Mar 31, 2018
DIRECTORS'' REPORT
Dear Members,
The Directors have pleasure in presenting the 50th Annual Report together with the Annual Audited Financial Statements of the Company for the year ended 31st March 2018.
FINANCIAL SUMMARY (RS, in Lakhs)
Particulars |
Standalone |
Consolidated |
||
Year ended 31st March, 2018 |
Year ended 31st March, 2017 |
Year ended 31st March, 2018 |
Year ended 31st March, 2017 |
|
Revenue (Net Sales) |
1,65,326 |
1,79,197 |
1,70,821 |
1,72,781 |
Profit Before Depreciation, Interest and taxes |
15,022 |
17,813 |
20,396 |
25,085 |
Profit before Tax |
10,112 |
13,584 |
11,836 |
17,653 |
Tax Expense |
3,602 |
4,813 |
3,926 |
6,150 |
Profit After Tax (before Minority interest) |
6,510 |
8,771 |
7,910 |
11,503 |
Minority Interest |
- |
- |
866 |
1,687 |
Profit After Tax (after Minority interest) |
6,510 |
8,771 |
7,044 |
9,816 |
Transferred to General Reserve |
- |
- |
- |
FINANCIAL REVIEW
(The financial discussion is based on Standalone Financial Statements)
This year your company was initially confronted with teething issues post implementation of SAP in April, 2017, thereafter, with the introduction of GST experienced hicups due to constant changes in rates and regulations.
Arising out of the above, revenues (net sales) of the Company declined marginally to H 165,326.33 lakhs during the year under review. The Earnings before Interest, Depreciation and Tax (EBIDTA), Profit before Tax (PBT) and Profit after Tax (PAT) for the year under review are H 15022.08 lakhs, H 10112.13 lakhs and H 6509.98 lakhs respectively.
CORPORATE HIGHLIGHTS
Access to Capacity
During the year under review, your Company had access to ~61 million square meters (msm) of tiles through own plants (26.28 msm), subsidiaries/ associates (25.71 msm) and other outsourced partners (~9 msm).
Capital Expenditure
Your Company continued to invest significantly in expanding and upgrading its plant and machinery and infrastructure. During the year under review, the gross block increased by H 10128.49 Lakhs (previous year H 3280.82 Lakhs) towards enhancing capacity and meeting routine capital expenditure requirements of own manufacturing plants.
Branding and Distribution
It is imperative for brand "Somany" to explore new marketing/advertising possibilities and newer ways of targeting specific target groups. Therefore, we engaged a top notch creative agency who understands the dynamic advertising & media environment, we have since recruited Ogilvy & Mather (India''s No.1 Advertising Agency), who came on board with a fresh and progressive approach in developing marketing campaigns which involves consumers/trade/influencer segment and remains amongst the top 3 brands for consideration within our industry.
Your company launched a fresh and peppy 360-degree TV advertisement campaign, ''Aapka style, Somany style'', which reinforced the brand''s commitment to meet the diverse customer personalities and requirements through its vast enriched product portfolio. The campaign unfolded with a power-packed all-round outreach and engagement plan across media vehicles. The brand had a significant presence across digital, retail, radio, print, cinema and TV with an estimated 1000 GRPs.
Your company also released new print ads for product categories like Duragres, Glosstra Plus Duragres Planks and French Collection. This was aimed to ensure visibility round the year in Home & Decor, B2B/ Trade, Premium positions like Back Cover, Inside Front Cover etc. were taken in various B2B and B2C magazines with avg. circulation of 75,000 copies across various publications Architectural Digest, BBC GoodHomes, Elle Decor, India Today Homes, Better Interiors, Better Homes & Garden, Inside Outside etc. Kerala being one of the focus states few advertisements were released in Vanitha (General Interest Magazine) & Veedu (Home Decor Magazine) thereby accelerating the growth momentum in the city.
To provide thrust to Sanitary ware & Bath Fittings business we had undertaken a brand positioning activity by associating with Royal Challengers Bangalore (RCB) as "Official Partner" for IPL 2018 with category exclusivity. As a result of this, your company and RCB partnered to ensure a 360° reach which entailed a series of marketing activities and advertising campaigns across all touch points like outdoor, digital, social, and print. Marque RCB players - Virat Kohli, AB De Villers and Chahal were featured as brand ambassadors helping us in our brand outreach to prospective customers and younger audience.
The company established key relationships and engaged with the PR firm and other media partners and ensured target brand visibility throughout the year by highlighting Somany''s expanding retail foot print, new product launches, financial performances and major corporate announcements. We garnered a total of 380 pieces of coverage for F.Y. 2017-18 which is an average of 1 clip per day. As a result, we managed to get significant free on air time with leading business news channels including CNBC, TV18, ET Now, CNBC Awaaz, etc.
In finding out new ways to reach out to the whole nation, your company executed in-cinema advertising during the screening of blockbusters like Bahubali 2, Tubelight, Jab Harry Met Sejal, Tiger Zinda Hai & Padmavaat. This also helped our brand grow and find recognition pan India.
Your Company is relentlessly working on innovation and product development. To cater the dynamic requirement of customers your company launched two new product ranges Duragres Tesoro & Glosstra Plus which received a good response from the market.
Keeping up the tradition of strengthening the distribution network and expanding footprints, your company opened about 100 showrooms/ display centres across the country.
Digital Presence of Somany has seen a progressive growth of more than 7% through month-on-month sales using its various digital touch points. One of the most quirky campaign was launched through Social Handles of Somany to promote its brand new TVC which garnered more than 1 million YouTube views and saw a boosted engagement rate of 28.41% on Facebook and 52.4% on Instagram, #Aapka Style Somany Style trended nationally on Twitter for more than 3 hours at top 3 positions. Digital sales were boosted by lead generation exercise through Social Media, SEO and SEM activities.
INDUSTRY SCENARIO AND OUTLOOK
The year 2017-18 was marked by several key structural initiatives to build strength across macro-economic parameters for sustainable growth in the future. These reforms are expected to help reduce internal barriers to trade, increase efficiency and improve tax compliance. The 1st half of the financial year was guarded by continuing effects of demonetization and the implementation of GST from 1st July 2017. However, the economy recovered from the initial setbacks to grow at over 7% in the 3rd quarter. In FY 2017-18 GDP growth was pegged at 6.6% and is estimated to further grow at 7.3% in 2018-19.
DIVIDEND
Your Directors are pleased to recommend a dividend of 135% i.e. H 2.70 per equity share for the year under review i.e. same as the previous year. This represents a pay-out ratio of 21.2%. Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the dividend declared by the Company is as per the Dividend Distribution Policy adopted by the Company in the year 2016-17 which is as follows:
- The Company was incorporated on 20th January, 1968 and started its commercial production in 1972. The company has been paying dividend continuously since 1974 except for the year 2002-03 to 2006-07.
- Dividend pay-out is decided on the basis of macro-economic factors, expected future cash flows and future capital needs for expansion of production capacities of the company from time to time and keeping in view contingencies for meeting unforeseen financial obligation of the Company.
The Dividend Distribution policy is also available on the website of the Company at the web link: https://www.somanyceramics.com/wp-content/uploads/2017/03/Dividend-Distribution-Policy_SCL1.pdf
TRANSFER TO RESERVES
No amount was transferred to the General Reserve of the Company for the financial year ended 31st March, 2018.
UTILISATION OF PROCEEDS ON ISSUE OF SHARES
Out of H 11,999.97 lakhs raised through qualified institutions placement of equity shares in December, 2015, the Company has so far utilized H 1849.97 lakhs (including issue expenses of H 307.34 lakhs) for the purpose the funds were so raised and balance H 10150.00 lakhs has been temporarily invested mainly in the debt instruments/funds.
PUBLIC DEPOSITS
Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
During the year, your Company increased equity stake in M/s. Sudha Somany Ceramics Private Limited (formerly known as Sudha Ceramics Private Limited) from 50% to 51% on 20th September, 2017 and it became Subsidiary of your company and also acquired 51% stake in M/s Amora Ceramics Private Limited thereby making it subsidiary of the company.
Your Company further increased its stake in M/s Sudha Somany Ceramics Private Limited from 51% to 60% on 1st May, 2018 and also acquired 51% stake in M/s Karanjot Enterprises Private Limited on 1st May, 2018 which is engaged in the business of manufacturing and selling of Bath Fittings items such as faucets, showers etc.
There was no business activity in M/s SKPL Ceramics Private Limited (Formerly known as Somany Keraben Private Limited), a 50:50 joint venture between your Company and M/s Keraben Grupo S.A. (Formerly known as M/s Keraben S.A.) therefore Joint Venture Agreement
executed between the Company and M/s. Keraben Grupo S.A was terminated during the year and an application to remove the name of M/s. SKPL Ceramics Private Limited from the register of Companies was filed, which is under process.
During the year, the Board of Directors reviewed the affairs of its subsidiaries and associates. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company, all its subsidiaries and associates, which forms part of this Annual Report.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on Company''s website http://www. somanyceramics.com. These documents will also be available for inspection at our registered office at Kolkata, India, between 3:00 p.m. to 5:00 p.m. in working days till the date of ensuing AGM.
The statement required under Section 134 of the Companies Act, 2013 in respect of the subsidiary companies, associates and joint venture is provided at Annexure - 1 to this report, which comprises performance and financial position of each of subsidiaries, associates and joint venture.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All transactions entered with Related Parties during the financial year were on arm''s length basis and were in the ordinary course of business. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large. 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 required. Your directors draw attention of the shareholders to the financial statements which set out related party disclosures.
Related Party Transactions Policy as approved by the Board has been uploaded on the Company''s website www.somanyceramics.com at the web link: https://www.somanyceramics.com/wp-content/ uploads/2017/06/Related-Party-Policy_Revised_24.01.2017.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of this Annual Report as Annexure - 2.
RISK MANAGEMENT
The Company has initiated measures to develop and implement Risk Management Systems in accordance to Section 134(3)(n) of the Companies Act, 2013 and the Risk Management Policy of the Company. The Risk Management process followed to identify, assess and prioritise risks that need to be minimised, monitored and mitigated is quite elaborate. These measures help in reducing and controlling the impact of adverse events and maximise the realisation of opportunities. Major risks are identified systematically and mitigated on a continuous basis. A few of the identified risks pertain to competitive intensity and cost volatility.
INVESTOR EDUCATION & PROTECTION FUND (IEPF)
The Company is required to transfer dividends which remained unpaid/unclaimed for a period of seven years to the IEPF established by the Central Government. The unpaid/ unclaimed dividend for the year ended 31st March, 2011 is due for transfer to IEPF on or after 11th September, 2018.
During the period under review, the MCA vide its General Circular No. 12/2017 dated 16th October, 2017 provided that where the seven years'' period provided under sub-section (5) of Section 124 was completed for unpaid/unclaimed dividends during 7th September, 2016 to 31st October, 2017, the due date for transfer of such shares by Companies was 31st October, 2017. During the period under review, the Company transferred 88,625 Equity shares of H 2/- each of 89 shareholders of the Company held in physical/demat form, whose dividends remained unclaimed for consecutive 7 years i.e. from 2008-09 to 2015-16 and 17,464 Equity shares of H 2/- each of 8 shareholders held in physical form, whose dividends remained unclaimed from 2009-10 to 2016-17, to Investor Education and Protection Fund (IEPF) pursuant to Section 124 (6) of the Companies Act, 2013 within the scheduled time.
STATEMENT ON COMPLIANCES OF APPLICABLE SECRETARIAL STANDARDS
In requirement of para 9 of revised Secretarial Standards on Board Meeting i.e. SS-1 your Directors states that they have devised proper systems to ensure compliance with the provisions of all applicable
Secretarial Standards and that such systems are adequate and operating effectively.
AUDITORS'' REPORT
All the items on which the Auditors'' have commented in their report are self-explanatory and suitably explained in the Notes to the Accounts. The Auditors'' Report to the Shareholders for the year under review does not contain any qualifications.
DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of the knowledge and belief of the Directors of the Company and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3) (c) of the Companies Act, 2013.
(a) In the preparation of the annual accounts for the year ended 31st March, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
(b) The Directors'' have selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the profit of the Company for the year ended on that date.
(c) The Directors 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) The Directors have prepared the annual accounts on a going concern basis.
(e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
CONSOLIDATED FINANCIAL RESULTS
As required by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements have been prepared in accordance with applicable Accounting Standards. The audited consolidated financial statements together with Auditors'' Report forms part of this Annual Report.
The consolidated net profit of your Company was H 7044.42 Lakhs in the year under review compared to H 9815.80 Lakhs in the corresponding previous year.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mrs. Anjana Somany retires by rotation at the ensuing Annual General Meeting and being eligible has offered herself for re-appointment.
Mr. Ghanshyambhai Girdharlal Trivedi, Chief Executive Officer of the Company retired from the post of Chief Executive Officer of the Company w.e.f. 17th August, 2017.
Mr. Tuljaram Maheshwari, Deputy Chief Executive Officer and Chief Financial Officer of the Company was re-designated as Chief Executive Officer and Chief Financial Officer of the Company w.e.f 17th August, 2017.
During the period under review, the Company has appointed Shri Ghanshyambhai Girdharlal Trivedi, as an Additional Director with effect from 1st September, 2017 upon recommendation of Nomination and Remuneration Committee of Company to hold the office until the date of ensuing Annual General Meeting of the Company. The Company has received notice under Section 160 of the Companies Act, 2013 from member signifying the intention to propose the candidate for the office of director at the ensuing Annual General Meeting of the Company.
Mr. Rameshwar Singh Thakur has been appointed as an Additional Director of the Company on 24th May, 2018 and he shall hold the office until the date of ensuing Annual General Meeting of the Company. The Company has received notice under Section 160 of the Companies Act, 2013 from a member signifying the intention to propose the appointment of Mr. Rameshwar Singh Thakur as an Independent Director of the Company at the ensuing Annual General Meeting of the Company.
Mr. Girdhari Lal Sultania, Non-Executive Non Independent Director resigned from the directorship of the Company w.e.f. 24th May, 2018. The Board places on record his contribution during his tenure of Directorship of the Company.
Mr. Tuljaram Maheshwari, Chief Executive Officer and Chief Financial
Officer of the Company resigned from the post of Chief Financial Officer of the Company w.e.f. 30th January, 2018 and he was appointed as Chief Executive Officer i.e. Whole Time Key Managerial Personnel by the Board of Directors w.e.f 30th January, 2018 upon recommendation of Nomination and Remuneration Committee of the Company.
