DIRECTORS' REPORT Your Directors are pleased to present the 24th Annual Report together with audited accounts for the year ended March 31, 2015. ECONOMIC OVERVIEW As per the latest GDP growth estimates, Indian economy grew by 7.4% in FY15 compared to 6.9% in FY14, mostly driven by improved economic fundamentals and revision of GDP methodology calculation. Even inflation showed signs of moderation, a welcome sign - wholesale price and consumer price inflation declined to 4.2% and 7.4% respectively, compared with last year's 6.3% and 10.1%. Reduced inflation, falling crude oil prices, stable Rupee, improved purchasing power and consumer spending, higher capital inflows supported by the government policy reforms have already put India on an accelerating growth track and improved the business outlook. The Government envisages GDP growth to accelerate to 8% in FY16 driven by strengthening macroeconomic fundamentals and implementation of policy reforms recently announced. Reforms like e-auctions of coal mines and telecom, FDI hike in insurance, speedier regulatory approvals etc. will be critical growth enablers to de-bottleneck stalled projects, improve the investment outlook and the ease of doing business in the country. Reforms currently underway such as GST implementation, Amendment on Land Acquisition Bill, Labour Reforms, etc., are expected to provide the requisite thrust for growth in the medium-term. HIGHLIGHTS OF PERFORMANCE During the year under review, against the backdrop of challenging business environment, the company has recorded moderate performance both in income and its profit. The income touched Rs. 214.45 crore which is 16% more than last year and recorded profit of Rs.13.90 crore which is up by 39% as over the previous year. The company had coupled with high level of modernization, concentrated efforts of both Management and dedicated employees; the whole hearted supports of Banks, suppliers and customers attained these levels of performance. The earnings per equity share (of face value of Rs.10/-) for the year increased to Rs.12.84 from Rs.9.33 for the previous year. During the year 2014-15, the company has recorded revenue from exports, including export incentive entitlement, of Rs. 167.82 crore, which represents 78.25% of total revenue. The company has showcased its products in major exhibitions in strategically important markets. During the year, the company has also progressed well in domestic business with an increase of 36% in revenues over the previous year. DIVIDEND In view of the expansion and investment strategies of the Company, your directors do not recommend any dividend for the year under review. SHARE CAPITAL The paid up Equity Share Capital as on 31st March, 2015 was Rs. 731.62 lacs. There has not been any change in the Equity Share Capital of the Company during the Financial Year ended 31st March, 2015. During the year under review, the Company has neither issued shares with differential voting rights nor issued sweat equity or granted stock options. DEPOSITS During the year under review, the Company did not accept any deposits from the public within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT Pursuant to Section 186 of the Companies Act, 2013, company has not directly or indirectly a) given any loan to any person or other body corporate other than usual advances envisaged in a contract of supply of materials if any, b) given any guarantee or provide security in connection with a loan to any other body corporate or person and c) acquired by way of subscription purchase or otherwise, the securities of any other body corporate, exceeding sixty percent, of its paid-up share capital, free reserve and securities premium account or one hundred percent of its free reserves and securities premium account whichever is more. MATERIAL CHANGES AND COMMITMENTS There has been no material changes which have occurred subsequent to the close of the financial year of the Company to which the Balance Sheet relates and the date of the report. STATUTORY AUDITORS AND THEIR REPORT M/s Sunil K Sood & Co., Chartered Accountants, (Registration No7564) had been appointed as Statutory Auditors of the Company, for a period of three years at the Annual General Meeting held on September 30, 2014, and shall hold office for a period of three years. However, as per first provision of Section 139(1) of the Companies Act, 2013, the appointment of auditors has to be ratified by the members at every annual general meeting. The company has received a letter from the auditors confirming that they are eligible for re-appointment as auditors of the Company under Section 139 of the Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the Companies Act, 2013. Board of Directors of the Company proposes to ratify the appointment of M/s Sunil K Sood & Co, Chartered Accountants, as Statutory Auditors of the company for FY16. The comments on statement of accounts referred to in the report of the auditors are self explanatory. The Auditors' Report does not contain any qualification, reservation or adverse remark. SECETARIAL AUDITORS AND THEIR REPORT Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Sanjiv Goel & Co., Practicing Company Secretaries, to undertake Secretarial Audit of the Company. The Secretarial Audit Report in Form MR-3 for the financial year ended March 31, 2015 is annexed herewith as "Annexure-I". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. COST AUDITORS The Company was not required to appoint Cost Auditor for the financial year ending March 31, 2015. INTERNAL AUDITORS The Board of Directors has appointed Mr. Akhil Raman & Associates, Chartered Accountants, as Internal Auditor of the Company to carry out internal audit of Branches, offices and manufacturing units of the Company. CORPORATE GOVERNACE Transparency is the cornerstone of the Company's philosophy and all requirements of Corporate Governance are adhered to both in letter and spirit All the Committees of the Board of Directors meet at regular intervals as required in terms of Clause 49 of the Listing Agreement. Your Board of Directors has taken all necessary steps to ensure compliance with all statutory and listing requirements. The Directors and key managerial personnel of your Company have complied with the approved 'Code of Ethics for Board of Directors and Senior Executives' of the Company. The Report on Corporate Governance as required under the Listing Agreement forms part Annual Report. The Auditors' Certificate on compliance with Corporate Governance requirements is also attached to this Report. CEO AND CFO CERTIFICATION Pursuant to Clause 49 of the Listing Agreement, the CEO and CFO certification is attached with the annual report. The Managing Director and CEO and the Chief Financial Officer also provide quarterly certification on financial results while placing the financial results before the Board in terms of Clause 41 of the Listing Agreement. BUSINESS EXCELLENCE AND QUALITY INITIATITIVES The company continues to be guided by the philosophy of business excellence to achieve sustainable growth. Customer-focused culture towards building long-term customers relationships is the key agenda of the Management. The company follows the principles of total quality management. The company continues to be certified under ISO 9001: 2000 certifications for complete range of laminates manufactured. OCCUPATIONAL, HEALTY, SAFETY & ENVIORMENT Company has effectively deployed the occupational health, safety and environment management policies, in line with core value of being recognised as a responsible corporate citizen. CORPORATE SOCIAL RESPONSIBILITY The Company through its Corporate Social Responsibility Committee had formulated a CSR policy as required under Section 135 of the Companies Act, 2013. The following is the composition of the Corporate Social Responsibility Committee. a) Mr. Jagdish Gupta - Chairman b) Mr. Satish Gupta- Member c) Mr. Satpal Garg - Member Scope of CSR Activities Company understands the importance of Corporate Social Responsibility (CSR) activities that bring a meaningful and lasting improvement in the life of youth and marginalized section of the society, more particularly of backward region. It has been a commitment of Company to the society. CSR Policy Implementation The Company shall undertake CSR project/ programmes identified by the CSR Committee and approved by the Board of Directors in line with the CSR Policy. The CSR Policy of the Company will be uploaded on the website of the Company. Reason for not spending on CSR Activities Being the initial year, the Company was in the process of evaluating the focus areas / locations of intervention for CSR activities to cater to the pressing needs of society and deliver optimal impact. The company was intended to own a village for embedding wider economic, social and environmental development by providing better health facilities, educational facilities and food etc for weaker section of the society. The company couldn't obtain the necessary approval from the agency. The company will comply with the provisions of Section 135 of the Companies Act, 2013 for FY15 as well as FY16 in this year. INTERNAL CONTROL Your Company has proper and adequate system of internal controls. The external audit firm has been appointed as internal auditors to conduct regular audits that are performed as per the annual Audit Plan. The Internal Audit team conducts its audits which are carried out at factory, branches and corporate offices with the objective to evaluate and continuously improve the effectiveness of internal controls and governance processes. Additional areas, if any, identified during the year are taken up as special assignments. The audit findings are reviewed by the Audit Committee of Directors and corrective action, as deemed necessary, is taken. Company also has laid down procedures and authority levels with suitable checks and balances encompassing the entire operations of the Company. OUTLOOK The Company's outlook remains favourable on account that inspite of the depressed economic conditions during past two years, the prospects for the medium to long term looks promising. During the last year, a stable Government at the Centre has assumed office and it is expected that major policy reforms would be undertaken with all seriousness. It is expected that interest rates would be softened thereby giving a much needed impetus to manufacturing which would consequently increase consumption. This would lead to an all round buoyancy especially for the industry and infrastructural sectors. The government has planned game-changing reforms in indirect tax through the introduction of GST, which is likely to be introduced with effect from 1st April, 2016. Introduction of GST was a much awaited reform and is expected to provide numerous benefits to both business and consumers. With the introduction of GST, supply chain inefficiencies will be reduced, Inter-state trade will become easy and the market will be integrated at the national level. The government with proactive initiatives like Make in India, Smart Cities and Swachh Bharat Abhiyan, among others will drive the industrial momentum. EXPANSION During the year under review, company has commenced production at their set-up at Panchkula, Haryana, the production of the interior grade laminates (in latest textures), for premium and standard grades, marketed under the brand name of 'Violam' and 'Wakalam' respectively. The company has developed HPL exterior grade premium flooring product, under the brand name of 'Walkon'. The company is the first to manufacture this product in India. Beside this, the company has enhanced production of Exterior Cladding which is marketed under the brand 'Fascia'. To put all the inventiveness measures under one roof, this includes development of new designs, finding of new vendors, to study product dynamics and to explore market for export and domestic business; at their separate