DIRECTORS' REPORT Dear Members of Sharat Industries Limited, 1. Your Directors have pleasure in presenting the Twenty Fifth Annual Report of the Company together with Audited Accounts for the year ended 31st March, 2015 2. SUMMARY OF OPERATIONS & STATE OF COMPANY AFFAIRS : The turnover of the company for the year ended 31st March, 2015 was Rs.20,660.61 lakhs against Rs.14,108.97 lakhs in the previous year. During the year the company made sales of Rs. Rs. 19,218.83 lakhs against Rs.13,541.48 lakhs in the previous year Job work receipts of Rs. 454.69 lakhs against Rs. 415.75 lakhs in the previous year and during the year the company has made an operating profit of Rs.391.81 lakhs against Rs. 393.41 lakhs in the previous year. During the year, the company's shrimp exports grew up by 81% and domestic feeds sales grew up by 29% as compared to the previous financial year Your directors are confident that the performance of the company will improve in the years to come. 3. FUTURE OUTLOOK : Our product is well received in the international market as well as domestic market. We are hopeful of achieving much better results in the years to come. The outlook and future plans of the Company have been mentioned in detail under the "Management Discussion and Analysis" section that forms part of this report. 4. SHARE CAPITAL : As on 31st March 2015, the issued, subscribed and paid up capital of your company stood at Rs.22,01,25,000/- comprising of 2,20,12,500/- equity shares of Rs.10/-each. 5. DIVIDEND : In order to retain the profits to strengthen the capital base, no dividend has been recommended by the Board for the year under review. 6. RESERVES , IF ANY The Company has not transferred any amount to reserves during the financial year. 7. LISTING OF SHARES : The equity shares of the Company have been listed on the Bombay Stock Exchange at Mumbai. The company confirms that it has paid Annual Listing Fees due to the Bombay Stock Exchange for the year 2015-2016. The Bombay Stock exchange suspended the trading of Company's Shares. Your Company could not establish connectivity with both National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the company is in the process to establish connectivity and dematerialize the shares. 8. CHANGE IN NATURE OF BUSINESS The company continues to be an integrated Aqua Culture company with Hatchery, Culture, and Feed and Shrimp Processing & Exports business and during the year, the company has not changed its business. 9. MATERIAL CHANGES AND COMMITMENTS No material changes and commitments affecting the financial position of the company have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report 10. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The company has in placed adequate financial controls commensurate with size and operations. 11. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS The company has Internal Audit and the Audit Committee is in place to take care of the same. 12. EXTRACT OF ANNUAL RETURN : As required pursuant to section 92(3) oftheCompaniesAct,2013 and rule 12(1) of the companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report as ANNEXURE II. 13. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES There are no Subsidiary/ Joint venture/ Associate companies 14. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENT Not applicable as there are no Subsidiary/ Joint venture/ Associate companies 15. STATUTORY AUDITORS The Auditors M/s P.A. Reddy & Co., Chartered Accountants, retiring auditors of the Company, were appointed as Statutory Auditors to hold office for a period of three years from conclusion of 24thAnnual General meeting till the conclusion of 27th Annual General Meeting. The resolution relating to ratification of the appointment is put to ratification by members in the ensuing Annual General Meeting. 16. AUDITORS' REPORT,OBSERVATIONS AND REPLIES The Auditors' Report was qualified and Notes to Accounts and some of the Auditors remarks in their report are self-explanatory and do not call for any further comments. However with specific reference to Para IV of the said report, items wise it is clarified as under In respect of Post Retirement Benefits viz. Gratuity, as per Accounting Standard-15 issued by the Institute of Chartered Accountants of India, the Company should make provision on actuarial basis every year towards liability for future payment of gratuity. However during the year, provision for gratuity has been made on adhoc basis. Such creation of provision is not in accordance with the Accounting Standard referred above. In the absence of details we are unable to comment on the effect of such provision on the profits for the year, gratuity liability and net worth of the Company The report of the Insurance Company on actuarial liability for gratuity is awaited. We shall make the requisite provision in the current year. In respect of a few creditors and advances recoverable, there are neither confirmations of the year-end balances nor reconciliation of the accounts. In the absence of such confirmations / reconciliations, we are unable to comment on the effect of such accounts on the profit of the Company for the year, year-end balances of trade creditors and advances recoverable and on the net worth of the Company. Confirmation of balances from some of the creditors who are illiterate farmers could not be obtained. However we are following up the matter to obtain the confirmations. We do not foresee any discrepancies in the balances and hence there will not be any effect on the Accounts. 17. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mr. S Sharat Reddy, Director retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment. During the year, Mrs. S. Charita Reddy has been appointed as an Additional Director under the category of Woman Director on the Board of the company. During the year Mr. V C Ramakrishna Kumar has been appointed as Chief Financial Officer of the company. 