The Board of Directors appointed Mr. Saikat Mukhopadhyay as Chief Financial Officer i.e. Whole Time Key Managerial Personnel w.e.f. 30th January, 2018 pursuant to Section 203 of the Companies Act, 2013 upon recommendation of Nomination and Remuneration Committee of the Company.
DELCARATION OF INDEPENDENCE
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under sub-section (6) of section 149 of the Act and Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013 evaluation is carried out by the Board, Nomination Remuneration Committee (NRC) and by the Independent Directors. The Board has carried out an annual performance evaluation of its own, individual Directors including Independent Directors (excluding the director being evaluated) and its Committees.
Board evaluation was carried out on the basis of questionnaire, prepared after considering various inputs received from the Directors, covering various aspects revealing the efficiency of the Board''s functioning such as Development of suitable strategies and business plans, size, structure and expertise of the Board and their efforts to learn about the Company and its business, obligations and governance.
Performance evaluation of every Director was carried out by Board and Nomination and Remuneration Committee on parameters such as appropriateness of qualification, knowledge, skills and experience, time devoted to Board deliberations and participation level in board functioning, extent of diversity in the knowledge and related industry expertise, attendance and participations in the meetings and workings thereof and Initiative to maintain high level of integrity & ethics.
Independent Directors had carried out performance evaluation of Non-
Independent Directors in their separate meeting, the Board as a whole and performance evaluation of Chairman was carried out, taking into account the views of Executive and Non-Executive Directors.
The performance of Committees was evaluated on parameters such as whether the Committees of the Board are appropriately constituted, Committees has an appropriate number of meetings each year to accomplish all of its responsibilities, Committees maintains the confidentiality of its discussions and decisions, Committee conducts a self-evaluation at least annually, Committee makes periodically
reporting to the Board along with its suggestions and recommendations.
Independent Director''s performance evaluation was carried out on parameters such as Director upholds ethical standards of integrity, the ability of the director to exercise objective and independent judgment in the best interest of Company, the level of confidentiality maintained. The Directors expressed their satisfaction with the evaluation process.
The Board founded the evaluation satisfactory and no observations were raised during the said evaluation in current year as well as in previous year.
NOMINATION AND REMUNERATION POLICY
The Board has modified Nomination and Remuneration Policy in its meeting held on 24th May, 2018. The modified policy is attached herewith as Annexure - 3 which forms part of this report and the same has also been uploaded on website of the company at www. somanyceramics.com at the weblink https://www.somanyceramics. com/wp-content/uploads/2018/07/Nomination-and-Remuneration_ Policy_Revised.pdf
MEETINGS OF THE BOARD
Five (5) meetings of the Board of Directors, Three(3) meetings of Nomination and Remuneration Committee, Four (4) meetings of Stakeholders Relationship Committee and Five (5) meetings of Audit Committee were held during the year the details of which are given in the Corporate Governance Report forming part of this Annual Report.
AUDIT COMMITTEE
The Audit Committee reconstituted during the year and comprises Independent Directors namely Mr. Ratna Kumar Daga (Chairman), Dr. Yoginder Kumar Alagh, Mr. Salil Singhal, Mr. Siddharath Bindra and non-independent directors Mr. G.L. Sultania and Mr. G. G. Trivedi who was inducted as member of Audit Committee w.e.f. 10.4.2018. All the recommendations made by the Audit Committee were accepted by the Board.
AUDITORS
M/s. Singhi & Co., Chartered Accountants, having Firm Registration No.302049E were appointed as Statutory Auditors of the Company for a period of 5 (Five) consecutive years at the 49th Annual General Meeting (AGM) held on 25th August, 2017, to hold office till the conclusion of the 54th AGM of the Company, subject to ratification of their appointment at every AGM, in terms of first proviso to Section 139 of the Companies Act, 2013, read with Rule 3(7) of the Companies (Audit and Auditors) Rules, 2014.
The provisions of the Companies (Amendment) Act, 2017 notified on 7th May, 2018 omitted the first proviso to sub-section 1 of Section 139 of the Companies Act, 2013 which provided for ratification of appointment of Statutory Auditors of the Company.
However, since the resolution passed on 25th August, 2017 contains such requirement, it is proposed by the Board of Directors on recommendation of Audit Committee, as a major of abundant caution, to have ratification of appointment of Statutory Auditors, done by the members for the entire unexpired period.
In this regard, the Company has received a letter from the auditor''s M/s. Singhi & Co., Chartered Accountants, confirming that they are eligible to continue 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 till the conclusion of 54th AGM of the Company.
SECRETARIAL AUDITOR AND THEIR REPORT
The Board had appointed M/s Pinchaa & Co., Company Secretaries having registration number P2016RJ051800 to conduct Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2017-18. The Secretarial Audit Report for the financial year ended 31st March, 2018 is annexed and marked as Annexure - 4 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure - 5 to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has formulated, developed and implemented a Corporate Social Responsibility Policy in terms of provisions of Section 135 of the Companies Act, 2013 read with Corporate Social Responsibility Policy Rules 2014 on recommendation of Corporate Social Responsibility Committee (CSR Committee) and approval of the Board of Directors of the Company. CSR Committee undertakes CSR activities in accordance with its Corporate Social Responsibility Policy (CSR Policy) uploaded on the Company''s website at www.somanyceramics.com at the weblink:https://www.somanyceramics.com/wp-content/uploads/ pdfs/policies/scl-corporate-social-responsibility-policy.pdf
The CSR Committee comprises of four members namely Mr. Abhishek Somany, Managing Director is Chairman of the Committee and Mr. Salil Singhal, Mr. Siddharath Bindra and Mr. Ravinder Nath Independent Directors of the Company are other members of the Committee.
The CSR initiatives of the Company are implemented directly and through various trusts/ societies/ NGO''s. The Company also carried out the CSR activities through a Section 8 Company under the Companies Act, 2013 incorporated under the name M/s H. L. Somany Foundation.
The 2% of the average net profit of the Company, made during the three immediately preceding financial years comes out to be H 192.75 Lakhs. A report on CSR activities is provided at Annexure - 6 to this report.
INTERNAL CONTROL SYSTEMS
The Company has an Internal Control System, commensurate with the size, scale and complexity of operations.
The internal control is supplemented by the extensive programme of internal audits, review by management and by the Audit Committee, and documented Policies, SOPs, Guidelines and Procedures.
The Internal Audit monitors and evaluates the efficacy and adequacy of internal control system in the company, its compliance with operating systems, accounting procedures and policies at all locations of the company.
During the year, no reportable material weakness in the design or operation was observed.
HUMAN RESOURCE (HR)
Our increasing focus on process simplification and operational excellence, has resulted in well Integrated HR practices and are directly contributing to the business requirements of the Company. HR initiatives during the year focused strongly on simplifying structures, hierarchies and removing redundant workflows, thereby supporting business performance. While strengthening on recent implementation of SAP, we have clarified and demarcated functional responsibilities and inter-dependencies in alignment of this change. To minimize our order processing to value generation turnaround time, we have built up state-centered order processing teams across India. These independent state-based teams are capable to address the state specific requirements and challenge in shortest possible times, without intervention of long hierarchies.
Considering our aggressive growth plans across verticals, we have customized our talent development strategy, making it more apt to the needs of existing talent and the organization. As the average age of the company is declining with more and more millennial joining our workforce, we have transformed our traditional Learning and Development (L&D) model and policies into more dynamic and performance facilitating learning model & practices. To make our L& D offerings more reachable and engaging to the people, we have introduced many insightful learning courses through our E-learning portal "E-Campus". Through E-campus, we have effectively imparted critical programs on New Joiner orientation, Product Knowledge, Commercial standards, professional effectiveness and life-skill enhancement, to our employees spread across India. Furthermore, to encourage a learning culture in the organization, we have integrated annual learning initiatives undertaken by an employee to their annual appraisal summary (as Quantified Learning Credits). The learning credit score of an employee represents his/her learning and growth orientation and hence acts as a meaningful insight. Our year-round consistent and unique initiatives taken, aim to partner the business and distinguish Somany as a Powerful Employer brand, attracting and employing the best talent from the Industry.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company has a continuous vigil mechanism in the form of Whistle Blower Policy in line with Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in terms of Section 177(9) of the Companies Act, 2013. The policy enables the stakeholders (including Directors and employees) to report unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct.
The Policy provides adequate safeguards against victimization of Director(s)/ employee(s) and enable direct access to the Chairman of the Audit Committee in exceptional cases. The protected disclosures, if any, reported under this Policy are appropriately and expeditiously investigated by the Chairman. The details of the Whistle Blower Policy is also explained in the Corporate Governance Report and is also available on the website of the Company at the weblink:https://www. somanyceramics.com/wp-content/uploads/pdfs/policies/whistel-blower-policy.pdf
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report forms integral part of this Annual Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, R&D, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed as Annexure - 7 forming part of this Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided at Annexure - 8.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names of employees and other particulars of the top ten employees and employees drawing remuneration in excess of the limits as provided in the said rules are set out in the Board''s Report as an addendum thereto. However, in terms of provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
CORPORATE GOVERNANCE
Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance and a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements forms part of this Director Report as Annexure - 9.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company continue to follow robust policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace.
The Company has a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the aspects as contained under "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013". The Internal Complaint Committee has been set up to redress the Complaints received regarding sexual harassment.
During the period under review, the Company has not received any complaint under this Policy.
SECTION C: OTHER DETAILS
Does the Company have any Subsidiary Company/ Companies? The Company has eight subsidiaries and four Associates.
Do the Subsidiary Company/Companies participate in the BR Initiatives No direct participation.
of the parent company? If yes, then indicate the number of such However, the Company encourages its subsidiaries to adopt its policies
subsidiary company(s). and practices.
Do any other entity/entities (e.g. suppliers, distributors etc.) that the No Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities?
[Less than 30%, 30-60%, More than 60%]
SECTION D: OTHER DETAILS
1. Details of Director/Directors responsible for BR
a) Details of Director responsible for implementation of the BR policy/policies
1. DIN : 00021423
2. Name : Shri Shreekant Somany
3. Designation : Chairman and Managing Director
b) Details of the BR Head
No. |
Particulars |
Details |
|
1. |
DIN (if Applicable) |
NA |
|
2. |
Name |
Saikat Mukhopadhyay |
|
3. |
Designation |
Chief Financial Officer |
|
4. |
Telephone number |
0120-4627900 |
|
5. |
E-mail id |
Principle 1 (P1) |
Businesses should conduct and govern themselves with Ethics, Transparency and Accountability |
Principle 2 (P2) |
Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle |
Principle 3 (P3) |
Businesses should promote the well-being of all employees. |
Principle 4 (P4) |
Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. |
Principle 5 (P5) |
Businesses should respect and promote human rights |
Principle 6 (P6) |
Businesses should respect, protect, and make efforts to restore the environment. |
Principle 7 (P7) |
Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner. |
Principle 8 (P8) |
Businesses should support inclusive growth and equitable development. |
Principle 9 (P9) |
Businesses should engage with and provide value to their customers and consumers in a responsible manner. |
2. Principle-wise (as per National Voluntary Guidelines) BR Policy/policies
a) Details of compliance (Reply in Y/N)
S. No. |
Questions |
P1 |
P2 |
P3 |
P4 |
P5 |
P6 |
P7 |
P8 |
P9 |
1. |
Do you have a policy/ policies for....... |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
2. |
Has the policy being formulated in consultation with the relevant stakeholders? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
3. |
Does the policy conform to any national / international standards? If yes, specify? (50 words) |
Company has adopted various national and international standards viz: 1. ISO 9001: 2008 for Quality Management System 2. ISO 14001: 2004 for Environment Management System 3. BS OHSAS 18001: 2007 Occupational Health and Safety Management System. 4. ISO 22000: 2005 for Food Safety Management System 5. 5 ''S'' Practices: for Work Place Management System |
||||||||
4. |
Has the policy being approved by the Board? If yes, has it been signed by MD/owner/CEO/appropriate Board Director? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
5. |
Does the company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
6. |
Indicate the link for the policy to be viewed online? |
|||||||||
7. |
Has the policy been formally communicated to all relevant internal and external stakeholders? |
The policies have been posted on the Company''s website for information of all stakeholders. |
||||||||
8. |
Does the company have in-house structure to implement the policy/policies. |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
9. |
Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders'' grievances related to the policy/ policies? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
10. |
Has the company carried out independent audit/ evaluation of the working of this policy by an internal or external agency? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
S. No. |
Questions |
P1 |
P2 |
P3 |
P4 |
P5 |
P6 |
P7 |
P8 |
P9 |
1 |
The company has not understood the Principles |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
2 |
The company is not at a stage where it finds itself in a position to formulate and implement the policies on specified principles |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
3 |
The company does not have financial or manpower resources available for the task |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
4 |
It is planned to be done with in next 6 months |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
5 |
It is planned to be done within the next 1 year |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
6 |
Any other reason(please specify) |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
(a) If answer to the question at serial number no. 1 against any principle is ''No'', explain why: (Tick up to 2 options) : N/A
3. Governance related to BR
(a) Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year.
The assessment is an on-going activity and is an integral part of corporate functions.
(b) Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published?? No.
SECTION E: PRINCIPLE- WISE PERFORMANCE Principle 1 - Business should conduct and govern themselves with Ethics, Transparency and Accountability.
1. Does the policy relating to ethics, bribery and corruption cover only the company? Yes/ No. Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others?
Yes, The Company''s policy relating to ethics, bribery and corruption serves as the guiding philosophy for all employees of the company as well as subsidiary companies.
2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or so.
During the year 14 complaints were received from the investors. All these investor''s complaints were properly attended and necessary actions were taken. In addition, the company received customer complaints which were addressed suitably from time to time.
Principle 2 - Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.
1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities.
a) Anti-Slip Floor Tiles with Slip Resistant Coating
b) Process Waste Recycle
c) Training of masons on tile laying (Known as Tile Master Programme)
2. For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product (optional):
(a) Reduction during sourcing/production/distribution achieved since the previous year throughout the value chain?
(b) Reduction during usage by consumers (energy, water) has been achieved since the previous year?
Energy efficient process:
(a) (1) Installation of Solar Plant at manufacturing plant of the Company at Kassar, which generated about 8.23 Lakhs units during this period. (2) Conversion of high RPM motors with Low RPM motors and (3) Installation of LED lights (4) Installation of Automatic Power Factor correction control panels.
(b) Installation of Inverters in BK combustion Fan Air Supply for reduction in power consumption.
(c) Exercised the option of rebate in power consumption during night shift & reduced our power cost.
(d) STP (Sewage Treatment Plant):
Treatment of domestic effluent waste water (Canteen, washrooms, toilets etc.), after treatment of effluent and approx. 60 KL water per day is re-used in process and solid waste is used as manure in gardening.