location at Panchkula Technology Park, Haryana. The construction of building having built-up areas of 20697.200 sq. mtrs is almost complete. The company has planned to lease out portion of constructed building to other players for commercial office space and for service sector businesses. The building will be operational before the close of this financial year. Considering the buoyant demand of product and study of long term outlook of the infrastructure, particular Tier-I and Tier-II cities, which is backed by favorable demographics, entry of foreign players and increasing urbanization in India; The company, at its Board Meeting held on 8th April, 2015, approved a proposal for expansion of capacity, thereafter the company has proposed to set-up compact laminates manufacturing unit at Vill. Mankabra, Raipur Rani, Distt. Panchkula, Haryana, with an approximate cost outlay of Rs.45 crore. VIGIL MECHANISM/ WHISTLE BLOWER POLICY In accordance with the provisions of the Companies Act, 2013 read with the Companies (Meeting of Board and its Powers) Rules, 2014, every listed Company is required to have a Vigil Mechanism for the Directors and employees to report their genuine concerns and grievances. Your Company has a Whistle Blower Policy in place and the same is also available on company's website. EXTRACT OF THE ANNUAL REPORT The extract of the Annual Return in Form No. MGT - 9 (Attached as "Annexure -II") forms part of the Board's report. BOARD EVALUATION Pursuant to the provisions of 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 directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. POLICY ON NOMINATION AND REMUNERATION The contents of Nomination and Remuneration Policy of the Company prepared in accordance with the provisions of Section 178 of the Companies Act, 2013 and Clause 49 (IV) of the Listing Agreements are provided in the Corporate Governance Report. MEETINGS During the year under review 8 Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. The details of constitution of the Board and its Committees are given in the Corporate Governance Report. COMPLIANCE WITH CODE OF ETHICS FOR BOARD OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL All Directors and Senior Management Personnel have affirmed Compliance with the Code of Ethics for Board of Directors and Senior Executives. A Declaration to that effect is attached with the Corporate Governance Report. LISTING The equity shares continue to be listed on BSE Limited (BSE). The company has paid annual listing fee for the financial year 2015-16. CREDIT RATING CARE has carried out a credit rating assessment of the company for both short term and long term exposures in compliance with BASEL II norms implemented by RBI. The rating of the company has improved to one notch point to 'Triple B' for long- term bank facilities at 'CARE BBB' and assigned 'A 3+' rating on the short term bank facilities at 'CARE A3'. INSURANCE The company's properties, including building, plant, machineries etc and stocks are adequately insured against risks. PARTICULATRS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All related party transactions that were entered during the financial year were in the ordinary course of business and on an arm's length basis. There were no materially significant related party transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company. All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval is also obtained from the Audit Committee for the related party transactions which are of repetitive nature which can be foreseen and accordingly the required disclosures are made to the Audit Committee on quarterly basis in terms of the approval of the Committee. The policy on materiality of related party transactions and also on dealing with related party transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the company. Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm's length basis, Form AOC - 2 is not applicable to the Company FRAUD REPORTING During the year under review, no fraud was reported by the Auditors of the Company to the Audit Committee or the Board of directors. DISCLOSURES UNDER SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 During the year under review, no case was filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. DETAIL OF SINGIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OT TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE There are no significant material orders passed by the Regulators/Courts which would impact the Going Concern status of the Company and its future Operations. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORBTION AND FOREIGN EXCHANGE EARNINS AND OUTGO Information pursuant to Clause (m) of Sub-Section (3) of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure I". PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is 'Not Applicable' as no employee is in receipt of remuneration in excess of the limits prescribed under this Section. DIRECTOR'S RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: a. That in the preparation of the annual financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b. That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; c. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. That the Directors have prepared the annual accounts on a going concern basis; and e. That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and f. That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. ACKNOWLEDGMENT The Board wishes to take this opportunity to thank its employees for their dedicated service and firm commitment to give the goals of the company. The Board also wishes to place on record its sincere appreciation for the wholehearted support from shareholders, customers, vendors, bankers, and all other business associates for their support and cooperation during the year. By Order of the Board, For Stylam Industries Limited Sd/- Jagdish Gupta Managing Director Place: Chandigarh Date: 2nd September, 2015 |