18. DECLARATION FROM INDEPENDENT DIRECTORS The Company has received necessary declaration from each Independent Director under section 149(7) of the Act that they meet with the criteria of their independence laid down in Section 149(6) of the Act. 19. DIRECTORS' RESPONSIBILITY STATEMENT The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 & 134 (5) of the Companies Act, 2013, shall state that- in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; the directors had prepared the annual accounts on a going concern basis; and The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 20. MEETINGS: A calendar of Meetings is prepared and circulated in advance to the Directors. During the year Nine Board Meetings and Five Audit Committee Meetings, 6 share transfer committee meetings and 2 nomination & remuneration 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. 21. VIGIL MECHANISM : In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.sharatindustires.com. 22. RISK MANAGEMENT: The Company has policy for identifying risk and established controls to effectively manage the risk. Further the Company has laid down various steps to mitigate the identified risk. 24. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Company is not required to constitute a Corporate Social Responsibility Committee as it does not fall within purview of Section 135(1) of the Companies Act, 2013 and hence it is not required to formulate policy on corporate social responsibility. 25. CORPORATE GOVERNANCE The Corporate Governance Report as stipulated in Clause 49 of the Listing agreement shall be annexed with the report. ANNEXURE-VII 26. PARTICULARS OF EMPLOYEES : Statement showing the details of employees who are in receipt of remuneration of Rs. 5, 00,000/- or more per month are given in the annexure - IV forming part of this report. 27. 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 ( ANNEXURE V) 28. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 DETAILS OF LOANS: PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES : The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto shall be disclosed in Form No. AOC-2. As ANNEXURE III 30. SECRETARIAL AUDIT REPORT A Secretarial Audit Report given by Sri. D.S. Venkata Narasimhan, Company secretaries is annexed with the report. With reference to the observations made, we state that The unintended delays in filings were due to the secretarial staff. The Company Secretary (CS) selected has not joined as the Registered Office is at a rural place. However, the company is making use of the practicing Company Secretary to ensure compliances. The company proposes to initiate the process for dematerialization during the year. (Annexure -I) Comments in Directors report: The Company is in the process of dematerializing the shares and also getting the connectivity from NSDL and CDSL. The Company is taking effective steps to comply with listing agreement and filing of forms with MCA in time. The Company has taken steps to appointing Company Secretary. According to the section 135 of Companies Act, 2013, CSR is not applicable for this Company sicne the net profit does not exceed Rs.5.00 crores. 31. INTERNAL AUDIT In terms of sec 138 of the companies' act 2013 and the relevant rules the company appointed M/s A R Krishnan & Associates, Chartered Accountants as the internal auditors of the company. The internal auditor directly reports to the audit committee. 32. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management Discussion and Analysis Report as required under 49 of the listing agreement with Stock Exchange, is annexed hereto ANNEXURE - VI 33. NO SIGNIFICANT AND MATERIAL ORDERS WERE PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE 34. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 To prevent sexual harassment of women at work place, a new act the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on 9th December, 2013 and every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee. Your Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment. 35. MECHANISM FOR BOARD EVALUATION Clause 49 of the Listing Agreement states that the board shall monitor and review the board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The Directors evaluation was broadly based on the parameters such as understanding of the Company's vision and objective, skills, knowledge and experience, participation and attendance in Board/Committee meetings; governance and contribution to strategy; interpersonal skills etc. The Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as evaluation of the working of its Board Committees. A structured questionnaire was prepared covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board Culture, execution and performance of specific duties, obligations and governance. A meeting of the Independent Directors was also held which reviewed the performance of Non-Independent Directors, Chairman and the quality, quantity and timelines of flow of information between the Company management and Board. 36. PERSONNEL: The relations between the management and the staff were very cordial throughout the year. Your Directors take this opportunity to record their appreciation for the cooperation and loyal services rendered by the employees. 37. ACKNOWLEDGEMENTS: Your Directors gratefully acknowledge with thanks the constructive guidance and cooperation extended by MPEDA, FEDERAL BANK LIMITED and other Government Agencies. BY THE ORDER OF BOARD OF DIRECTORS For SHARAT INDUSTRIES LIMITED S. PRASAD REDDY CHAIRMAN & MANAGING DIRECTOR PLACE: VENKANNAPALEM DATE: 5th September 2015 |