(e) ETP (Effluent Treatment Plant):
The Industrial effluent (cutting, polishing machines and washing water) was treated. The water is used in process. The effluent (sludge) was used as raw material in body preparation.
(f) Fired Pitcher grinding ball mill :
Fired pitcher grinding ball mill is used to grind the fired pitcher generated from tiles production in the plant. The dry powder is used as raw material in process.
Further, the data regarding reduction during usage by consumers (energy, water) is not available with the company.
3. Does the company have procedures in place for sustainable sourcing (including transportation)?
(a) If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in about 50 words or so.
The Sourcing practices of the Company are devised to achieve environmentally sustainable buying processes focusing on cost reduction in procuring raw material and logistics contracts. Our Company''s criteria for vendor selection is based on vendor''s market reputation, compliance to the best quality standards and practices of its social responsibilities.
4. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work?
If yes, what steps have been taken to improve their capacity and capability of local and small vendors?
Company accords priority to local suppliers of goods and services. Company takes steps for capacity building of local and small vendors. Company''s contractors who supply labour and transportation services for plant operations employ workmen from nearby communities. The training is provided to workforce for occupational health and safety.
5. Does the company have a mechanism to recycle products and waste? If yes, what is the percentage of recycling of products and waste (separately as<5%, 5-10%,>10%). Also, provide details thereof, in about 50 words or so.
The Company''s product are Ceramics/Vitrified wall & floor tiles and the Company has taken steps to reuse or recycle the waste. For treatment of water effluents, the company has installed STP Plant/ ETP, 100% recycled water is used in the processes. Solid waste is used as a raw material in the process and ensured 100% recycled water used in the process (zero discharge).
Principle 3 - Businesses should promote the wellbeing of all employees.
i. Please indicate the Total number of employees.
The total number of permanent employees are 2355 as on 31st March, 2018.
ii. Please indicate the Total number of employees hired on temporary/ contractual/casual basis.
Total temporary/contractual/casual employees are 1017 as on 31st March, 2018.
Principle 4 - Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized
1. Has the company mapped its internal and external stakeholders? Yes/No
Yes.
I |
Permanent Employees |
59.12% |
II |
Permanent Women Employees |
55% |
III |
Causal/Temporary/Contractual Employees |
66.64% |
IV |
Employees with Disabilities |
NA |
No. |
Category |
No. of complaints filed during the financial year |
No. of complaints Pending as on end of the financial year |
1 |
Child labour/forced labour/involuntary |
NIL |
NIL |
2 |
Sexual harassment |
NIL |
NIL |
3 |
Discriminatory employment |
NIL |
NIL |
viii. What percentage of your under mentioned employees were given safety & skill up- gradation training in the last year?
iii. Please indicate the Number of permanent women employees. There were 60 Permanent women employees as on 31st March, 2018.
iv. Please indicate the Number of permanent employees with disabilities.
There were 2 permanent employees with disabilities as on 31st March, 2018.
v. Do you have an employee association that is recognized by management?
No, there is no employee association which is recognized by Management.
vi. What percentage of your permanent employees is members of this recognized employee association?
N.A
vii. Please indicate the Number of complaints relating to child labour, forced labour, in voluntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year.
2. Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders?
Yes.
3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders? If so, provide details thereof, in about 50 words or so.
Our CSR approach focuses on the development of communities around the vicinity of our plants. We have also developed innovative programmes that leverage our capabilities as a tile manufacturer.
Our "Tile Master" initiative has cumulatively trained more than
8,000 mason workers on tile laying techniques and improved their productivity and livelihood.
Principle 5 - Business should respect and promote human rights.
1. Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/Suppliers/ Contractors/NGOs/Others?
The Policy on Human Rights covers the Company only. Company encourages parties associated with its value chain like vendors, suppliers, contractors, etc. to follow the principles stated in the policy.
2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management?
The Company has not received any complaint from any stakeholder except the investor complaints during the period under review.
Principle 6 - Business should respect, protect, and make efforts to restore the environment.
1. Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/ others?
The Policy on environment covers the Company only.
2. Does the company have strategies/initiatives to address global environmental issues such as climate change, global warming, etc.? Y/N. If yes, please give hyperlink for webpage etc.
Yes. The Company has Environmental Policy which guides the organization to continually mitigate the impact on climate change and global warming as a result of our operations. The company works continuously to reduce the waste and is focused on creating green infrastructure which are designed for better energy efficiency and efficient operations.
3. Does the company identify and assess potential environmental risks? Y/N
Yes.
4. Does the company have any project related to Clean Development Mechanism? If so, provide details thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed?
The locations of the Company are certified for requirements under ISO 14001 (Environmental System) and OHSAS 18001 (Occupational Health and Safety System). Audit by Independent Auditors are carried out to check the level of compliance.
5. Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web page etc.
The initiative taken by the Company are covered under the Directors'' Report, which forms part of the Annual Report.
6. Are the Emissions / Waste generated by the company within the permissible limits given by CPCB / SPCB for the financial year being reported?
Emissions and Waste generated by the company are within the permissible limits.
7. Number of show cause/legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year.
None.
Principle 7 - Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner.
1. Is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with:
Yes, the Company is member of following trade associations which make efforts towards sustainable business development -
(a) Indian Council of Ceramic Tiles and Sanitary ware (ICCTAS)
(b) Confederation of Indian Industry (CII)
(c) PHD Chamber of Commerce
(d) MCC Chamber of Commerce and Industry
2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/No; if yes specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others)
The Company has represented through above associations from time to time for various economic and corporate governance issues in the interest of the Industry in general and Ceramic Industry in particular.
Principle 8 - Businesses should support inclusive growth and equitable development.
1. Does the company have specified programmes/initiatives/projects in pursuit of the policy related to Principle 8? If yes details thereof.
The Company has taken a holistic approach towards the development of the deprived groups of the society. The Company work in the areas of education, vocational skills training and empowerment of women, development of children and health care and sanitation. To oversee implementation of various initiatives, Company has formed a Board Level Committee called Corporate Social Responsibility (CSR) Committee.
2. Are the programmes/projects undertaken through in-house team/ own foundation/external NGO/government structures/any other organization?
The projects are undertaken by in-house team, CSR Foundation of the Company and in co-ordination with external agencies like NGOs and trusts.
3. Have you done any impact assessment of your initiative?
The CSR programme and their impacts/outcomes are monitored and reviewed by the Committee.
4. What is your company''s direct contribution to community development Projects-Amount in INR and the details of the projects undertaken?
The company has spent an amount of H 199.87 Lakhs in various CSR activities during the year 2017-18 which includes H 7.12 Lakhs being the amount required to be spent by the Company in terms of CSR Regulations in the financial year 2016-17. The details of the amount incurred on areas covered are given in Annexure to the report on Corporate Social Responsibility forming part of this Report.
5. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words, or so.
Company has a process of engaging with local community to understand their concerns. The CSR interventions are carried out on a need based approach which is developed after consultations with the local community to ensure that the activities are adopted by them.
Principle 9 - Businesses should engage with and provide value to their customers and consumers in a responsible manner.
1. What percentage of customer complaints/consumer cases are pending as on the end of financial year?
The Company has an effective system for addressing customer complaints. The customer cases filed against the Company for defects in tiles or relating to sales are not significant in number compared with annual sales volume.
2. Does the company display product information on the product label, over and above what is mandated as per local laws? Yes/ No/N.A./Remarks (additional information)
The Company displays all information as mandated by the regulations to ensure full compliance with relevant laws.
3. Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as on end of financial year? If so, provide details thereof, in about 50 words or so.
No, there is no case filed by any stakeholder during last five year regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour.
4. Did your company carry out any consumer survey/consumer satisfaction trends?
The Company has received various awards for its contribution to the Industry, which represents customer satisfaction.
OTHER DISCLOSURES
I. There were no significant material orders passed by the Regulators / Courts during the financial year 2017-18 which would impact the going concern status of the Company and its future operations.
II. The Registered Office of the Company has been shifted from National Capital Territory (NCT) of Delhi to the State of West Bengal, with effect from 1st January, 2018.
III. There were no significant material changes and commitments in terms of Section 134(3) (l) of the Companies Act, 2013, affecting the financial position of the Company.
IV. A draft scheme of amalgamation providing for the amalgamation of
Bhilwara Holdings Limited ("BHL"), Sarvottam Vanijya Limited ("SVL") and Scope Vinimoy Private Limited ("SVPL") with Somany Ceramics Limited ("SCL") was approved by the Board of Directors at their meeting held on 5th March, 2018 and is in process of filing with NCLT for necessary approvals.
ACKNOWLEDGEMENT
Your Directors acknowledge with sincere gratitude, the cooperation and help extended by all the stakeholders of your Company including its esteemed shareholders, government departments and agencies, financial institutions and banks, customers, vendors and employees.
For and on behalf of the Board
Place: New Delhi SHREEKANT SOMANY
Dated: 24th May, 2018 Chairman and Managing Director
Mar 31, 2017
Dear Members,
The Directors have pleasure in presenting the 49th Annual Report together with the Annual Audited Financial Statements of the Company for the year ended 31st March 2017.
FINANCIAL RESULTS
(Based on Standalone Financial Statements)
(Rs. in Lakhs)
Particulars |
2016-17 |
2015-16 |
Gross Revenues from Operations |
192,276 |
179,938 |
Net Revenues from Operations |
184,057 |
173,070 |
Other income |
1,512 |
921 |
Profit before Interest, depreciation and tax (EBIDTA) |
17,923 |
13,221 |
Interest and finance charges |
1,652 |
1,633 |
Profit Before Depreciation |
16,271 |
11,588 |
Less: Depreciation |
2,532 |
2,057 |
Profit before Exceptional Item |
13,739 |
9,531 |
Exceptional Item |
406 |
443 |
Profit before tax (PBT) |
13,333 |
9,088 |
Less: Provision for tax (net) |
4,724 |
2,982 |
Profit after tax (PAT) |
8,609 |
6,106 |
Add: Balance brought forward |
19,658 |
15,325 |
Surplus available for appropriation |
28,267 |
21,431 |
Appropriations: |
- |
- |
Proposed dividend on equity shares |
- |
975 |
Tax on proposed dividend |
- |
198 |
Transferred to general reserve |
- |
600 |
Balance Carried to balance sheet |
- |
19,658 |
Total |
28,267 |
21,431 |
FINANCIAL REVIEW
Your Company continued to perform well in the financial year under review, even when it faced multiple odds such as demonetisation, continuing slowdown in the real estate sector etc. adversely affecting building material industry including tiles.
Your Company has always performed better than the industry and the same was reflected this year where the Companyâs growth rate of sales was 6.7%, achieving a 5 yearsâ CAGR of 15.7%.
The net revenues strengthened to 184,056.78 Lakhs in the year under review, which is a growth of 6.5% over the preceeding year. The Earnings before Interest, Depreciation and Tax (EBIDTA), Profit before Tax (PBT) and Profit after Tax (PAT) have also grown substantially during the year under review by 55.6%, 46.7% and 41.0% respectively.
CORPORATE HIGHLIGHTS
Access to Capacity
During the year under review, your Company had access to 60.25 million square meters (msm) of tiles through own plants (25.55 msm), Subsidiaries/ Associates (25.70 msm) and other outsource partners (9 msm).
Capital Expenditure
Your Company continued to invest significantly in expanding and upgrading its plant and machinery and infrastructure. During the year under review, the gross block increased by Rs.5,280.82 Lakhs (previous year Rs.9,642.11 Lakhs) towards meeting routine capital expenditure requirements of own manufacturing plants.
Branding and Distribution
The main objectives to be achieved from brand and distribution were:
- To increase top of mind brand recall and connect
- To be in the top 2 consideration list of consumer/influencer
- Constant brand engagement
Your company followed a focussed communication strategy to reach out to its target group not only through the conventional medium of TV commercial, print, cinema, exhibitions, etc. but also through innovative activities like the studio bus lounge , showroom activations , smart kiosks at Airports and many more . It focussed on making state of the art retail showrooms across the country to enhance customer experience complemented with an upgraded visual merchandising at the stores. The TV commercial was aired in Kerala market owing to the focus we wanted to put in that market and helped create a new persona of our products.
During the year your company also participated in prestigious international and national exhibitions namely CERSAI at Bologna (Italy), Revestir at Sao Paulo (Brazil) and ACETECH at Delhi and Mumbai.
Your company also released new consumer ads for product categories like Duragres, Vitro, Glosstra and French Collection sanitaryware range; considering the latest trends in market and to further strengthen our brand persona as a young, trendy and vibrant brand. The media plan had an equal inclination towards trade and lifestyle magazines.
Many new product launches were done to keep abreast of the latest trends in the dynamic industry e.g. new GVT series, 40x80 Ceramic launch and the biggest launch of the year - The French Collection, a premium sanitaryware range that went on to become a rage and still expanding. The launch led to setting standards within the Indian Sanitary ware Industry which was very well appreciated by internal & external audiences.
The Business Lounge
To reach out to Target Groups (TGs) like Architects, Contractors & Builders we created an experiential lounge in a 40 Feet bus & took it to the doorstep of the TGs. The experiential lounge is stationed at a central hub wherein the targeted audience is invited for engagement and interactions. Also small events are created around the lounge.
Your company also organised the fourth edition of Architecture & Design Summit 2016â to applaud the creativity in architecture and design which took place in conjunction with Economic Times.
Enhanced brand exposure through a Visualization Software & Mobile App and updated presence on social media platforms is also helping gain a lot of mileage. Also, various online yearly engagement contests like #Har Kahani Mein Somany amplified the brand reach pan India.
INDUSTRY SCENARIO AND OUTLOOK
India was once again the worldâs third largest tile producer and consumer country in 2015. National production rose from 825 to 850 million sq. m. ( 10%). Domestic consumption also increased by just 7 million sq. m. to 765 million sq. m. ( 0.9%). Exports from the country witnessed a growth from 92 to 122 million sq. m. ( 52.6%), corresponding to fourfold growth in just 3 years, positioning India 4th in the rankings of top world exporters. Going forward, the anti-dumping duty proposed on certain categories of tiles imported from China will provide a level playing field for domestic players creating sustained demand. The proposed Goods and Services Tax (GST) will create a seamless national market for the organised players, resulting in removal of inter-state barriers and improvement in supply chain, besides reducing the price differential between the organised and unorganised players.
DIVIDEND
Your Directors are pleased to recommend a dividend of 135% i.e Rs.2.70 per equity share for the year under review as against 115% at Rs.2.30 per share in the previous year. This represents a payout ratio of 16%.
