
otherwise stated and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as on 31st March, 2014 and of the loss of the Company
for the year ended on that date,
(iii) that they have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
(iv) that they have prepared the attached Annual Accounts on a ''going
concern'' basis.
19. AUDITORS
M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration
No.107929W), who are the Statutory Auditors of Company holds office up
to the conclusion of the ensuing Annual General Meeting and they are
eligible for re- appointment.
In terms of Clause 41(1)(g) of the Listing Agreement the Statutory
Auditors are subjected to the Pear Review Process of the Institute of
Chartered Accountants of India (ICAI) and to hold a valid certificate
issued by "Pear Review of the Board" of ICAI and our Statutory Auditors
hold a valid certificate by the Pear Review Board of ICAI.
A Certificate from them has been received to the effect that their
re-appointment, if made, would be within the limits prescribed under
Sub-Section (1B) of Section 224 of the Companies Act, 1956 and that
they are not disqualified for re-appointment within the meaning of
Section 226 of the said Act.
The Board proposes the re-appointment of M/s Pipara & Company,
Chartered Accountants, as Statutory Auditors of your Company based on
the recommendation of Audit Committee to hold office from the
conclusion of the ensuing Annual General Meeting until the conclusion
of next Annual General Meeting.
20. AUDITORS'' REPORT
Notes on accounts, forming part of the Audited Accounts are
self-explanatory and do not call for any further comments. There are
no qualifications or adverse remarks in the Auditors'' Report which
require any clarifications/explanations thereof.
21. INDUSTRIAL RELATIONS
Industrial relations, through-out the year under review were cordial
and harmonious.
22. COST AUDITORS
In terms of the provisions of Section 233(B) of the Companies Act, 1956
the Board has appointed a firm of Cost Accountants, M/s. N. D. Birla &
Co., as Cost Auditors of the Company to conduct the Audit of the Cost
Accounts in respect of manufacturing of Textile for the Financial Year
ending 31st March, 2014 subject to obtaining approval from Government
of India, Ministry of Corporate Affairs, Cost Audit Branch, New Delhi.
The Company has e-filed the Cost Audit Report for the financial year
ended 31st March, 2013 vide SRN. S22641278 on 29th September, 2013,
with Ministry of Corporate Affairs (Cost Audit Branch), New Delhi.
23. DEPOSITORY SYSTEMS
As the Members are aware that the Company''s Shares are compulsory
traded in dematerialized form, the Company has arrangements with both
the Depositories National Securities Depository Limited (NSDL) and
Central Depository Services (India) Limited (CDSL), to establish
electronic connectivity of its Shares, for trading in dematerialised
form.
As on 31st March, 2014, 98.36% of the Company''s total paid up Capital
representing 32,491,931 Equity Shares are in dematerialized form.
In view of the numerous advantages offered by the Depository System,
Members holding Shares in Physical mode are advised to avail of the
facility of dematerialization from either of the depositories.
24. PARTICULARS OF EMPLOYEES
During the year under report, none of the employees of the Company was
in receipt of remuneration for any part of the year, in excess of the
amount of remuneration prescribed under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 as amended upto date.
25. ADDITIONAL INFORMATION
The Company is primarily engaged in the business of manufacturing of
Cotton Yarn, Denim Fabrics, Shirtings and Garments.
Information on conservation of energy, technology absorption and
foreign exchange earnings and Outgo required to be disclosed pursuant
to Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules
1988, as amended is given in the Annexure and forms part of this
Report.
26. ACKNOWLEDGEMENT
Your Directors thanks all the valued Customers, Suppliers,
Shareholders, Business Associates, Financial Institutions, Bankers,
Government Agencies and other Stakeholders, for their patronage and
support and look forward to their continued support in future. We also
thank the dedicated and committed team of employees of the Company for
their contribution to the Company.
On behalf of the Board
Place : Ahmedabad (S. K. SOMANY)
Date:30th May, 2014 Chairman
Mar 31, 2013
To The Members,
The Directors have pleasure in presenting their 75th Annual Report of
the Company, together with the audited accounts for the Financial Year
ended 31st March, 2013.
1. FINANCIAL PERFORMANCE
During the Financial Year under review the business scenario for the
Textile Industry was extremely challenging, even though your Company
has reported a top- line growth of 21% over the previous year.
The revenue from operations for the year 2012-13 was Rs. 32,271 lacs as
compared to Rs. 26,614 lacs in previous year. The loss before Prior
period, Exceptional item and tax was Rs. 419 lacs against the previous
year loss of Rs. 1,719 lacs. The net loss for the year was Rs. 166 lacs
against the previous year net loss of Rs. 746 lacs.
2. DIVIDEND
The Board of Directors of your Company have not recommended any
dividend on the paid up Equity Share Capital of the Company for the
Financial Year under review considering the brought forward losses and
loss during the year.
3. COTTON
India''s cotton production in the current season is likely to be 340
lacs bales out of which expected exports will be about 81 lacs bales.
Due to the muted international demand and surplus production of cotton
in the current season, the industry is expecting that adequate cotton
will be available for domestic consumption which will be resulting in
stable and range bound cotton prices in the year 2013. However, price
movement is much dependent on the future procurement policies of China.
4. EXPORT
Your Company''s export performance in the year under review has improved
from the last year mainly on account of denim fabric export. The FOB
value of the exports during the Financial Year was Rs. 3,613 lacs against
Rs. 1,939 lacs in the previous year.
5. PROSPECT
Indian economy grew by 5% in Financial Year 2013, reflecting lower than
expected growth in both industry and service sectors. Inflation also
was at elevated levels. However with commodity and crude oil prices on
the decline from the peak and with various policy initiatives coming
through, the economy is estimated to grow by around 6% in Financial
Year 2014 with lower inflation.
Your Company''s business performance was adversely impacted by the weak
consumer sentiment resulting in lower discretionary spends and increase
in input cost.
Indian textiles industry is one of the leading sectors of Indian
economy and contributes significantly to the country''s industrial
output (14%), employment generation (35 million in direct and another
20 million, in indirect employment) and export earnings (17%). It
contributes 4% to India''s GDP.