TRANSFER TO RESERVES
No amount was transferred to the General Reserve of the Company for the financial year ended 31st March, 2017.
UTILISATION OF PROCEEDS ON ISSUE OF SHARES
Out of Rs.11,999.97 lakhs raised through qualified institutions placement of equity shares in December, 2015, the Company has so far utilized Rs.1,849.97 lakhs (including issue expenses of Rs.307.34 lakhs) for the purpose the funds were so raised and balance Rs.10,150.00 lakhs has been temporarily invested mainly in the debt instruments/funds.
PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
During the year your company invested in 50% equity of M/s. Sudha Somany Ceramics Private Limited.
During the year under review, your company increased equity stake in associate company, M/s Vintage Tiles Private Limited from 26% to 50%.
There was no business activity in M/s SKPL Ceramics Private Limited (Formerly known as Somany Keraben Private Limited), a 50:50 joint venture between your Company and M/s Keraben Grupo S.A. (Formerly known as M/s Keraben S.A.). The Board decided to terminate the Joint Venture Agreement executed between the Company and M/s. Keraben Grupo S.A.
During the year the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which forms part of this Annual Report.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on Companyâs website http://www. somanyceramics.com. These documents will also be available for inspection at our registered office in New Delhi, India, between 3:00 p.m. and 5:00 p.m. in working days till the date of ensuing AGM.
The statement required under Section 134 of the Companies Act, 2013 in respect of the subsidiary companies, associates and joint venture is provided at Annexure 1 to this report, which comprises performance and financial position of each of subsidiaries, associates and joint venture.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All transactions entered with Related Parties during the financial year were on armâs length basis and were in the ordinary course of business. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large. 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 required. Your directors draw attention of the shareholders to the financial statements which set out related party dosclosures.
Related Party Transactions Policy as approved by the Board has been uploaded on the Companyâs website www.somanyceramics.com at the web link: https://www.somanyceramics.com/wp-content/ uploads/2017/06/Related-Party-Policy_Revised_24.01.2017.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.
RISK MANAGEMENT
The Company has initiated measures to develop and implement Risk Management Systems in accordance to Section 134(3)(n) of the Companies Act, 2013 post it identified the factors, which in the opinion of the Board could threaten the Companyâs existence. The Risk Management process that is followed to identify, assess and prioritise risks that need to be minimised, monitored and mitigated is quite elaborate. These measures help in reducing and controlling the impact of adverse events and maximise the realisation of opportunities. This procedure of Risk Management that has been developed is audited by the Audit Committee post stringent review from time to time, which ensures that the executive management controls risks through means of a properly defined framework. Major risks are identified systematically and mitigated on a continous basis. A few of the identified risks pertain to competitive intensity and cost volatility.
INVESTOR EDUCATION b PROTECTION FUND (IEPF)
The Company is required to transfer dividends which remained unpaid/ unclaimed for a period of seven years to the IEPF established by the Central Government. The unpaid/ unclaimed dividend for the year ended 31st March, 2010 is due for transfer to IEPF on or after 27th August, 2017.
AUDITORSâ REPORT
All the items on which the Auditorsâ have commented in their report are self-explanatory and suitably explained in the Notes to the Accounts. The Auditorsâ Report to the Shareholders for the year under review does not contain any qualifications.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of the knowledge and belief of the Directors of the Company and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013.
(a) In the preparation of the annual accounts for the year ended 31st March, 2017, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;
(b) The Directorsâ have selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the profit of the Company for the year ended on that date.
(c) The Directors 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) The Directors have prepared the annual accounts on a going concern basis.
(e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
CONSOLIDATED FINANCIAL RESULTS
As required by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements have been prepared in accordance with applicable Accounting Standards. The audited consolidated financial statements together with Auditorsâ Report forms part of this Annual Report.
The consolidated net profit of your Company was Rs.9307 Lakhs in the year under review compared to Rs.6470 Lakhs in the corresponding previous year.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Abhishek Somany retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment.
In view of the sale of shares by M/s. Latinia Limited held in the Company, M/s Latinia Limited withdrawn the nomination of Mr. Narayan Anand from the Board of Directors of the Company with effect from 12 April, 2017. Consequently, he resigned from the Board on the said date.The Board place on record the valuable contribution made by him during his tenure as director of the Company.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
BOARD EVALUATION
Regulation 4(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. Clause (p) of sub-clause 5 of Section 154 of the Companies Act, 2015, states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and the Directors individually. Schedule IV to the Companies Act, 2015, states that the performance evaluation of Independent Directors shall be done by the entire Board excluding the Directors being evaluated. Performance evaluation was made by the Board on the various parameters and criteria governing performance of the Board and that of its committees and Directors and the same was taken on record.
NOMINATION AND REMUNERATION POLICY
The Companyâs Policy on Directors appointment and remuneration as required by Section 134(3)(e) of the Companies Act, 2015 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) read with Part D of Schedule II of the said Listing Regulations has been uploaded on the website of the Company at www.somanyceramics.com at the weblink: https:// www.somanyceramics.com/wp-content/uploads/2016/06/SCL-Nomination-Remuneration-Policy.pdf
MEETINGS OF THE BOARD
Four meetings of the Board of Directors were held during the year the details of which are given in the Corporate Governance Report forming part of this Annual Report.
AUDIT COMMITTEE
The Audit Committee comprises Independent Directors namely Mr. R.K. Daga (Chairman), Dr. Y.K. Alagh, Mr. Salil Singhal, Mr. Siddharath Bindra and a non-independent director Mr. G.L. Sultania. All the recommendations made by the Audit Committee were accepted by the Board.
AUDITORS
M/s. Lodha & Co., Chartered Accountants, Statutory Auditors of the Company, having Firm Registration No. 301051E, were appointed as Statutory Auditors for a period of 3 (three) consecutive years at the 46th Annual General Meeting (AGM) held on 4th September, 2014, to hold office till the conclusion of the 49th AGM of the Company, subject to ratification of their appointment at every AGM, in terms of the first proviso to Section 139 of the Companies Act, 2013, read with Rule 3(7) of Companies (Audit and Auditors) Rules, 2014.
M/s. Lodha & Co., Chartered Accountants, cease to be the Statutory Auditors of the Company at conclusion of the ensuing AGM of the Company. The Company has received a letter from M/s Singhi & Co., Chartered Accountants, conforming that they are eligible for appointment as Statutory Auditors of the Company under Section 139 of the Companies Act, 2013 and meet the criteria for appointment specified in Section 141 of the said Act.
Based on the recommendations of the Audit Committee, the Board of Directors of the Company have recommended the appointment of M/s Singhi & Co., Chartered Accountants, having Firm Registration No. 302049E as Statutory Auditors of the Company for a term of 5 (five) consecutive years from the conclusion of the 49th AGM of the Company, subject to the approval of Shareholders.
CORPORATE GOVERNANCE
Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance and a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements forms part of this Annual Report.
SECRETARIAL AUDITOR AND THEIR REPORT
The Board had appointed M/s Pinchaa and Company, Company Secretaries having firm registration number P2016RJ051800 to conduct Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2016-17. The Secretarial Audit Report for the financial year ended 31st March, 2017 is annexed and marked as Annexure 2 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure 3 to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee (CSR Committee) of the Company has formulated a Corporate Social Responsibility Policy in terms of provisions of Section 135 of the Companies Act, 2013 read with Corporate Social Responsibility Policy Rules 2014. CSR Committee undertakes CSR activities in accordance with its Corporate Social Responsibility Policy (CSR Policy) uploaded on the Companyâs website at www.somanyceramics.com at the weblink: https:// www.somanyceramics.com/wp-content/uploads/pdfs/policies/scl-corporate-social-responsibility-policy.pdf
The CSR initiatives of the Company are implemented directly and through various trusts/societies/NGOâs. The Company also carried out the CSR activities through a Section 8 Company under the Companies Act, 2013 incorporated under the name M/s H. L. Somany Foundation. The Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013.
The 2% of the average net profit of the Company, made during the three immediately preceding financial years comes out to be Rs. 135.92 Lakhs. A report on CSR activities is provided at Annexure 4 to this report.
INTERNAL CONTROL SYSTEMS
The Company has in place adequate internal financial controls with reference to financial statements. During the year, no reportable material weakness in the design or operation was observed.
HUMAN RESOURCE (HR)
In Last few years, we have put consistent efforts to establish standardized processes for each HR deliverable. This has eliminated many redundant and unproductive work flows and enabled us to achieve higher benchmarks in HR operations. Technology combined with process, has supported employee transactions with more speed, ease and transparency. Leveraging on this increased operational effectiveness, we aim to strengthen our focus on strategic talent management, which is a long term talent planning and development practice to foster business competitiveness in future. To realize this aim, we see performance engagement and reinforcement as the key differentiator to business success. Our performance management model has clearly integrated individual performance and potential to the business vision. The Model has founded effective framework to facilitate, assess, distinguish & recognize peopleâs performance and to engage their capabilities and aspirations with business requirements. The meaningful insights driven from these performance analytics, guide our talent management and performance strategies.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has in place a Whistle Blower Policy, in terms of Section 177(9) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which works as Vigil Mechanism for all the directors and employees to report genuine concerns to the appropriate authority. Protected disclosures can be made by a whistle blower through an e-mail, or a letter to a task force referred in the said Policy.
The Whistle Blower Policy may be accessed on the Companyâs website www.somanyceramics.com at the weblink: https://www. somanyceramics.com/wp-content/uploads/pdfs/policies/whistel-blower-policy.pdf
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report forms integral part of this Annual Report.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, R&D, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed as Annexure 5 forming part of this Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided at Annexure-6.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names of employees and other particulars of the top ten employees and employees drawing remuneration in excess of the limits as provided in the said rules are set out in the Boardâs Report as an addendum thereto. However, in terms of provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the aspects as contained under âThe Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013â.
During the period under review, the Company has not received any complaint under this Policy.
BUSINESS RESPONSIBILITY REPORT
The Board of Directors presents the Business Responsibility Report (BR) of the Company for the financial year ended on 31st March, 2017, pursuant to Regulation 34 (2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
SECTION A: GENERAL INFORMATION ABOUT THE COMPANY
1. |
Corporate Identity Number (CIN) of the Company |
L40200DL1968PLC005169 |
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2. |
Name of the Company |
Somany Ceramics Limited |
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3. |
Registered address |
82/19, Bhakerwara Road, Mundka, New Delhi - 110041 |
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4. |
Website |
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5. |
E-mail id |
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6. |
Financial Year reported |
1st April, 2016 to 31st March, 2017 |
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7. |
Sector(s) that the Company is engaged in (industrial activity codewise) |
Code as per NIC - 23929 - Ceramic/Vitrified Wall & Floor Tiles, Sanitaryware and Bath Fittings. |
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8. |
List three key products/services that the Company manufactures/ provides (as in balance sheet) |
Ceramic/Vitrified Wall & Floor Tiles, Sanitaryware & Bath Fittings. |
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9. |
Total number of locations where business activity is undertaken by |
A |
Number of International Locations |
Nil |
|
the Company |
B |
Number of National Locations |
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i |
Tile manufacturing locations |
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Own |
2 |
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Subsidiaries/Associates/JVs |
7 |
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ii |
Sales Depot |
19 |
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iii |
Display Centers |
18 |
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iv |
Registered & Corporate offices |
2 |
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10. |
Markets served by the Company |
Local |
State |
National |
International |
_/ |
_/ |
_/ |
_/ |
SECTION B: FINANCIAL DETAILS OF THE COMPANY
1. |
Paid up Capital |
Rs.847.59 Lakhs |
2. |
Total Turnover |
Rs.190,980.22 Lakhs |
3. |
Total profit after taxes |
Rs.8,608.81 Lakhs |
4. |
Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) |
Rs.128.80 Lakhs. 1.90% of the average net profit after taxes in the previous three financial years. |
5. |
List of activities in which expenditure in 4 above has been incurred:- |
- Youth Empowerment through Skill Development - Healthcare and Sanitation Programmes - Vocational Training - Women Empowerment - Promotion of Sports - Support to Charities/ NGOs |
SECTION C: OTHER DETAILS
Does the Company have any Subsidiary Company/ Companies? |
Yes |
Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(s). |
No direct participation. However the Company encourages its subsidiaries to adopt its policies and practices. |
Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%] |
No |
SECTION D: OTHER DETAILS
1. Details of Director/Directors responsible for BR
a) Details of Director responsible for implementation of the BR policy/policies
1. DIN : 00021423
2. Name : Shri Shreekant Somany
3. Designation : Chairman and Managing Director
b) Details of the BR Head
No. |
Particulars |
Details |
|
1. |
DIN (if Applicable) |
NA |
|
2. |
Name |
Shri R.K.Lakhotia |
|
3. |
Designation |
Vice President-Finance |
|
4. |
Telephone number |
01276-223300 |
|
5. |
E-mail id |
2. Principle-wise (as per National Voluntary Guidelines) BR Policy/policies a) Details of compliance (Reply in Y/N)
Principle 1 (P1) |
Businesses should conduct and govern themselves with Ethics, Transparency and Accountability |
Principle 2 (P2) |
Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle |
Principle 3 (P3) |
Businesses should promote the well-being of all employees. |
Principle 4 (P4) |
Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. |
Principle 5 (P5) |
Businesses should respect and promote human rights |
Principle 6 (P6) |
Businesses should respect, protect, and make efforts to restore the environment. |
Principle 7 (P7) |
Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner. |
Principle 8 (P8) |
Businesses should support inclusive growth and equitable development. |
Principle 9 (P9) |
Businesses should engage with and provide value to their customers and consumers in a responsible manner. |
S. No. |
Questions |
P1 |
P2 |
P3 |
P4 |
P5 |
P6 |
P7 |
P8 |
P9 |
1. |
Do you have a policy/ policies for....... |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
2. |
Has the policy being formulated in consultation with the relevant stakeholders? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
3. |
Does the policy conform to any national / international standards? If yes, specify? (50 words) |
Company has adopted various national and international standards viz: 1. ISO 9001: 2008 for Quality Management System |
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2. ISO 14001: 2004 for Environment Management System |
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3. BS OHSAS 18001: 2007 Occupational Health and Safety Management System. |
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4. ISO 22000: 2005 for Food Safety Management System |
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5. 5 âSâ Practices: for Shop Floor Management System |
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4. |
Has the policy being approved by the Board? If yes, has it been signed by MD/owner/CEO/appropriate Board Director? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
5. |
Does the company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
6. |
Indicate the link for the policy to be viewed online? |
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7. |
Has the policy been formally communicated to all relevant internal and external stakeholders? |
The policies have been posted on the Companyâs website for information of all stakeholders. |
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8. |
Does the company have in-house structure to implement the policy/policies. |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
9. |
Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholdersâ grievances related to the policy/ policies? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
10. |
Has the company carried out independent audit/ evaluation of the working of this policy by an internal or external agency? |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
(a) If answer to the question at serial number no. 1 against any principle is âNoâ , explain why: (Tick up to 2 options) : N/A
S. No. |
Questions |
P1 |
P2 |
P3 |
P4 |
P5 |
P6 |
P7 |
P8 |
P9 |
1 |
The company has not understood the Principles |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
2 |
The company is not at a stage where it finds itself in a position to formulate and implement the policies on specified principles |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
3 |
The company does not have financial or manpower resources available for the task |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
4 |
It is planned to be done with in next 6 months |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
5 |
It is planned to be done within the next 1 year |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
6 |
Any other reason(please specify) |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
NA |
3. Governance related to BR
(a) Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company Within 3 months, 3-6 months, Annually, More than 1 year.
This is the first time Company is publishing the Business Responsibility Report. Therefore, there is no defined frequency. However, assessment is an ongoing activity and is an integral part of corporate functions.
(b) Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published?
No.
SECTION E: PRINCIPLE- WISE PERFORMANCE
Principle 1 - Business should conduct and govern themselves with Ethics, Transparency and Accountability.
1. Does the policy relating to ethics, bribery and corruption cover only the company? Yes/ No. Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others?
Yes, The Companyâs policy relating to ethics, bribery and corruption serves as the guiding philosophy for all employees of the company as well as subsidiary companies.
2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or so.
During the year 8 complaints were received from the investors. All these investorâs complaints were properly attended and necessary actions were taken. In addition, the company received customer complaints which were addressed suitably from time to time.
Principle 2 - Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.
1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities.
(a) Anti-Slip Floor Tiles with Slip Resistant Coating
(b) Process Waste Recycle
(c) Energy efficient processes
(d) Training of masons on tile laying (Known as Tile Master Programme)
2. For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product (optional):
(a) Reduction during sourcing/production/distribution achieved since the previous year throughout the value chain?
(b) Reduction during usage by consumers (energy, water) has been achieved since the previous year?
Energy efficient process:
a. (1) Installations of Solar Plant of 0.5 Megawatt at Kadi Plant of the Company (2) Installation of LED Lights (5) Installation of variable frequency drives, (4) Installation of temperature sensor and Energy efficient motors.
b. Use of thermal waste energy in different process like pre heating of combustion air and using pre-dryers for pre-drying the tiles.
c. Use of smoke waste by using the equipmentâs heat pipe technology require the energy from the stack
Further, the data regarding reduction during usage by consumers (energy, water) is not available with the company.
3. Does the company have procedures in place for sustainable sourcing (including transportation)?
(a) If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in about 50 words or so.
The sourcing practices of the Company are devised to achieve environmental sustainability, cost reduction and social interest. The Company endeavor that the criteria used for vendor selection including transportation are cost effective with high quality standard and are eco-friendly. The selection of the vendors is done on the principles of sustainability, it is always ensured that the vendors adopt best human resource practices and take care of global warming.
4. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work?
If yes, what steps have been taken to improve their capacity and capability of local and small vendors?
Company accords priority to local suppliers of goods and services. Company takes steps for capacity building of local and small vendors. Companyâs contractors who supply labour and transportation services for plant operations employ workmen from nearby communities. The training is provided to workforce for occupational health and safety.
5. Does the company have a mechanism to recycle products and waste? If yes, what is the percentage of recycling of products and waste (separately as<5%, 5-10%,>10%). Also, provide details thereof, in about 50 words or so.
The Companyâs product are Ceramics/Vitrified wall & floor tiles and the Company has taken steps to reuse or recycle the waste. For treatment of water effluents, the company has installed STP Plant and 100% recycled water is used in the processes. Solid waste is used as a raw material in the process.
Principle 3 - Businesses should promote the wellbeing of all employees.
i. Please indicate the Total number of employees.
The total number of permanent employees are 2277 as on 51st March, 2017.
ii. Please indicate the Total number of employees hired on temporary/ contractual/casual basis.
Total temporary/contractual/casual employees are 1058 as on 51st March, 2017.
iii. Please indicate the Number of permanent women employees. There were 50 Permanent women employees as on 51st March, 2017.
iv. Please indicate the Number of permanent employees with disabilities.
There were 2 permanent employees with disabilities as on 51st March, 2017.
v. Do you have an employee association that is recognized by management?
No, there is no employee association which is recognized by Management.
vi. What percentage of your permanent employees is members of this recognized employee association?
N.A
vii. Please indicate the Number of complaints relating to child labour, forced labour, in voluntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year.
No. |
Category |
No. of complaints filed during the financial year |
No. of complaints Pending as on end of the financial year |
1 |
Child labour/forced labour/involuntary |
NIL |
NIL |
2 |
Sexual harassment |
NIL |
NIL |
3 |
Discriminatory employment |
NIL |
NIL |
viii. What percentage of your under mentioned employees were given safety & skill up- gradation training in the last year?
1 |
Permanent Employees |
57.8% |
II |
Permanent Women Employees |
42.8% |
III |
Causal/Temporary/Contractual |
81.7% |
Employees |
||
IV |
Employees with Disabilities |
0% |
Principle 4 - Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized
1. Has the company mapped its internal and external stakeholders? Yes/No
Yes.
2. Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders?
Yes.
3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders? If so, provide details thereof, in about 50 words or so.
Our CSR approach focuses on the development of communities around the vicinity of our plants. We have also developed innovative programmes that leverage our capabilities as a tile manufacturer.
Our âTile Masterâ initiative has cumulatively trained more than 5000 mason workers on tile laying techniques and improved their productivity and livelihood.
Principle 5 - Business should respect and promote human rights.
1. Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/Suppliers/ Contractors/NGOs/Others?
The Policy on Human Rights covers the Company only Company encourages parties associated with its value chain like vendors, suppliers, contractors, etc. to follow the principles stated in the policy.
2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management?
The Company has not received any complaint from any stakeholder except the investor complaints during the period under review.
Principle 6 - Business should respect, protect, and make efforts to restore the environment.
1. Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/ others?
The Policy on environment covers the Company only.
2. Does the company have strategies/initiatives to address global environmental issues such as climate change, global warming, etc.? Y/N. If yes, please give hyperlink for webpage etc.
Yes. The Company has Environmental Policy which guides the organization to continually mitigate the impact on climate change and global warming as a result of our operations. The company works continuously to reduce the waste and is focused on creating green infrastructure which are designed for better energy efficiency and efficient operations.
3. Does the company identify and assess potential environmental risks? Y/N
Yes.
4. Does the company have any project related to Clean Development Mechanism? If so, provide details thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed?
The locations of the Company are certified for requirements under ISO 14001 (Environmental System) and OHSAS18001 (Occupational Health and Safety System). Audit by Independent Auditors are carried out to check the level of compliance.
5. Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, piease give hyperlink for web page etc.
The initiative taken by the Company are covered under the Directorsâ Report, which forms part of the Annual Report.
6. Are the Emissions / Waste generated by the company within the permissible limits given by CPCB / SPCB for the financial year being reported?
Emissions and Waste generated by the company are within the permissible limits.
7. Number of show cause/legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year.
None.
Principle 7 - Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner.
1. is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with:
Yes, the Company is member of following trade associations which make efforts towards sustainable business development -
(a) Indian Council of Ceramic Tiles and Sanitary ware (ICCTAS)
(b) Confederation of Indian Industry (ClI)
(c) PHD Chamber of Commerce
(d) MCC Chamber of Commerce and Industry
2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/No; if yes specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others)
The Company has represented through above associations from time to time for various economic and corporate governance issues in the interest of the Industry in general and Ceramic Industry in particular.
Principle 8 - Businesses should support inclusive growth and equitable development.
1. Does the company have specified programmes/initiatives/projects in pursuit of the policy related to Principle 8? If yes details thereof. The Company has taken a holistic approach towards the development of the deprived groups of the society. The Company work in the areas of education, vocational skills training and empowerment of women, development of children. To oversee implementation of various initiatives, Company has formed a Board Level Committee called Corporate Social Responsibility (CSR) Committee.
2. Are the programmes/projects undertaken through in-house team/ own foundation/external NGO/government structures/any other organization?
The projects are undertaken by in-house team/ CSR Foundation of the Company and in co-ordination with external agencies like NGOs and trusts.
3. Have you done any impact assessment of your initiative?
The CSR programme and their impacts/outcomes are monitored and reviewed by the Committee.
4. What is your companyâs direct contribution to community development Projects-Amount in INR and the details of the projects undertaken?
The company has spent an amount of Rs.298.34 Lakhs in various CSR activities during the year 2016-17 which includes Rs.128.80 Lakhs being the amount required to be spent by the Company in terms of CSR Regulations in the financial year 2016-17. The details of the amount incurred on areas covered are given in Annexure to the report on Corporate Social Responsibility forming part of this Report.
5. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words, or so.
Company has a process of engaging with local community to understand their concerns. The CSR interventions are carried out on a need based approach which is developed after consultations with the local community to ensure that the activities are adopted by them.
Principle 9 - Businesses should engage with and provide value to their customers and consumers in a responsible manner.
1. What percentage of customer complaints/consumer cases are pending as on the end of financial year?
The Company has an effective system for addressing customer complaints. The customer cases filed against the Company for defects in tiles or relating to sales are not significant in number compared with annual sales volume.
2. Does the company display product information on the product label, over and above what is mandated as per local laws? Yes/ No/N.A./Remarks (additional information)
The Company displays all information as mandated by the regulations to ensure full compliance with relevant laws.
3. Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as on end of financial year? If so, provide details thereof, in about 50 words or so.
No, there is no case filed by any stakeholder during last five year regarding unfair trade practices, irresponsible advertising and/or anti-competitive behavior.
4. Did your company carry out any consumer survey/consumer satisfaction trends?
The Company has received various awards for its contribution to the Industry, which represents customer satisfaction.
OTHER DISCLOSURES
I. There were no significant material orders passed by the Regulators / Courts during the financial year 2016-17 which would impact the going concern status of the Company and its future operations.
II. The Board has approved shifting of Registered Office of the Company from National Capital Territory (NCT) of Delhi to the state of West Bengal, subject to approval of Shareholders through Postal Ballot.
III. There were no significant material changes and commitments in terms of Section 134(3) (I) of the Companies Act, 2013, affecting the financial position of the Company.
ACKNOWLEDGEMENT
Your Directors acknowledge with sincere gratitude, the cooperation and help extended by all the stakeholders of your Company including its esteemed shareholders, government departments and agencies, financial institutions and banks, customers, vendors and employees.
For and on behalf of the Board
Place: New Delhi SHREEKANT SOMANY
Dated: 24th May, 2017 Chairman and Managing Director
Mar 31, 2016
Dear Members,
The Directors have pleasure in presenting the 48th Annual Report
together with the Annual Audited Financial Statements of the Company
for the year ended 3161 March 2016.
FINANCIAL RESULTS
(Based on Standalone Financial Statements)
(Rs. in Lacs)
Particulars 2015-16 2014-15
Gross Revenues from Operations 179938 160803
Net Revenues from Operations 173070 154105
Other income 921 783
Profit before Interest, depreciation and tax 13221 10409
(EBIDTA)
Interest and finance charges 1633 1631
Profit Before Depreciation 11588 8778
Less: Depreciation 2057 2227
Profit before Exceptional Item 9531 6551
Exceptional Item 443 -
Profit before tax (PBT) 9088 6551
Less: Provision for tax (net) 2982 2113
Profit after tax (PAT) 6106 4438
Add: Balance brought forward 15325 12262
Surplus available for appropriation 21431 16700
Appropriations:
Proposed dividend on equity shares 975 777
Tax on proposed dividend 198 158
Transferred to general reserve 600 440
Balance Carried to balance sheet 19658 15325
Total 21432 16700
FINANCIAL REVIEW
During the year under review, your Company once again performed well
despite continuing slowdown in the real estate sector adversely
affecting building material industry including tiles.
Keeping in with its tradition of growing above the industry average,
this year also your Company outperformed average industry growth rate
by growing its net sales by 12.4% achieving a 5 years'' CAGR of 19.4%.
Overall net revenues increased to Rs. 173070 lacs in the year under
review, registering a growth of 12.3% over corresponding previous year.
The Earnings before Interest, Depreciation and Tax (EBIDTA), Profit
before Tax (PBT) and Profit after Tax (PAT) also increased
significantly during FY16 by 27.0%, 38.7% and 37.6% respectively.
CORPORATE HIGHLIGHTS
Capacity Expansions
During the year under review, your Company added access to 8.29 million
square meters of tiles as follows:
a) Somany Fine Vitrified Private Limited, a subsidiary Company
commissioned polished vitrified tiles capacity of 4.29 million square
meters per annum in October, 2015.
b) Expanded own plant capacity at Kassar (Haryana) in March, 2016 to
produce additional 4 million square meters per annum of glazed
vitrified tiles.
Post expansion own tile manufacturing capacity increased from 21.55
million square meters to 25.55 million square meters per annum,
subsidiary/associates'' tile manufacturing capacities increased from
20.97 million square meters to 25.70 million square meters per annum at
the end of year under review.
In addition, your Company has access to about 9.0 million square meters
of tiles through other vendors.
The aggregate access to capacity is about 60.25 million square meters
at the end of financial year under review.
In addition to the above, the Board of Directors of your Company
approved expansion of existing capacity of Somany Sanitary Ware Pvt.
Ltd., which has become subsidiary of your Company during the year under
review, from 3.03 lacs pieces per annum to 9 lacs pieces per annum.
Exports
During the year under review, exports of your Company increased to Rs.
8044.69 lacs, a growth of 25% over the previous year. Exports expanded
its foot print further during this year. With this your Company is
currently exporting to about 60 countries.
Capital Expenditure
Your Company continued to invest significantly in expanding and
upgrading its plant and machinery and infrastructure. During the year
under review, the gross block increased by Rs. 9642.11 lacs (previous
year Rs. 4693.56 lacs) out of which Rs. 8431.29 lacs were invested in
expansion of Kassar plant as mentioned earlier and remaining on meeting
routine capital expenditure requirements.
Branding and Distribution
Your Company followed a comprehensive plan for its communication and
reached out through the medium of TV commercials, print, trade shows,
exhibitions, retail showrooms complemented with an upgraded visual
merchandising. The TV commercial was aired on most of the TV channels
and helped create a new persona of our products. Also, the brand
harnessed the potential of Newspaper and Cinema advertising in selected
markets.