Consumer demand remained sluggish across the textile and apparel value
chain in Financial Year 2013 due to high inflation and interest rates
resulting in long periods of extended end-of-season sales, pressure on
margins, thus impacting profitability.
Textile industry is one of the largest employers in India and has
strong linkages with the rural economy. The growing young middle-class
population is a source of great potential and provides immense
opportunities to spur growth in the industry going forward.
The major challenge that the textile and apparel industry is facing is
increasing cost of production arising out of rising wages, high power
and interest costs.
The Baramati unit of the Company is continuously incurring loss due to
shortage of labour and uncertainty in cotton price. The decision of the
Company to dispose off the unit by signing Business Transfer Agreement
will help to improve the profitability of the Company, as the loss is
no more to be absorbed by our Ahmedabad unit.
6. EXPANSION AND MODERNISATION
Your Company is under Denim Capacity expansion which will be completed
in Financial Year 2013-14 resulting in increase of its Denim
Manufacturing capacity from 14 mmpa to 23 mmpa.
7. RIGHTS ISSUE
The Company had approved rights issue of equity shares to meet the
requirements of CDR sanction with regard to infusion of Rs. 9.75 crores
as equity capital by promoters. However, considering the prevailing
market conditions, regulatory constraints and the current market
quotation of our company''s shares besides the fact that the promoters
have already brought in the required funds to meet the CDR stipulation,
it has now been proposed to CDR Empowered Group (CDREG) for issue of
Redeemable Preference Shares of an aggregate value of Rs. 9.75 crores to
the promoters of the company instead of making rights issue to
shareholders. The proposal is under the active consideration of CDR
Empowered Group (CDREG) and awaiting their approval. This proposal will
also save expenses for the company which it would have to otherwise
incur for a rights issue.
8. SALE OF BARAMATI UNIT
The Company has signed the Business Transfer Agreement on 1st April,
2013 with Messrs GTN Engineering (India) Ltd., a Public Limited Company
situated in Hyderabad, in the State of Andhra Pradesh, for sale of its
Cotton spinning Unit at Baramati, in Pune, in the State of Maharashtra,
on a Slump Sale basis at a Lump sum consideration of Rs. 29.80 crore. Out
of this Rs. 24.75 crore will be utilized for payment of dues of lenders,
Rs. 4.28 crores towards gap funding in modified capex and Rs. 0.77 crore
towards legal fees, professional charges, gratuity and leave wages
encashment. The sale of the said cotton spinning unit is subject to
Company''s obtaining permission/NOC, from:-
Permission/NOC from Status
Corporate Debt Restructuring Empowered Group Awaited Shareholders''
Appproval u/s 293(1)(a) of the Co''s Act, 1956 Received through Postal
Ballot Income Tax u/s 281(i)(ii) of the I.T. Act, 1961 Awaited Lenders
of the Company Few lenders have given their approval & rest are awaited
Labour Union Received Company is pushing hard to get these permissions
at the earliest so as to conclude the sale transaction.
9. CASH FLOW STATEMENT
The Cash Flow Statement, for the year ended 31st March, 2013 is annexed
hereto forming part of the Annual Report, in compliance with Clause 32
of the Listing Agreement entered in to with the Stock Exchanges.
10. INSURANCE
Adequate insurance cover has been taken for all properties of the
Company including its Buildings, Plant & Machinery and Stocks against
fire, flood, earthquake, explosive and other such risks as considered
necessary.
11. INTERNAL CONTROL SYSTEMS
Your Company has a proper and adequate internal control procedure
commensurate with its nature of business and the size of operations to
ensure the timely and accurate recordings of financial transactions and
adherence, to applicable Accounting Standards, optimum utilization &
safety of assets, complying with applicable statutes and compliance
with Corporate policy(ies). The Audit Committee periodically interacts
with the Management, Internal Auditors and Statutory Auditors and
tracks the implementation of corrective actions. The Audit Committee
oversees the functions of internal auditor and reviews the audit plans,
internal control and internal audit reports, submitted by the internal
auditors, to examine and evaluate the adequate and effectiveness of the
internal control system to further strengthen the internal control
systems and procedures. Significant observations, emanating from the
audit are acted upon. The Audit Committee of the Board of Directors
comprises the majority of Independent Directors.
12. FIXED DEPOSITS
Your Company has not invited or accepted any Public Deposits under
Section 58A of the Companies Act, 1956 during the year under report.
13. DIRECTORS
Shri S. K. Somany, Director retires by rotation at the ensuing Annual
General Meeting, and being eligible, offers himself for re-appointment
in accordance with the provisions of the Companies Act, 1956 and
Articles of Association of the Company. The Board recommends his
re-appointment.
None of the Directors are disqualified from being appointed or holding
office as Directors as stipulated under Section 274(1)(g) of the
Companies Act, 1956.
14. CORPORATE GOVERNANCE
Your Company has complied with the requirements relating to Corporate
Governance as stipulated in Clause 49 of the Listing Agreement.
The Reports of the Directors on ÂCorporate Governance'' and a
certificate from the Auditors of the Company on Compliance of
conditions of Corporate Governance, as stipulated in Clause 49 of the
Listing Agreement, is given as a Separate Section Titled "Corporate
Governance Report", forming part of the Annual Report.
15. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009
The Voluntary Guidelines 2009 on Corporate Governance issued by the
Ministry of Corporate Affairs, Government of India, for voluntary
adoption of a set of good practices by the Corporate Sector in addition
to the existing laws for further improvement of Corporate Standards and
practices, is recommendatory in nature this Guidelines will be
considered by the Management after the enactment of new Company Bill by
the Government. The Management however, generally reviews the same from
time to time to ensure the adherence of the same voluntarily in line
with the requirements best suited to your Company gradually in phases.
16. MANAGEMENT DISCUSSION AND ANALYSIS
In accordance with requirement of Clause 49 of the Listing Agreement,
Management Discussion and Analysis Report is attached to and forms
integral part of this report.
17. DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors of the Company to the best of their knowledge and belief
and on the basis of information and explanation obtained by them from
the operating management, hereby state and confirm pursuant to the
provisions of Section 217(2AA) of the Companies Act, 1956 in respect of
Financial Year under review: -
(i) that in the preparation of the annual accounts for the Financial
Year ended 31st March, 2013 the applicable Accounting Standards have
been followed along with proper explanation relating to material
departures, wherever, applicable;
(ii) that the Company has 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 as on 31st March, 2013
and of the loss of the Company for the year under review;
(iii) that proper and sufficient care have been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
(iv) that the attached Annual Accounts for the Financial Year ended
31st March, 2013 have been prepared on a Âgoing concern'' basis.
18. AUDITORS
M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration
No.107929W), the Statutory Auditors of the Company retire at the
conclusion of forthcoming Annual General Meeting and being eligible,
offer themselves for re-appointment for the Financial Year 2013-14.
Necessary certificate under Section 224(1B) of the Companies Act, 1956
from the retiring auditors has been received, confirming that their
re-appointment, if made would be in accordance with Sub-Section (1B) of
Section 224 of the Companies Act, 1956 and that they are not
disqualified for such re-appointment within the meaning of Section 226
of the said Act.
Your Directors, on the recommendation of the Audit Committee, recommend
the Members to consider their re-appointment for the financial year
ending 31st March, 2014 at the remuneration to be decided by the Board
of Directors of the Company.
19. AUDITORS'' REPORT
The observations, in the Audit Reports, are dealt by way of notes to
the accounts at appropriate places and notes being self explanatory
need no further comments or explanations from the Board of Directors.
20. INDUSTRIAL RELATIONS
Overall industrial relations, during the year under report, were
healthy and cordial.
21. COST AUDITORS
In compliance with the directives of the Central Government under the
provisions of Section 233(B) of the Companies Act, 1956 the Board has
appointed a firm of Cost Accountants, M/s. N. D. Birla & Co., as Cost
Auditors of the Company to carry out Cost Audit of the Company for the
Financial Year ending 31st March, 2014 subject to obtaining approval
from Government of India, Ministry of Corporate Affairs, Cost Audit
Branch, New Delhi.
22. DEPOSITORY SYSTEMS
The Company''s Shares are compulsory traded in dematerialized form. The
Company has arrangements with both the Depositories National Securities
Depository Limited (NSDL) and Central Depository Services (India)
Limited (CDSL), to establish electronic connectivity of its Shares, for
trading in dematerialised form.
23. PARTICULARS OF EMPLOYEES
During the year under report, none of the employees of the Company was
in receipt of remuneration for any part of the year, in excess of the
amount of remuneration prescribed under Section 217(2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees)
Rules, 1975 as amended upto date.
24. ADDITIONAL INFORMATION
The Company is primarily engaged in the business of manufacturing and
sale of Cotton Yarn, Polyester Blended Yarn, Denim (Indigo dyed)
Fabrics, Shirtings and Garments.
The particulars required to be provided under Section 217(1)(e) of the
Companies Act, 1956 read with the Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules 1988, as amended from time
to time regarding Conservation of Energy, Technology Absorption and
Foreign Exchange Earnings and Outgo are given in the Annexure, which
forms part of this Report.
25. ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation towards all
associates including Customers, Suppliers, Government Agencies,
Financial Institutions, Bankers, Shareholders, Employees and others,
who have reposed their confidence in the Company. Your Directors look
forward to their continued support in future.
On behalf of the Board
Place : Ahmedabad (S. K. SOMANY)
Date : 24th May, 2013 Chairman
Mar 31, 2012
The Directors have pleasure in presenting their 74th Annual Report of
the Company, along with the audited Accounts for the year ended 31st
March, 2012.
1. FINANCIAL HIGHLIGHTS
The Financial Year under review was challenging for the entire Textile
Industry. The Unprecedented price fluctuation in cotton and cotton yarn
in the global and domestic markets, coupled with frequent changes in
the Central Government policies, devaluation of the Indian Rupees cost
World currencies resulted in tremendous problems for the entire Textile
value chain. The Textile spinning industry was further subjected to
problems of severe power cut and non availability of skilled labour
resulting in increased cost on the lab our front. All these collectively
resulted in a reverse business scenario and due to uncertainty in the
yarn market your Company had curtailed the productivity at the Baramati
Unit for two months.
During the year, due to the reasons mentioned above, the Revenue from
Operations was lower by 4.38% at Rs. 26,614 lacs as compared to Rs. 27,833
lacs in the previous year. The Company has incurred a net loss of Rs. 746
lacs against the previous year net loss of Rs. 475 lacs.
2. DIVIDEND
The Board of Directors of your Company have not recommended any
dividend for the financial year under review considering the loss
incurred during the year.
3. COTTON
Although Cotton production in India is expected to be the highest (over
35 million bales) the volatility in the prices neither safe guarded the
interest of farmers nor that of the mills. Added to this was the
permission to allow export of cotton under OGL which further boosted
the volatility. The Government of India was forced to stop the export
of cotton for some time to control the runaway prices.
4. EXPORT
The sharp increase in the price of cotton greatly lowered the demand of
both yarn and fabrics. The FOB value of export during the year under
review was Rs. 1,939 lacs as against Rs. 3,219 lacs in the previous year.
5. PROSPECT
The recession in the European and the US market still continues but it
is hoped that some improvements in the US Economy will help to increase
our exports to that country. The Government of India has not been able
to control the deficit financing and the cost of living continues to
rise unabated which has also affected the operations of your Company.
Cost of production increased substantially due to more than 20% rise in
the Power cost and other input costs which resulted in Indian Textile
Industry becoming less competitive in export market as a result Foreign
Exchange earnings capacity of textile industry in India has greatly
reduced. In order to bring the accelerated growth in Textile Industry,
suitable incentive policy from the Government is the need of the hour.