During the year, your Company also participated in prestigious
international and national exhibitions namely CERSAI at Bologna
(Italy), Revestir at Sao Paulo (Brazil) and ACETECH at Delhi and
Mumbai.
Your Company also released new ads for product categories like
Duragres, Vitro, Glosstra and Sanitaryware & Bath Fittings; considering
the latest trends in market and to further strengthen our brand
positioning as a young, trendy and vibrant brand. The media plan had an
equal inclination towards trade and lifestyle magazines.
Your Company launched #NahiPhislenge, one of India''s biggest social
campaigns, inspired by Somany Slip Shield. The brand gave ''not
slipping'' a whole new meaning. The campaign reached out to masses with
relevant issues, such as caring for the elderly, car pool, keeping the
city clean, gender equality and organ donation in their day-to-day
activities and created an impactful difference amongst the public by
making them self-conscious.
Your Company also organised the third edition of Architecture & Design
Summit 2015'' to applaud the creativity in architecture and design which
took place in conjunction with The Economic Times.
Enhanced brand exposure through a Visualization Software & Mobile App
and updated presence on social media platforms is also helping gain a
lot of mileage. Also, various online engagement contests like
#HarKahaniMeinSomany amplified the brand reach Pan India.
INDUSTRY SCENARIO AND OUTLOOK
The Indian Tile Industry like the other sectors of the economy
continued to be subdued. The estimated size of the Indian Tile Industry
at 756 million square meters was around Rs. 24000 crores which was
equally divided between branded and unbranded players in value terms.
The growth of industry in FY 16 was estimated to be under 10%. Your
Company however continued to outperform the industry by growing at 12%
in FY 16.
The growth drivers to accelerate the business momentum in the years to
come include various government initiatives like ''Housing for All by
2022'', ''Smart Cities'', ''Swatch Bharat'', ''Real Estate Bill'' and thrust
on infrastructure. Uptick in rural economy, expected good monsoon and
rising disposable income and aspiration levels of Indian middle class
towards branded products will also drive the growth of the industry.
Though the price hikes of tiles are difficult to come by due to intense
competition, the value growth would come by mainly from going up the
value chain. This would be possible by higher investment in branding
activities to create a stronger brand recall amongst the consumers.
The reduction in fuel prices and also the anti dumping duty on import
of Chinese vitrified tiles would help tile industry in strengthening
its margin.
DIVIDEND
Your Directors are pleased to recommend a dividend of 115 % i.e Rs.
2.30 per equity shares for the year under review as against 100% at Rs.
2.00 per share in the previous year. This represents a payout ratio of
19.2%.
CHANGES IN SHARE CAPITAL
The paid up share capital of Company as on 31st March, 2016 was Rs.
84,758,852/-. During the year under review, your Company has issued and
allotted 35,34,600 equity shares of face value of Rs. 2/- each of the
Company on 22nd December, 2015 at a price of Rs. 339.50 per equity
share (including share premium of Rs. 337.50 per equity share) to
Qualified Institutional Buyers under Qualified Institutional Placement
aggregating to Rs. 11999.97 lacs.
TRANSFER TO RESERVES
A sum of Rs. 600 lacs being 9.8% of the Profit after Tax of the
financial year ended 31st March, 2016, has been transferred to the
General Reserve of the Company.
UTILISATION OF PROCEEDS ON ISSUE OF SHARES
During the year, your Company has fully utilized Rs. 5,000/- lacs
raised through private placement of equity shares in February, 2014 for
the purposes the funds were so raised.
Your Company has also raised Rs. 11,999.97 lacs by allotting 35,34,600
equity shares of Rs. 2/- each @ Rs. 339.50 per share (including premium
@ Rs. 337.50 per share) through qualified institutions placement on
22nd December, 2015. The funds so raised (net of issue expenses of Rs.
307.34 lacs) have been utilized for the purposes for which the same
were raised except for Rs. 10,150 lacs which have been temporarily
invested mainly in the debt instruments/funds.
PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits within the meaning of
Section 73 of the Companies Act, 2013.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
M/s SR Continental Limited, a wholly-owned subsidiary Company has
closed its manufacturing operations. The trading of ceramic and allied
products have also slowed down during the year.
M/s Somany Global Limited, another wholly-owned subsidiary Company
continued its operations of selling tiles and sanitary ware till July
2015, post which there is no business activity in the Company.
M/s Amora Tiles Private Limited, a subsidiary Company in which the
Company owns 51% equity shareholding has a manufacturing facility to
produce 4.58 million square meters of wall tiles per annum.
M/s Somany Fine Vitrified Private Limited, became subsidiary during the
year post increasing the equity stake upto 51%, has completed
commissioning of 4.29 million square meters per annum of polished
vitrfied tiles and had started its production in October, 2015.
M/s Somany Sanitary Ware Private Limited, became subsidiary during the
year post increasing the equity stake upto 51%, has a manufacturing
facility to produce 3.03 lacs pieces of sanitaryware per annum.
In addition, your Company has formed another wholly owned subsidiary
namely Somany Excel Vitrified Private Limited on 30th October, 2015.
There are four associate companies having aggregate capacity to
manufacture 16.83 million square meters per annum of tiles.
The Annual Report does not contain the financial statements of
Subsidiary Companies pursuant to circular no. 2/2011 dated 8th
February, 2011 issued by the Ministry of Corporate Affairs. However,
financials of such Subsidiary Companies have been considered in the
Consolidated Financial Statements of the Company for the period under
review and provided in this Annual Report. The Board of Directors
hereby undertakes that the audited accounts and related information of
subsidiary companies, where applicable, will be made available upon
request. The said documents will also be available for inspection
during business hours at registered office of the Company as well as at
the registered office of the subsidiary Companies.
The statement required under Section 134 of the Companies Act, 2013 in
respect of the subsidiary companies is provided at Annexure 1 to this
report.
There was no business activity in M/s Somany Keraben Private Limited, a
50:50 joint venture between your Company and M/s Keraben Grupo S.A.
(Formerly known as M/s Keraben S.A.).
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All transactions entered with Related Parties during the financial year
were on arm''s length basis and were in the ordinary course of business.
Further, there are no materially significant related party transactions
during the year under review made by the Company with Promoters,
Directors, Key Managerial Personnel or other designated persons which
may have potential conflict with the interest of the Company at large.
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 required.
Related Party Transactions Policy as approved by the Board has been
uploaded on the Company''s website www.somanyceramics.com at the web
link: https://
www.somanyceramics.com/wp-content/uploads/pdfs/policies/related-party-
transaction-policy.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the
Companies Act, 2013 forms part of the notes to the financial statements
provided in this Annual Report.
RISK MANAGEMENT
The Company has adopted the measures concerning the development and
implementation of a Risk Management System in terms of Section
134(3)(n) of the Companies Act, 2013 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 an elaborate Risk Management
process of identification, assessment and prioritisation of risk
followed by coordinated efforts to minimise, monitor and
mitigate/control the probability and/or impact of unfortunate events or
to maximise the realisation of opportunities. The Risk Management
procedure is reviewed by the Audit Committee from time to time, to
ensure that the executive management controls risks through means of a
properly defined framework. Major risks identified are systematically
addressed through mitigating actions on a continuing basis. Some of the
identified risks relate to competitive intensity and cost volatility.
INVESTOR EDUCATION & PROTECTION FUND (IEPF)
The Company is required to transfer dividends which have remained
unpaid/ unclaimed for a period of seven years to the IEPF established
by the Central Government. The unpaid/ unclaimed dividend for the year
ended 31st March, 2009 is due for transfer to IEPF on or after 29th
September, 2016.
AUDITORS'' REPORT
All the items on which the Auditors'' have commented in their report are
self- explanatory and suitably explained in the Notes to the Accounts.
The Auditors'' Report to the Shareholders for the year under review does
not contain any qualifications.
DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of the knowledge and belief of the Directors of the Company
and according to the information and explanations obtained by them,
your Directors make the following statement in terms of Section 134(3)
(c) of the Companies Act, 2013.
(a) In the preparation of the annual accounts for the year ended 31st
March, 2016, the applicable accounting standards read with requirements
set out under Schedule III to the Act, have been followed and there are
no material departures from the same;
(b) The Directors'' have selected such accounting policies, applied them
consistently and made judgments and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at 31st March, 2016 and of the profit of the Company for
the year ended on that date.
(c) The Directors 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) The Directors have prepared the annual accounts on a going concern
basis.
(e) The Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and are operating effectively; and
(f) The Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are
adequate and operating effectively.
CONSOLIDATED FINANCIAL RESULTS
As required by Regulation 33 of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the consolidated financial
statements have been prepared in accordance with applicable Accounting
Standards. The audited consolidated financial statements together with
Auditors'' Report forms part of the Annual Report.
The consolidated net profit of your Company was Rs. 6470 lacs in the
year under review compared to Rs. 4639 lacs in the corresponding
previous year.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Sections 196, 197, 198 & 203
read with Schedule V to the Companies Act, 2013 and all other
applicable provisions of the Companies Act, 2013 and the rules made
thereunder, Mr. T. R. Maheshwari, Deputy Chief Executive Officer (Dy.
CEO) of the Company was appointed as a Key Managerial Personnel and
re-designated as Dy. Chief Executive Officer & Chief Financial Officer
of the Company w.e.f. 25th January, 2016.
Mrs. Anjana Somany was appointed as a Whole-time Director of the
Company, liable to retire by rotation, by the Board of Directors in
their meeting held on 21st May, 2016. Mrs. Anjana Somany is related to
Mr. Shreekant Somany, Chairman and Managing Director and Mr. Abhishek
Somany, Managing Director of the Company. Her appointment as a
Whole-time Director of the Company will be subject to approval of
shareholders in the ensuing Annual General Meeting of the Company.
Mr. G. L. Sultania retires by rotation at the ensuing Annual General
Meeting and being eligible has offered himself for re-appointment.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed both under the Act and Regulation 16(1) (b)
of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015.
BOARD EVALUATION
Regulation 4(1) (f) of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 mandates that the Board shall monitor
and review the Board evaluation framework. Clause (p) of sub-clause 3
of Section 134 of 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 the Directors individually. Schedule IV to
the Companies Act, 2013, states that the performance evaluation of
Independent Directors shall be done by the entire Board excluding the
Directors being evaluated. Performance evaluation was made by the Board
on the various parameters and criteria governing performance of the
Board and that of its committees and Directors and the same was taken
on record.
NOMINATION AND REMUNERATION POLICY
The Company''s Policy on Directors appointment and remuneration as
required by Section 134(3)(e) of the Companies Act, 2013 and Regulation
19 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (Listing Regulations) read with Part D of Schedule II
of the said Listing Regulations has been uploaded on the website of the
Company at www.somanvceramics.com at the weblink:
https//wvvw.somanycerarnbs.corrAvp-conten1/uploads/2016/06/SCL-
Nornination-Remuneration-P3fcy.pdf
MEETINGS OF THE BOARD
Four meetings of the Board of Directors were held during the year the
details of which are given in the Corporate Governance Report forming
part of the Annual Report.
AUDIT COMMITTEE
The Audit Committee comprises Independent Directors namely Mr. R.K.
Daga (Chairman), Dr. Y.K. Alagh, Mr. Salil Singhal and a
non-independent director Mr. G.L. Sultania. All the recommendations
made by the Audit Committee were accepted by the Board.
AUDITORS
M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of the
Company, having Firm Registration No. 301051E, were appointed as
Statutory Auditors for a period of 3 (three) consecutive years at the
46th Annual General Meeting (AGM) held on 4th September, 2014, to hold
office till the conclusion of the 49th AGM of the Company, subject to
ratification of their appointment at every AGM, in terms of the first
proviso to Section 139 of the Companies Act, 2013, read with Rule 3(7)
of Companies (Audit and Auditors) Rules, 2014.
In this regard, the Company has received a letter from the Auditors
conforming 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 said Act.
Based on the recommendations by the Audit Committee, the Board of
Directors of the Company recommend the ratification of re-appointment
of M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of
the Company, having Firm Registration No. 301051E as Statutory Auditors
of the Company for the financial year 2016-17, by the Shareholders at
the ensuing AGM.
CORPORATE GOVERNANCE
Your Company has been following the principles and practices of good
Corporate Governance. A separate report on Corporate Governance with a
certificate from the Statutory Auditors confirming compliance with the
Corporate Governance requirements forms part of the Annual Report.
SECRETARIAL AUDITOR AND THEIR REPORT
The Board had appointed M/s Drolia & Company, Practicing Company
Secretaries having Certificate of Practice No. 1362, to conduct
Secretarial Audit under the provisions of Section 204 of the Companies
Act, 2013 for the financial year 2015-16. The Secretarial Audit Report
for the financial year ended 31st March, 2016 is annexed herewith
marked as Annexure 2 to this Report. The Secretarial Audit Report does
not contain any qualification, reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an
extract of the annual return in the prescribed format is appended as
Annexure 3 to this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee (CSR Committee)
undertakes CSR activities in accordance with its Corporate Social
Responsibility Policy (CSR Policy) uploaded on the Company''s website
atwww.somanvceramics.com at the weblink:
https://Www.somanyceramics.corn/Wp-content/uploads/pdfe/policies/
scl<»rpo(ate-social-(esponsibility-policy.pdf
A Section 8 Company under the Companies Act, 2013 was incorporated with
the name M/s H. L. Somany Foundation to carry out the Corporate Social
Responsibility activities of the Company. The Foundation came into
effect on 2nd March, 2015. The Company would also undertake other need
based initiatives in compliance with Schedule VII to the Companies Act,
2013.
The 2% of the average net profit of the Company, made during the three
immediately preceding financial years comes out to be Rs. 115.61 lacs.
A report on CSR activities is provided at Annexure 4 to this report.
INTERNAL CONTROL SYSTEMS
The Company has in place adequate internal financial controls with
reference to financial statements. During the year, no reportable
material weakness in the design or operation was observed.
HUMAN RESOURCE
In Somany, our HR Initiatives are aimed towards building a performance
facilitating culture across the organization. We keep exploring and
implementing new initiatives to engage, develop and retain key talent
in the organization. We have established standard processes and systems
in all HR operations, to provide transparency, clarity & rational
approach in all HR activities.
As the world is moving fast, to match the pace of change both inside
and outside, we have focused on integrating technology at all relevant
employee interfaces, so as to give them ease and speed of working. The
core purpose is to enable employees to maximize their potential and to
foster individual''s and organization''s performance.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company has in place a Whistle Blower Policy, in terms of Section
177(9) of the Companies Act, 2013 and Regulation 22 of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015
which works as Vigil Mechanism for all the directors and employees to
report genuine concerns to the appropriate authority. Protected
disclosures can be made by a whistle blower through an e-mail, or a
letter to a task force referred in the said Policy.