Notwithstanding the current economic environment there are strong
reasons to be bullish on the country's long term growth potential.
Favorable demographics a large growing middle class with increasing
disposal incomes support a strong consumption story.
It is worth to note that the Government proposes to increase the
investment in this sector to generate more employment through various
schemes viz., Scheme for Integrated Textile Parks (SIP), Technology
Up gradation Fund Scheme (TUFs), Integrated Skill Development Scheme
(ISDS), Technology Mission on Technical Textiles (TMTT). The allocation
for this sector during the 12th Five Year Plan is proposed to be
increased to around Rs. 49,650 crore as against an allocation of Rs.14,000
crore during the 11th Five Year Plan.
6. EXPANSION AND MODERNISATION
Modernization and expansion of the textile industries in India is
almost stagnant. The Government must also ask the banking industries to
make available adequate fund to modernize, expand and bring about
reduction in the cost of manufacture to compete in the export market
particularly against Pakistan, Bangladesh, Vietnam and China.
7. RIGHTS ISSUE
As reported last year, the Board had approved, in principle, issue of
equity share of Rs. 10/- each on rights basis at par for an amount not
exceeding Rs.10 crore as per the stipulation made under the Capital Debt
Restructuring (CDR) Scheme, sanctioned to the Company by Corporate Debt
Restructuring (CDR) Cell. Shareholders had also subsequently approved
the same. However, the Draft Letter of Offer which was filed with the
Securities and Exchange Board of India (SEBI), Kolkata, for their
approval was withdrawn by the Company because of substantial change in
the project cost from Rs. 12.35 crores to Rs. 25.72 crores. The Company is
now having the option to file a revised offer letter for rights issue
or opt for preferential issue of equity shares to promoters, as SEBI
(SAST) Regulations, 2011 which have been notified by SEBI, interlaid
provides that acquisition of shares not involving a change of control
over the Company, pursuant to a CDR scheme shall be exempted from the
obligation of making an open offer subject to fulfillment of certain
conditions.
Considering the current market scenario, the Company has now approached
CDR seeking approval for raising of equity capital either by way of
right issue to shareholders or by way of preferential issue to
promoters. The decision of CDR was received permitting the Company for
raising the equity capital in either of the modes as approached by the
Company. However in order to provide equal opportunity to all the
Equity Shareholders, the Board has finally decided to proceed with the
issue of Equity Shares of Rs. 10/- each on Rights Basis to existing
Shareholders of the Company in terms of the Special Resolution passed
at an Extra Ordinary General Meeting held on 7th December, 2009,
instead of Preferential Issue, to the promoters and promoters group, as
earlier decided by the Board at its meeting held on 24th May, 2012.
Revised Offer Letter for Rights Issue is being made ready to file with
SEBI, Kolkata.
8. CASH FLOW STATEMENT
The Cash Flow Statement, for the year ended 31st March, 2012 in terms
of Clause 32 of the Listing Agreement with the Stock Exchanges is
annexed hereto forming part of the Annual Report.
9. INSURANCE
Adequate insurance cover has been taken for all properties of the
Company against fire, flood, earthquake, explosive and any such other
risks as considered necessary.
10. INTERNAL CONTROL SYSTEMS
Your Company has a proper and adequate internal control system
commensurate with its nature and size of business to ensure the timely
and accurate recordings of financial transactions and adherence, in
particular, to applicable Accounting Standards, safety of assets,
optimum utilization, applicable laws, rules & regulations and
Management policy. The Audit Committee meets periodically with the
management and Internal Audit Team to examine and evaluate the adequacy
and effectiveness of the internal control systems and takes necessary
steps wherever found necessary, to further strengthen the internal
control systems and procedures. Significant findings are brought to the
notice of the Audit Committee of the Board and corrective measures are
recommended for implementation.
11. FIXED DEPOSITS
Your Company has not invited any deposits from public/shareholders in
accordance with Section 58A of the Companies Act, 1956.
12. DIRECTORS
Shri Bajrang Lal Dhoot, Director retires by rotation at the ensuing
Annual General Meeting, and being eligible, offers himself for
re-appointment in accordance with the provisions of the Companies Act,
1956, and Articles of Association of the Company. The Board recommends
his re-appointment.
None of the Directors are disqualified from being appointed or holding
office as Directors as stipulated under Section 274 (1) (g) of the
Companies Act, 1956.
13. CORPORATE GOVERNANCE
The Company has complied with Corporate Governance Code as stipulated
under Clause 49 of the Listing Agreements with the Stock Exchanges.
A separate Section on 'Corporate Governance' along with Certificate
from Statutory Auditors confirming compliance with Clause 49 of the
Listing Agreement is annexed hereto and forms a part of this Report.
14. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs has issued the Corporate Governance -
Voluntary Guidelines 2009 for voluntary adoption of a set of good
practices by the Corporate Sector in addition to the existing laws for
further improvement of Corporate Standards and practices, which is
recommendatory in nature. The Management generally reviews the same
from time to time to ensure the adherence of the same voluntarily in
line with the requirements best suited to your Company gradually in
phases.
15. MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement, Management Discussion
and Analysis Report is attached to and forms integral part of this
report.
16. DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors to the best of their knowledge and belief and on the basis of
information and explanations obtained by them from the operating
management, state and confirm that: -
(i) In the preparation of the annual accounts for the financial year
ended 31st March, 2012, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
wherever, applicable;
(ii) The Company has selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at the end of the financial year and of the loss of the
Company for the year under review ;
(iii) Proper and sufficient care have been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities ; and
(iv) The attached Annual accounts for the financial year ended 31st
March, 2012 have been prepared on a 'going concern' basis.
17. AUDITORS
M/s Pipara & Company, Chartered Accountants, (ICAI registration
No.107929W), retire as Statutory Auditors of the Company at the
forthcoming Annual General Meeting and have expressed their eligibility
and willingness to accept the office of Statutory Auditors, if
appointed.
A Certificate from the Auditors has been received, to the effect that
their re-appointment, if made would be within the limits prescribed
under Section 224(1B) of the Companies Act, 1956.
Members are requested to consider their re-appointment for the
financial year ending 31st March, 2013, in the remuneration to be
decided by the Board.
18. AUDITORS' REPORT
The Auditors' Report is unqualified. With regard to the Auditors
observations in their Report, the Board wishes to state that Note nos.
13, 13.1 and 13.2 appearing in the Notes on Accounts and referred to in
the Auditors' Report are self explanatory and therefore, do not call
for any further comments and explanations under Section 217 of the
Companies Act, 1956.
19. INDUSTRIAL RELATIONS
Relations with the staff and lab our remained peaceful and cordial.
20. COST AUDITORS
In accordance with the directives of the Central Government under the
provisions of Section 233 (B) of the Companies Act, 1956, M/s. N. D.
Birla & Co., have been appointed as Cost Auditors of the Company to
conduct an audit of Cost Accounting records of the Company for the
current year ending 31st March, 2013 subject to approval from
Government of India, Ministry of Corporate Affairs, Cost Audit Branch.
21. DEPOSITORY SYSTEMS
It is mandatory that the Shares of the Company are traded in electronic
form. The Company has entered into Agreements with both the
depositories i.e. National Securities Depository Limited (NSDL) and
Central Depository Services (India) Limited (CDSL).
22. PARTICULARS OF EMPLOYEES
During the year under review, the Company has no employee, who
qualifies for disclosures in so far as to remuneration drawn pursuant
to Section 217 (2A) of the Companies Act, 1956, read with Companies
(Particulars of Employees) Rules, 1975 as amended up to date.
23. ADDITIONAL INFORMATION
The Company is primarily engaged in the business of manufacturing and
sale of cotton yarn, polyester blended yarn, Denim (Indigo dyed)
fabrics, shirting's and garments.
The Disclosures of particulars under Section 217 of the Companies Act,
1956, read with the Companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988, as amended from time to time
relating to Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo respectively is attached hereto and forms
part of this Report.
24. ACKNOWLEDGEMENT
Your Directors thank all the shareholders, all employees of the
Company, customers, suppliers, Government Authorities, Financial
Institutions and bankers for their continued support.
You Directors look forward to their continued support in future.
On behalf of the Board
Place : Ahmadabad (S. K. SOMANY)
Date : 1st August, 2012 Chairman
Mar 31, 2011
The Members,
The Directors have pleasure in presenting their 73rd Annual Report of
the Company, along with the audited Accounts for the year ended 31st
March, 2011.
1. FINANCIAL RESULTS:
The financial results are summarized below:
(Rs. In Lacs)
2010-11 2009-10
Turnover 27,613 20,756
Other Income 818 802
Total Income 28,431 21,558
Profit/(Loss) before Depreciation, Prior
Period Items, Exceptional Items and Tax 940 (296)
Less : Depreciation 1,653 1,655
Profit/(Loss)before Prior Period Item,
Exceptional Items and Tax (713) (1,951)
Add : Prior Period Items- income/(loss) 186 12
Less : Exceptional Items (55) (893)
Profit(Loss) before Taxation (582) (2,832)
Add : Provision for Deferred Tax Income 107 964
Net Profit/(Loss) for the year (475) (1,868)
Add : Balance being Profit/(loss) brought
forward from previous year (4,164) (2,296)
Balance being Profit/(loss) carried to
Balance Sheet (4,639) (4,164)
2. DIVIDEND
Your Directors do not recommend any dividend for the year 2010-11, in
view of net loss during the year.
3. OPERATIONS
Mobile connectivity has brought about a major revolution. The farmers
in the remotest area in our country are able to sell their produce at a
much better price thus improving their standard of living. This has
resulted in a great boost to the local demand of fabrics and the
turnover of the Company has increased by 33% to Rs.27,613 lacs. The
Company has been able to reduce its net loss to Rs. 475 lacs, compared
to loss of Rs. 1,868 lacs in the previous year, which is around 1/4th
of the loss sustained in the previous year. Shortage of adequate
working capital was a major impediment which affected the performance
of the Company alongwith higher input cost of raw materials, specially
cotton. Non availability of skilled manpower in the spinning unit at
Baramati Maharashtra is a cause of worry. Training is now being
imparted to female workers so as to overcome the problem of labour
shortage.
4. COTTON
With more remunerative prices, farmers increased the area in cotton
cultivation. In anticipation of a record production of cotton, the
Government of India allowed the export of 55 lac bales. The unseasonal
rain in December last year not only reduced the size of the crop but
also the quality was inferior. This resulted in an increase in cotton
prices from Rs.11,000/- per bale to as high as Rs. 32,000/- per bale.
After the ban on the export of cotton, prices have fallen to
Rs.22,000/- per bale, but this is twice in valuation when compared to
the previous year.
5. EXPORT
Despite a substantial increase in the cost of production and facing
stiff competition, the Company was able to almost double its export to
Rs. 3,219 lacs FOB and have ventured into the upper segment by selling
desized and mercerized Denim fabrics in different shades.
6. PROSPECT
Our Country is now considered as the most favourite destination by
foreign investors. The rapid industrialization and massive expenditure
in infrastructure development by our Government has created a situation
where trained manpower has become very difficult to get. This situation
will further worsen and Textile, being a labour intensive industry will
need a major investment in automation to maintain the tempo of
production. This is only possible if the Government of India would help
the industry by making available adequate finance at reasonable rate of
interest alongwith a loan having long term maturity to give an impetus
to the industry to go in for automation in a very big way.
7. EXPANSION AND MODERNISATION
The Company was sanctioned the capital expenditure for completing its
Garment project and other essential capital expenditure for its
existing fabric process house under the Corporate Debt Restructuring
(CDR) Scheme approved by CDR Cell vide Letter of Approval (LOA) No.
BY.CDR/AG No. 1110/2008-2009 dated 26th February, 2009. Out of
sanctioned capital expenditure, the Company incurred a sum of Rs. 399
lacs (bare minimum CAPEX required to be incurred) and financed mainly
out of the promoters' contribution required to be brought in under CDR
scheme.