The Whistle Blower Policy may be accessed on the Company''s website www.
somanvceramics.com at the weblink : https://www.somanyceramics.com/wp-
content/uploads/pdfs/policies/whistel-blower-policy.pdf
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report forms integral part of this
Annual Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, R&D, technology absorption,
foreign exchange earnings and outgo as required under Section 134 of
the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014
is annexed as Annexure 5 forming part of this Report.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration
in excess of the limits set out in the said rules are provided in the
Annexure 6 forming part of the Annual report.
Disclosures pertaining to the remuneration and the other details as
required under Section 197(12) of the Companies Act, 2013 read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are provided in the Annexure 6 forming part of
the Annual Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has a Policy on Prevention, Prohibition and Redressal of
Sexual Harassment of Women at Workplace and matters connected therewith
or incidental thereto covering all the aspects as contained under "The
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013".
Up till date, the Company has not received any complaint under the
Policy.
OTHER DISCLOSURES
I. Business Responsibility Report as per clause (f) of sub regulation
(2) of Regulation 34 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, describing the initiatives taken by
the Company from an environmental, social and governance perspective
and was not applicable to the Company earlier is now applicable to the
Company as per SEBI Circular CIR/CFD/CMD/10/2015, dated 4th November,
2015 and Notification by the SEBI dated 22nd December, 2015, effective
from 1st April, 2016.
II. There were no significant material orders passed by the Regulators
/ Courts during the financial year 2015-16 which would impact the going
concern status of the Company and its future operations.
III. There were no significant material changes and commitments in
terms of Section 134(3)(l) of the Companies Act, 2013, affecting the
financial position of the Company.
ACKNOWLEDGEMENT
Your Directors acknowledge with sincere gratitude, the cooperation and
help extended by all the stakeholders of your Company including its
esteemed shareholders, government departments and agencies, financial
institutions and banks, customers, vendors and employees.
For and on behalf of the Board
SHREEKANT SOMANY
Chairman and Managing Director
Place: New Delhi
Dated: 21st May, 2016
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the 47th Annual Report
together with the Audited Accounts of the Company for the year ended
31st March 2015.
FINANCIAL RESULTS
(RS. in lacs)
Particulars 31.03.2015 31.03.2014
Gross revenues from operations 160803 132946
Net revenues from operations 154105 125967
other income 783 274
Profit before Interest, depreciation and 10409 8438
tax (EBIDTA)
Interest and finance charges (net) 1631 1830
Profit Before Depreciation 8778 6608
Less: Depreciation 2227 2206
Profit before tax (PBT) 6551 4402
Less: Provision for tax (net) 2113 1599
Profit after tax (PAT) 4438 2803
Add: Balance brought forward 12262 10441
Surplus available for appropriation 16700 13244
appropriations:
proposed dividend on equity shares 777 583
Tax on proposed dividend 158 99
Transferred to general reserve 440 300
Balance Carried to balance sheet 15325 12262
Total 16700 13244
FINANCIAL REVIEW
During the year under review, your company once again performed well
despite continuing slowdown in the real estate sector adversely
affecting building material industry including tiles.
Keeping in with its tradition of growing above the industry average,
this year also your company outperformed average industry growth rate
by growing its net sales by 21.97% achieving a 5 years'' CAGR of 23.32%.
overall net revenues increased to RS. 154105 lacs in the year under
review registering a growth of 22.34% over corresponding previous year.
The Earnings before Interest, Depreciation and Tax (EBIDTA), Profit
before Tax (PBT) and Profit after Tax (PAT) also increased
significantly during FY15 year by 23.36%, 48.82% and 58.33%
respectively.
DIVIDEND
Your Directors are pleased to recommend a dividend of 100% on equity
shares at RS. 2/- per share (face value of RS. 2/- each) for the year
under review as against 75% at RS. 1.50 per share in the previous year.
This represents a payout ratio of 21.07%.
CORPORATE HIGHLIGHTS
Capacity Expansions
During the year under review, Your Company added access to 7.90 million
square meters of tiles as follows:
a) Expanded own ceramic tiles capacity at Kadi (Gujarat) Plant by 2.40
million square meters per annum.
b) Amora Tiles Private Limited, a subsidiary company expanded ceramic
tiles capacity by 2.44 million square meters per annum in November
2014.
c) Acer Granito Private Ltd., an existing associate company expanded
polished vitrified tiles capacity by 3.06 million square meters in
October 2014.
Post expansion as above, own tile manufacturing capacity increased from
19.15 million square meters to 21.55 million square meters per annum,
subsidiary / associates'' tile manufacturing capacities increased from
15.47 million square meters to 20.97 million square meters per annum at
the end of year under review. In addition, your company has access to
about 9.0 million square meters of tiles through other vendors.
The agreegate access to capacity is about 51.52 million square meters
at the end of final year under review.
In addition to above, the Board of Directors of your company approved
expansion of Kassar (Haryana) Plant capacity by 4.00 million square
meters to produce glazed vitrified / ceramic floor tiles.
Exports
During the year under review, exports of your company increased to RS.
6434.35 lacs, a growth of 201% over the previous year. The exports
covered 10 new countries during this year. with this your company is
currently exporting to more than 40 countries.
Capital Expenditure
Your Company continued to invest significantly in expanding and
upgrading its plant and machinery and infrastructure. During the year
under review the gross block increased by RS. 4693.56 lacs (previous
year RS. 4117.53 lacs)out of which RS. 2973.35 lacs were invested in
expansion of Kadi plant as mentioned earlier and remaining on meeting
routine capital expenditure requirements.
Branding and Distribution
Your company followed a comprehensive plan for its communication and
reached out through the medium of TV commercials, print, trade shows,
exhibitions, retail showrooms complemented with an upgraded visual
merchandising. The Tv commercial was aired on most of the Tv channels
and helped create a new persona of our products.
During the year your company also participated in prestigious
international and national exhibitions namely CERSAI at Bologna
(Italy), MosBuild at Moscow (Russia) and ACETECH at Delhi, Mumbai and
Bangalore.
Your company also released new ads for product categories like
Duragres, Vitro and Glosstra; considering the latest trends in market
and to further strengthen our brand positioning as a young, trendy and
vibrant brand. The media plan had an equal inclination towards trade
and lifestyle magazines.
Your company also organised the second edition of ''Architecture &
Design Summit 2014'' to applaud the creativity in architecture and
design which took place in conjunction with Economic Times.
Enhanced brand exposure through a refurbished website, Visualization
Software and updated presence on social media platforms is also helping
gain a lot of mileage.
INDUSTRY SCENARIO AND OUTLOOK
Like other building materials, the fortunes of tile industry are also
linked with the performance of real estate sector in India. While the
year under review was slow to modarate in terms of ground activity in
Real Estate, there are positive indicators towards end of the year
which could be potential game changers for the Real Estate Industry
going forward. This in turn would spur growth of tile industry also.
The Indian ceramic tile industry is the third largest globally after
China and Brazil yet with the lowest per capita consumption.
Tiles industry volumes have a positive correlation with India''s GDP at
1.5 x for past few years. With GDP expected to grow faster, tiles
industry is expected to continue to grow in double digits. Government
policies such as Housing for all & Smart cities, the rapid
urbanization, rising disposable income, commercial, infrastructure and
replacement demand would continue to ensure robust growth of tile
industry.
Large ad spends, premiumisation and design innovations backed by change
in perception towards tiles as lifestyle product will ensure higher
than industry growth rates for branded players like your company.
The profit margins of the industry continued to remain under pressure
due to inability on the part of industry to fully pass on the cost
burden to end consumer due to severe competition.
UTILISATION OF PROCEEDS ON ISSUE OF SHARES
Out of RS. 5000.00 lacs raised through private placement of equity
shares to Latinia Limited in February, 2014, the Company has so far
utilized RS. 2650.00 Lacs (including Issue Expenses of RS. 145.94 lacs)
for the purposes for which the same were raised. The balance RS.
2350.00 lacs remain temporarily invested in Bonds / Debts scheme of
Mutual Funds.
PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits within the meaning of
Section 73 of the Companies Act, 2013.
SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES
M/s SR Continental Limited, a wholly-owned subsidiary company continued
its business of manufacturing and selling of refractories, colors used
in the ceramic industry and also business of outsourcing and selling of
ceramic tiles.
M/s Somany Global Limited, another wholly-owned subsidiary company
continued its operations of selling imported and other high-end tiles
and sanitary ware through its two show rooms named ''SOMANY GLOBAL''.
M/s Amora Tiles Private Limited (ATPL), a subsidiary company in which
the Company owns 51% equity shareholding has a manufacturing facility
to produce 4.58 million square meters of wall tiles per annum.
There are four associate companies having aggregate capacity to
manufacture 16.39 million square meters of tiles. There is one
associate company which is in the process of setting up a manufacturing
facility to produce 4.29 million square meters of tiles per annum which
is expected to commence production in current financial year 2015-16.
In addition there is one associate company which has a manufacturing
facility to produce 3 lacs pieces of sanitary ware per annum.
The Annual Report does not contain the financial statements of
Subsidiary Companies pursuant to circular no. 2/2011 dated 8th
February, 2011 issued by the Ministry of Corporate Affairs. However,
financials of such Subsidiary Companies have been considered in the
Consolidated Financial Statements of the Company for the period under
review and provided in this Annual Report. The Board of Directors
hereby undertakes that the audited accounts and related information of
subsidiary companies, where applicable, will be made available upon
request. The said documents will also be available for inspection
during business hours at registered office of the Company as well as at
the registered office of the subsidiary Companies.
The statement required under Section 134 of the Companies Act, 2013 in
respect of the subsidiary companies is provided at Annexure 1 to this
report.
There was no business activity in M/s Somany Keraben Private Limited, a
50:50 joint venture between your company and M/s Keraben Grupo S.A.
(Formerly known as M/s Keraben S.A.).
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All transactions entered with Related Parties during the financial year
were on arm''s length basis and were in the ordinary course of business.
Further, there are no materially significant related party transactions
during the year under review made by the Company with Promoters,
Directors, Key Managerial Personnel or other designated persons which
may have potential conflict with the interest of the Company at large.
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 required.
Related Party Transactions Policy as approved by the Board has been
uploaded on the Company''s website www.somanyceramics. com at the web
link: httDs://www.somanvceramics.com/wD-content/uDloads/2015/06/
Related-Partv-Transaction-Policv.pdF
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the
Companies Act, 2013 forms part of the notes to the financial statements
provided in this Annual Report.
RISK MANAGEMENT
The Company has adopted the measures concerning the development and
implementation of a Risk Management Policy in terms of Section
134(3)(n) of the Companies Act, 2013 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 an elaborate Risk Management
process of identification, assessment and prioritisation of risk
followed by coordinated efforts to minimise, monitor and
mitigate/control the probability and/or impact of unfortunate events or
to maximise the realisation of opportunities. The Risk Management
procedure is reviewed by the Audit Committee from time to time, to
ensure that the executive management controls risks through means of a
properly defined framework. Major risks identified are systematically
addressed through mitigating actions on a continuing basis. Some of the
identified risks relate to competitive intensity and cost volatility.
INVESTOR EDUCATION & PROTECTION FUND (IEPF)
The Company is required to transfer dividends which have remained
unpaid/ unclaimed for a period of seven years to the IEPF established
by the Central Government. Hence, the Company shall on 1st October,
2015 transfer the unpaid/ unclaimed dividend for the year ended 31st
March, 2008 to IEPF.
AUDITORS'' REPORT
All the items on which the Auditors'' have commented in their report are
self-explanatory and suitably explained in the Notes to the Accounts.
The Auditors'' Report to the Shareholders for the year under review does
not contain any qualifications.
DIRECTORS'' 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 statement in terms of Section 134(3)(c) of the Companies Act,
2013.
(a) In the preparation of the annual accounts for the year ended March
31, 2015, the applicable accounting standards read with requirements
set out under Schedule III to the Act, have been followed and there are
no material departures from the same;
(b) The directors'' have selected such accounting policies, applied them
consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of
affairs of the Company as at March 31, 2015 and of the profit of the
Company for that date.
(c) The directors 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) The directors have prepared the annual accounts on a going concern
basis.
(e) The Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and are operating effectively; and
(f) The Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are
adequate and operating effectively.
CONSOLIDATED FINANCIAL RESULTS
As required by Clause 32 of the listing agreement with the stock
exchanges, the consolidated financial statements have been prepared in
accordance with applicable Accounting Standards. The audited
consolidated financial statements together with Auditors'' Report form
part of the Annual Report.
The consolidated net profit of your company was RS. 4639 lacs in the
year under review compared to RS. 2887 lacs in the corresponding
previous year.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Sections 149, 152, 161 and all
other applicable provisions of the Companies Act, 2013 and the rules
made thereunder, Mrs. Anjana Somany was appointed as an Additional
Director on Board of the Company with effect from 24th March, 2015.
Mrs. Anjana Somany is related to Mr. Shreekant Somany, Chairman and
Managing Director of the Company and Mr. Abhishek Somany, Joint
Managing Director of the Company. Her appointment as Director on the
Board of Directors of the Company will be subject to approval of
shareholders in the ensuing Annual General Meeting of the Company,
liable to retire by rotation. A notice in writing was received from a
Member along with requisite deposit under Section 160 of the Companies
Act, 2013 proposing candidature of Mrs. Anjana Somany for the office of
regular Director.
Mr. Narayan Anand retires by rotation at the ensuing Annual General
Meeting and being eligible has offered himself for reappointment.
Mr. R. L. Gaggar, who retired by rotation, at 46th Annual General
Meeting of the Company held on 4th September, 2014, did not seek for
re-appointment. The Board placed on record its appreciation for the
valued contribution made by him, in the various deliberation and
discussions and guidance during his association with the Company.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed both under the Act and Clause 49 of the
Listing Agreement with the Stock Exchanges.
BOARD EVALUATION
Clause 49 of the Listing Agreement mandates that the Board shall
monitor and review the Board evaluation framework. Clause (p) of
sub-clause 3 of Section 134 of 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 the Directors individually.
Schedule IV to the Companies Act, 2013, states that the performance
evaluation of Independent Directors shall be done by the entire Board
excluding the Directors being evaluated. Performance evaluation was
made by the Board on the various parameters and criteria''s governing
performance of the Board and that of its committees and Directors and
the same was taken on record.
EVALUATION CRITERIA
the Committee shall review the performance of every Director on the
basis of the criteria laid down by the Committee as detailed below for
evaluation of performance and submit its report to the Board.