The Company has not availed of the sanctioned term loan of Rs 900 lacs
from the lenders during the year under review and upto the date of this
Report.
The financials of the Company for the year under review improved mainly
due to better off-take of Denim fabrics. The future prospects of Denim
industry looks bright due to better domestic and international demands.
The higher demand for Denim fabrics will lead to higher demand for open
end yarn and the availability of open end yarn in India is limited due
to lesser number of manufacturers.
The Company submitted its revised CAPEX plan to the monitoring
committee in the meeting held in the month of November, 2010 at Mumbai.
On receipt of our revised CAPEX, the monitoring committee had appointed
Bombay Textile Research Association (BTRA) to conduct Techno-Economic
Viability (TEV) study of the Company. BTRA conducted its study and held
detailed discussions with management personnel at various level and
suggested changes in the CAPEX programme of the Company. Accordingly,
Company has revised its CAPEX programme with an outlay of Rs.25.96
crores which will result in an increase in the Denim manufacturing
capacity from 14 mmpa to 23 mmpa. The Company will shortly approach
lenders and the CDR to take their approval for the revised CAPEX
programme.
8. RIGHTS ISSUE
The Board has approved, in principle, issue of equity share of Rs.10/-
each on Rights basis at par for an amount not exceeding Rs.10 crore as
per the stipulation made under the Capital Debt Restructuring (CDR)
Scheme, sanctioned to the Company by Corporate Debt Restructuring (CDR)
Cell. Shareholders have subsequently approved the same. The Company has
filed its Draft letter of offer with the Securities and Exchange Board
of India (SEBI), Kolkata, for their approval.
9. SUBSIDIARY COMPANY
As reported in our last year's report, that Soma Textile FZE, an
overseas wholly owned subsidiary ceased to be a subsidiary of the
Company at the close of the year ended on 31st March, 2010 upon
dilution of Company's holding to 40%, from 100% in the paid up capital
of the said subsidiary and consequently it has become an "Associate" of
the Company.
10. CASH FLOW STATEMENT
The Cash Flow Statement, for the year under reference, as prepared in
accordance with the Accounting Standard on Cash Flow Statement (AS 3)
issued by the Institute of Chartered Accountants of India (ICAI), is
included in the Annual Accounts in conformity with the provisions of
Clause 32 of the Listing Agreement with the Stock Exchanges.
11. INSURANCE
Adequate insurance cover has been taken for all properties of the
Company against fire, flood, earthquake, explosive and any such other
risks as considered necessary.
12. INTERNAL CONTROL SYSTEMS
Your Company has adequate internal control system commensurate with its
nature and size of business. The Audit Committee examines and evaluates
the adequacy and effectiveness of the internal control systems and
takes necessary steps wherever found necessary, to further strengthen
the internal control systems and procedures. Significant findings are
brought to the notice of the Audit Committee of the Board and
corrective measures are recommended for implementation.
13. FIXED DEPOSITS
Your Company has not accepted any fixed deposits under the provisions
of Section 58A of the Companies Act, 1956 during the year and upto the
date of this Report.
14. DIRECTORS
Shri Brij Kishore Hurkat, Director retires by rotation at the ensuing
Annual General Meeting, and being eligible, offers himself for
re-appointment in accordance with the provisions of the Companies Act,
1956, and Articles of Association of the Company. The Board recommends
his re-appointment.
None of the Directors are disqualified from being appointed or holding
office as Directors as stipulated under Section 274 (1) (g) of the
Companies Act, 1956.
15. CORPORATE GOVERNANCE
Your Company has complied with all the requirements of the Code of
Corporate Governance as specified under Clause 49 of the Listing
Agreements with the Stock Exchanges.
A separate Section titled 'Corporate Governance' as stipulated under
Clause 49 of the Listing Agreement with Stock Exchanges is annexed
hereto and forms part of this Report. A Certificate from Statutory
Auditors of the Company confirming compliance with the clauses of
Corporate Governance laid down under the said Clause 49 of the Listing
Agreement is also annexed hereto and forms a part of this Report.
16. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009
The Ministry of Corporate Affairs has announced the Corporate
Governance - Voluntary Guidelines 2009. The preamble sets the tone for
a set of good practices for voluntary adoption by the Corporate Sector
and which may be adopted voluntarily by the Corporates in addition to
the existing laws for further improvement of Corporate Standards and
practices, but recommendatory in nature. It is being reviewed by the
management to ensure the adherence of the same voluntarily in line with
the requirements best suited to your Company gradually in phases.
17. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report is appended to this Report as
required by the provisions of the Code of Corporate Governance, under
Clause 49 of the Listing Agreement forming a part of Annual Report.
18. DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors to the best of their knowledge and belief and on the basis of
information and explanation obtained by them from the operating
management, state and confirm that: - (i) In the preparation of the
annual accounts for the financial year ended 31 st March, 2011, the
applicable accounting standards have been followed along with proper
explanation relating to material departures, wherever, applicable;
(ii) The Company has selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at the end of the financial year and of the loss of the
Company for the year under review ;
(iii) Proper and sufficient care have been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities ; and
(iv) The attached Annual accounts for the financial year ended 31st
March, 2011 have been prepared on a 'going concern' basis.
19. AUDITORS
M/s Pipara & Company, Chartered Accounts, Ahmedabad, Statutory Auditors
of the Company bearing ICAI registration No.107929W, retire at the
ensuing Annual General Meeting of the Company and, being eligible,
offer themselves for re-appointment. Your Company has received a
certificate from them confirming that their appointment, if made, will
be in accordance with the provisions of Section 224 (1B) of the
Companies Act, 1956 and that they are not disqualified from
re-appointment within the meaning of Section 226 of the Companies Act,
1956.
The Audit Committee recommends re-appointment of M/s. Pipara & Co. as
Statutory Auditors of the Company for the Financial Year ending on 31st
March, 2012, subject to necessary approval from the shareholders of the
Company at the ensuing, 73rd Annual General Meeting.
20. AUDITORS'REPORT
With regard to the observation made under para (VI) of the Auditors'
Report on the claim of deemed duty drawback for prior periods
recognized as revenue by the Company, your Directors state that the
management is reasonably confident of recovery of the claim as the
claim has been made and filed with the Development Commissioner SEEPZ,
Mumbai pursuant to the circular issued by Director General of Foreign
Trade (DGFT) which is the governing body and the same is legally
tenable and binding on the Development Commissioner.
And the Auditors' observation on the Investment and the amount advanced
to Soma Textile FZC, an overseas Associate (the Erstwhile 100%
Subsidiary) of the Company read with note no.24 of Schedule 22(B) on
Notes of Account of the Annual Report is self explanatory and do not
require further explanation.
21. INDUSTRIAL RELATIONS
Industrial relations remained by and large cordial during the year.
22. COST AUDITORS
Pursuant to the directives of the Central Government under the
provisions of Section 233 (B) of the Companies Act, 1956, M/s. N. D.
Birla & Co., have been appointed as Cost Auditors of the Company for
the financial year ending 31st March, 2012 to conduct an audit of Cost
Accounting records of the Company with due approval received from
Government of India, Ministry of Corporate Affairs, Cost Audit Branch
vide their Sanction Letter NO. 52/129/CAB/1988 dated 3rd May, 2011.
23. PARTICULARS OF EMPLOYEES
The Company has no employee drawing a remuneration as prescribed under
Section 217 (2A) of the Companies Act, 1956, read with Companies
(Particulars of Employees) Rules, 1975 as amended, during the year
under review.
24. ADDITIONAL INFORMATION
A statement giving details of Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo pursuant to Clause
(e) of Sub-Section (1) of Section 217 of the Companies Act, 1956, read
with the Companies (Disclosure of particulars in the Report of Board of
Directors) Rules 1988, is annexed hereto and forms part of this report.
25. ACKNOWLEDGEMENT
Your Directors thank all the shareholders, all employees of the
Company, customers, suppliers, Government Authorities, Financial
Institutions and bankers for their continued support. Your Directors
look forward to this continued support in future as well.
On behalf of the Board
Place : Ahmedabad (S. K. SOMANY)
Date : 18th May, 2011 Chairman
Mar 31, 2010
We have pleasure in presenting the 72nd Annual Report of the Company,
along with audited statements of Accounts for the year ended 31st
March, 2010. The summarized financial results are given below:
1. SUMMARISED FINANCIAL RESULTS:
(Rs. In Lacs)
2009-10 2008-09
Turnover 20,756 15,707
Other Income 802 953
Total Income 21,558 16,660
Loss before Depreciation, Prior
Period Item, Exceptional Items and Tax 296 1,850
Add : Depreciation 1,655 1,651
Loss before Prior Period Item,
Exceptional Items and Tax 1,951 3,501
Add : Prior Period Items- income (12) -
Add : Exceptional Items 893 (442)
Loss before Taxation 2,832 3,059
Add : Taxes - 16
Add : Provision for Deferred Tax (964) (238)
Net Loss for the year 1,868 2,837
Add : Balance brought forward
from Previous year 2,296 (541)
Balance being loss carried to
Balance Sheet 4,164 2,296
2. DIVIDEND
Your Directors do not recommend any dividend for the year 2009-10, in
view of net loss during the year.
3. RESULTS OF OPERATIONS
During the year under review, the operations of the Company improved
due to good domestic demand. Due to the increase in the activity, the
sale turnover of the Company has increased by 32% at Rs.20,756 lacs as
compared to Rs.15,707 lacs in the Previous year.
The Company has incurred a net loss of Rs.1,868 lacs against the
Previous years net loss of Rs. 2,837 lacs. This was mainly due to
volatility in the input cost of the major raw materials, cotton and
yarn as well as the high power cost and labour shortage during the
period under review.
4. COTTON
Cotton production during the year was a little lower than the previous
year, but due to remunerative export prices the average input cost of
cotton to the industry was higher. The farmers have been able to get
better prices for their produce and this will encourage them to
increase more acreage in cotton production.
5. EXPORT
FOB value of export turnover at Rs.1,685 lacs was 53% lower than export
of Rs.3,584 lacs achieved in the previous year mainly due to slow down
in the world economy.
6. PROSPECT
Foreign investment in our country is steadily increasing and this has
brought about a situation where we are not able to get adequate trained
manpower to maintain the level of production. In the summer months and
during festival season, your company has been compelled to keep
production machinery stopped due to non availability of proper
manpower. This situation will increase rapidly in the years to come and
in the textile industry where manpower requirement is very high this
industry will find it very difficult to maintain the tempo of
production. The Government of India should consider inducing the
textile manufacturers to go in for modern equipment to reduce the
requirement of manpower to maintain the production. This would be
feasible only with the Government extending adequate finance at
reasonable rates to the industry to go in for automation.
The action taken by the Government in giving remunerative prices to the
farmers has resulted in increased expenditure on essential
requirements. Sales of fabric and garments are expected to increase in
the home market giving a much needed helping hand to the textile
industry.
7. EXPANSION AND MODERNISATION
The Company shall incur capital expenditure as sanctioned by the
lenders under Corporate Debt Restructuring Scheme approved vide Letter
of Approval (LOA) No. BY.CDR/AG No. 1110/2008-2009 dated 26th February,
2009 for completing the Garment project and essential capital
expenditure in existing fabric process house.
8. SUBSIDIARY COMPANY
The Audited Statement of Accounts for the year ended 31st March, 2010
of Soma Textile FZE, Sharjah, UAE, the Companys wholly owned
subsidiary together with statement in respect of subsidiary as required
pursuant to the provisions of Section 212 of the Companies Act, 1956
are attached.
During the year under report, Soma Textile FZE, an overseas wholly
owned subsidiary of the Company has raised its Share Capital from AED
300000 to AED 750000. The Company has not subscribed to the additional
capital offered to the Company on first priority basis. The subsidiary
Company has, therefore, allotted additional 450 shares of AED 1000 each
to two other foreign shareholders i.e. 225 shares each of an aggregate
value of AED 450000 and that resulted in dilution of Companys holding
in its subsidiary to 40%, from 100% in the paid up capital of its
subsidiary. Consequent upon Soma Textile FZE ceased to be a subsidiary
of the Company after the close of business hours as on 31st March,
2010.
9. CONSOLIDATED FINANCIAL STATEMENT
Your Directors have pleasure in attaching the Consolidated Financial
Statements pursuant to Clause 32 of the Listing Agreement entered into
with the Stock Exchanges and prepared the Financial Statements in
accordance with Accounting Standards prescribed by the Institute of
Chartered Accountants of India.
10. CASH FLOW STATEMENT
As required under Clause 32 of the Listing Agreement with the Stock
Exchange(s), in India, a Cash Flow Statement, as prepared in accordance
with the Accounting Standard on Cash Flow Statement (AS 3) issued by
the Institute of Chartered Accountants of India (ICAI), is given along
with Balance Sheet and Profit and Loss Account.
11. INSURANCE
All the properties of our Company have been adequately insured against
fire, flood, earthquake, and explosive risks
12. INTERNAL CONTROL SYSTEMS
The Company has in place proper and effective control system
commensurate with size of its operations, to ensure that all systems
are properly functioning and policies are being complied with as
required. The Audit Committee reviews and evaluates the adequacy,
relevance and effectiveness of the internal control systems and makes
recommendation, wherever found necessary.
13. FIXED DEPOSITS
Your Company has not invited/accepted any deposits from the public in
terms of Section 58A of the Companies Act, 1956 during the year and up
to the date of this Report.
14. DIRECTORS
Appointment
Shri Anoop Sharma, has been nominated by IDBI Bank Ltd. as its Nominee
Director on the Board of the Company effective from 19th April, 2010 in
place of Shri B. H. Parghi, IDBIs existing nominee on the Board of the
Company.
Cessation
IDBI Bank Ltd. (IDBI) has withdrawn Shri B. H. Parghi, as its Nominee
Director from the Board of Directors of the Company with effect from
19th April, 2010 by simultaneously appointing Shri Anoop Sharma as its
nominee on the Board of the Company.
The Board recorded its appreciation for the services rendered by Shri
B. H. Parghi during his association with the Company, as a nominee
Director on the Board for and on behalf of IDBI.
Rotation
Shri Shrikant Bhat, Director and the Executive Director of the Company
retires at the forthcoming Annual General Meeting, and being eligible,
offers himself for re-appointment. The Board recommends the appointment
of Shri Shrikant Bhat.
15. CORPORATE GOVERNANCE
Your Directors are happy to report that your Company is compliant with
the Corporate Governance requirements as per Clause 49 of the Listing
Agreement with Stock Exchanges. Your Company has been committed to the
highest standard of Corporate Governance practices in the entire gamut
of its business policy.
A separate Report on Corporate Governance pursuant to Clause 49 of the
Listing Agreement with Stock Exchanges is attached as a separate
annexure and forms a part of this Report. A Certificate from Statutory
Auditors of the Company regarding compliance of the conditions of
Corporate Governance under Clause 49 of the Listing Agreement is also
attached to this Report.
16. MANAGEMENT DISCUSSION AND ANALYSIS
A Report on Management Discussion and Analysis is presented separately
pursuant to the provisions of the Corporate Governance, under Clause 49
of the Listing Agreement forming part of this Annual Report.
17. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956 and on the
basis of the information received by them, your Directors confirm: Ã
(i) That in the preparation of the annual accounts for the financial
year ended 31st March, 2010, the applicable accounting standards have
been followed along with proper explanation relating to material
departures wherever applicable ;
(ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
loss of the Company for the year under review ;
(iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
(iv) That the Directors have prepared the annual accounts for the
financial year ended 31st March, 2010 on a Ãgoing concern basis.
18. AUDITORS
The Statutory Auditors, M/s Pipara & Company, retire at the 72nd Annual
General Meeting of the Company and, being eligible, offer themselves
for re-appointment.
The Board of Directors recommends re-appointment of M/s. Pipara & Co.
as Statutory Auditors of the Company, subject to necessary approval
from the shareholders of the Company at the 72nd AGM.
19. AUDITORS REPORT
The Auditors Report to the Shareholders does not contain any
qualification. Note no.23 of Schedule 22(B) to the Notes on Accounts
referred to by the Statutory Auditors in their Auditors Report is
self-explanatory and therefore do not call for any further elucidation.
The Directors Report should be read in conjunction with the Auditors
Report and Notes to Accounts annexed hereafter.
20. COST AUDITORS
M/s. N. D. Birla & Co., a Cost Accountant firm have been appointed as
Cost Auditors of the Company for the financial year ending 31st March,
2011 to conduct an audit of Cost Accounting records of the Company with
due sanction of the Central Government.
21. PARTICULARS OF EMPLOYEES
Information on the particulars of employees remuneration as per
Section 217(2A) of the Companies Act, 1956, read with Companies
(Particulars of Employees) Rules, 1975, forms part of this Report.
However, as per the provisions of Section 219 (1) (b) (iv) of the
Companies Act, 1956, the Report and Accounts are being sent to all
shareholder of the Company excluding the statement of Particulars of
Employees remuneration. Any shareholder, interested in such
particulars may write to the Company Secretary at the Registered Office
of the Company for a copy of the Statement.
22. ADDITIONAL INFORMATION
Information pursuant to Clause (e) of Sub-Section (1) of Section 217 of
the Companies Act, 1956, read with Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 relating to
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo and forming part of the Directors Report are given
as annexure attached hereto.
23. ACKNOWLEDGEMENT
The Directors thank all its employees for their contribution and the
shareholders, customers, Government Authorities, Financial Institutions
and bankers for their continued support.
On behalf of the Board
Place : Ahmedabad (S. K. SOMANY)
Date :29th May, 2010 Chairman
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