Criteria for Evaluation of Independent Director and the Board:
The Independent Directors and the Board shall be evaluated on the basis
of the following criteria''s i.e. whether they:
(a) Act objectively and constructively while exercising their duties;
(b) Exercise their responsibilities in a bona fide manner in the
interest of the Company;
(c) Devote sufficient time and attention to their professional
obligations for informed and balanced decision making;
(d) Do not abuse their position to the detriment of the Company or its
shareholders or for the purpose of gaining direct or indirect personal
advantage or advantage for any associated person;
(e) Refrain from any action that would lead to loss of his
independence;
(f) Inform the Board immediately when they lose their independence;
(g) Assist the Company in implementing the best corporate governance
practices;
(h) strive to attend all meetings of the Board of Directors and the
Committees;
(i) participate constructively and actively in the committees of the
Board in which they are chairpersons or members;
(j) Strive to attend the general meetings of the Company;
(k) Keep themselves well informed about the Company and the external
environment in which it operates;
(l) Do not to unfairly obstruct the functioning of an otherwise proper
Board or Committee of the Board;
(m) Moderate and arbitrate in the interest of the Company as a whole,
in situations of conflict between management and shareholder''s
interest;
(n) Abide by Company''s Memorandum and Articles of Association,
Company''s Policies and procedures including code of conduct, insider
trading guidelines etc.
The performance of Executive Directors shall also be evaluated on the
basis of Targets / Criteria met by them, as given by the Board from
time to time.
NOMINATION AND REMUNERATION POLICY
The Company''s Policy on Directors appointment and remuneration as
required by Section 134(3)(e) of the Companies Act, 2013 and Clause 49
of the Listing Agreement is stated in the Corporate Governance Report,
forming part of this Report.
MEETINGS OF THE BOARD
Six meetings of the Board of Directors were held during the year the
details of which are given in the report on Corporate Governance of
this Annual Report.
AUDIT COMMITTEE
the audit Committee comprises independent Directors namely Mr. R.K.
Daga (Chairman), Dr. Y.K. Alagh, Mr. Salil Singhal and Mr. G.L.
Sultania. All the recommendations made by the Audit Committee were
accepted by the Board.
AUDITORS
M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of the
Company, having Firm Registration No. 301051E, were appointed as
statutory auditors for a period of 3 (three) consecutive years at the
46th annual general Meeting (AGM) held on 4th September, 2014, to hold
office till the conclusion of the 49th AGM of the Company, subject to
ratification of their appointment at every AGM, in terms of the first
proviso to Section 139 of the Companies Act, 2013 read with Rule 3(7)
of Companies (Audit and Auditors) Rules, 2014.
In this regard, the Company has received a letter from the Auditors
conforming that they are eligible for 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 said Act.
Based on the recommendations by the Audit Committee, the Board of
Directors of the Company recommend the ratification of appointment of
M/s. Lodha & Company, Chartered Accountants, Statutory Auditors of the
Company, having Firm Registration No. 301051E as Statutory Auditors of
the Company by the Shareholders at the ensuing AGM.
CORPORATE GOVERNANCE
Your Company has been following the principles and practices of good
Corporate Governance. A separate report on Corporate Governance with a
certificate from the Statutory Auditors confirming compliance with the
Corporate Governance requirements forms part of the Annual Report.
SECRETARIAL AUDITOR AND THEIR REPORT
The Board had appointed M/s Drolia & Company, Practicing Company
Secretaries having Certificate of Practice No. 1362, to conduct
secretarial audit under the provisions of section 204 of the Companies
Act, 2013 the financial year 2014-15. The Secretarial Audit Report for
the financial year ended March 31, 2015 is annexed herewith marked as
Annexure 2 to this report.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an
extract of the annual return in the prescribed format is appended as
Annexure 3 to this report
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee (CSR Committee) has
formulated and recommended to the Board, a Corporate Social
Responsibility Policy (CSR Policy) indicating the activities to be
undertaken by the Company, which has been approved by the Board. The
CSR Policy may be accessed on the Company''s website at the link:
https://www.somanyceramics.com/wp-content/uploads/2015/07/sCL-
Corporate-Social-Responsibilitv-Policv.pdf
A Section 8 Company under the Companies Act, 2013 was incorporated with
the name M/s H.L. Somany Foundation to carry out the Corporate Social
Responsibility activities of the Company. The Foundation came into
being on 2nd March, 2015. The Company would also undertake other need
based initiatives in compliance with Schedule VII to the Act.
The 2% of the average net profit of the company made during the three
immediately preceding financial years comes out to be RS. 96.84 lacs. a
report on csr activities is provided at Annexure 4 to this report.
INTERNAL CONTROL SYSTEMS
The Company has in place adequate internal financial controls with
reference to financial statements. During the year, no reportable
material weakness in the design or operation were observed.
HUMAN RESOURCE
At Somany, employees are considered as our biggest assets and we
significantly invest in training and development of all our resources.
We nurture our talent pool with enhancing their skills and leadership
capabilities. We articulate a career path for our employees and follow
a policy of growing leaders within the Company. we provide a very
conducive work environment with opportunities for all to grow. These
initiatives help us to attract and retain good quality talent.
WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has whistle Blower policy in terms of the listing Agreement
which works as Vigil Mechanism. Protected disclosures can be made by a
whistle blower through an e-mail, or a letter to a task force referred
in the policy.
The Policy on vigil mechanism and whistle blower policy may be accessed
on the Company''s website.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report forms integral part of this
Annual Report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, R&D, technology absorption,
foreign exchange earnings and outgo as required under Section 134 of
the Companies Act, 2013 read with the Companies (Accounts) Rules 2014
is annexed as Annexure 5 forming part of this report.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration
in excess of the limits set out in the said rules are provided in the
Annexure Forming part of the Annual report.
Disclosures pertaining to the remuneration and the other details as
required under Section 197(12) of the Companies Act, 2013 read with
rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are provided in the Annexure 6 forming part of
the Annual Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has a Policy on Prohibition, Prevention and Redressal of
Sexual Harassment of Women at Workplace and matters connected therewith
or incidental thereto covering all the aspects as contained under "The
Sexual Harassment of Women at Workplace (Prohibition, Prevention and
Redressal) Act, 2013".
Up till date, the Company has not received any complaint under the
Policy.
OTHER DISCLOSURES
I. There has been no change in the Share Capital of the Company for the
year under review.
II. Business Responsibility Report as per Clause 55 of the Listing
Agreement with the Stock Exchange, describing the initiatives taken by
Company from an environmental, social and governance perspective is not
applicable to the Company, as per SEBI Circular CIR/CFD/DIL/8/2012,
dated 13th August, 2012.
III. There were no significant material orders passed by the Regulators
/ Courts during the financial year 2014-15 which would impact the going
concern status of the Company and its future operations.
IV. There were no significant material changes and commitments in
terms of Section 134(3)(l) of the Companies Act, 2013, affecting the
financial position of the Company.
ACKNOWLEDGEMENT
Your Directors acknowledge with sincere gratitude, the cooperation and
help extended by all the stakeholders of your Company including its
esteemed shareholders, government departments and agencies, financial
institutions and banks, customers, vendors and employees.
For and on behalf of the Board
SHREEKANT SOMANY
Chairman and Managing Director
Place: New Delhi
Dated: The 18th day of May, 2015
Mar 31, 2013
Dear Members
The Directors have the pleasure in presenting the 45th Annual Report
together with the Audited Accounts of the Company for the year ended
31st March, 2013.
Financial Results (Rs. in Lacs)
Particulars 2012-13 2011-12
Gross Revenues from Operations 111242 92397
Net Revenues from Operations 105014 87323
Other income 176 106
Profit before Interest, depreciation and tax 8705 7456
Interest and finance charges (net) 1998 2065
Profit Before Depreciation 6707 5391
Less: Depreciation 2040 1822
Profit before tax 4667 3569
Less: Provision for tax (net) 1508 1094
Profit after tax 3159 2475
Add: Balance brought forward 8086 6182
Surplus available for appropriation 11245 8657
Appropriations:
Proposed dividend on equity shares 414 276
Tax on proposed dividend 70 45
Transferred to general reserve 320 250
Balance Carried to balance sheet 10441 8086
Total 11245 8657
Operating Results
Your Company once again outperformed the average industry growth of
12-14% despite sluggish economic growth in almost all sectors of
economy including construction. During the year under review, gross
revenues increased from Rs. 92,397 lac in previous year to Rs. 11,1242
lac in the current year scaling a growth of 20.4% for the year and a 5
years'' CAGR of 25.9%.This could be achieved due to larger share of
value added sales and also expanding volumes from outsourcing business.
This in turn could be made possible due to further strengthening of the
sales and distribution network backed by higher brand visibility.
However, the profit margins remained under pressure mainly due to
substantial increase in cost of fuels (natural gas) and some of the raw
materials along with the limited ability to pass on this cost burden to
the end consumer due to competition.
Despite of the above, the Earnings before interest, depreciation and
tax (EBIDTA), Profit before and after tax increased to Rs. 8,705 lac
(16.8%), Rs. 4,667 lac (30.8%) and Rs. 3,159 lac (27.6%) respectively.
Dividend
Encouraged by good operating and financial performance, your Director''s
recommended a dividend of 60% on equity shares at Rs.1.20per share
(face value of Rs. 2/- each) for the year under review as against 40%
at Rs.0.80 per share in the previous year
Corporate Highlights
Capacity Expansion: Your Company forged another joint venture by
acquiring 26% equity stake in Commander Vitrified Private Ltd. which
has set up a new plant at Morbi, Gujarat with an annual capacity to
produce up to 2.65 million square meters of large format polished and
glazed vitrified tiles. The plant started production since June 2012.
Vintage Tiles Private Ltd, the first JV with a manufacturing facility
to produce up to 2.65 million square meters of polished vitrified tiles
in which also your company acquired 26% stake last year continued
production of polished vitrified tiles for the full year.
Your Company is entitled to buy and sell the entire production of both
the JVs under its own brand name. The combined sales of your company
from the products of both the JVs stood at Rs.143.62 crore, which is
12.96% of your company''s gross turnover.
Technological upgradation: Your Company continued to invest
significantly in upgrading its plant and machinery. With addition of
three more state-of-the-art imported digital printers for producing
digital tiles, the total number of the same increased to six during the
year under review. New age digital tiles will continue to enhance your
Company''s sales realizations over vanilla variants.
Retail outlets: Your Company strengthened its distribution network by
further increasing its retail foot prints. During the year under
review, fifty four (54) new franchisee-run / self- managed retail
outlets were added. With this, the total number of retail outlets
(Somany Exclusives, Somany Global and Somany Studios) stood at 181 as
on March, 2013.
Recognitions and accreditations: Your Company was awarded with
following recognitions and accreditations during the year:
- Participated in LACP (League of American Communication
Professionals), a global communication platform and received Gold award
for our annual report of FY 12.
- Accredited with OHSAS 18001 (Health and Safety Standard) and ISO
22000 (Food safety management) for both the plants.
- ISO 14001 (Environment friendly manufacturing facility) and 5''S''
certification to Kassar plant.
- Brand ''SOMANY'' recognized as Asia''s most promising brand for the
year 2012-13.
Industrial Scenario and Outlook
Despite economic downturn and subdued construction activity, the Indian
ceramic tile industry is estimated to grow in double digits in the year
under review. The size of the industry is estimated at about Rs.17,000
crore which is almost equally divided between branded national players
and unbranded regional players, mostly based out of Morbi(Gujarat).
The branded segment is continuing to grow significantly higher than the
unbranded players.
Within branded segment, three players including your Company command
more than 50% market share.
The long term outlook for the tile industry in India is expected to be
good owing to certain factors such as increasing disposable incomes,
increasing urbanization, growth in the middle class, huge shortage of
housing and commercial space and government''s thrust on building
necessary infrastructure to spur economic growth.
The profit margins of the industry continued to be under pressure
mainly due to substantial increase in cost of energy (mainly natural
gas) and inability on the part of industry to fully pass on this cost
burden to end consumer due to severe competition.
On the other hand, faced with cost pressures and lack of brand and
distribution set up, more and more unbranded players are willing to
partner with branded players producing exclusively for the latter
Having already done two such JVs, your Company would continue to look
out for more such alliances.
Human Resource
Your Company remains committed to the enrichment of skill set and
upgradation of its human resource through training, performance
appraisals and various welfare activities. Industrial relations
continued to remain cordial throughout the year However, availability
of skilled/semi-skilled human resource and their retention at desired
compensation levels continued to be a challenge.
Public Deposits
Your Company has not accepted any fixed deposits and as such no amount
of principal and interest was outstanding as on the date of balance
sheet.
Subsidiary/Joint Venture Companies
M/s SR Continental Limited, a wholly-owned subsidiary company continued
its business of manufacturing and selling of refractories, colours used
in the ceramic industry and also business of outsourcing and selling of
ceramic tiles.
M/s Somany Global Limited, another wholly- owned subsidiary company
continued its operations of selling imported and other high-end tiles
and sanitaryware through its three showrooms named ''SOMANY GLOBAL.
The Annual Report does not contain the financial statement of our
subsidiaries pursuant to circular no. 2/2011 dated 8th February 2011
issued by the Ministry of Corporate Affairs. The Board of Directors
hereby undertakes that the audited accounts and related information of
subsidiary companies, where applicable, will be made available upon
request. The said documents will also be available for inspection
during business hours at registered office of the Company as well as at
the registered office of the subsidiary Companies.
The information on two JVs with Commander Vitrified Private Ltd and
Vintage Tiles Private Ltd are covered under the sub heading ''Capacity
Expansion'' under the main heading ''Corporate Highlights''.
There was no business activity in M/s Somany Keraben Private Limited, a
50:50 joint venture between your Company and M/s Keraben, Spain.
The statement required under Section 212 of the Companies Act 1956 in
respect of the subsidiary company is appended.
Auditors'' Report
All the items on which the Auditors'' have commented in their report are
self- explanatory and suitably explained in the Notes to the Accounts.
Directors'' 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 statement in terms of Section 217 (2AA) of the Companies Act
1956.
In the preparation of the Annual Accounts, the applicable accounting
standards have been followed.
- The Company has selected such accounting policies, applied them
consistently and made judgments and estimates that were 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 of the
Company for that period.
- 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.
- The Company has prepared the attached annual Statement of Accounts
for the year ended 31st March, 2013 on a going concern basis.
Consolidated Financial Statements
In accordance with the Accounting Standard AS-21 and other applicable
Accounting Standards on Consolidated Financial Statements, your
Directors have the pleasure in attaching the Consolidated Financial
Statements which form part of the Annual Report and Accounts.
Directors
In accordance with the provisions of the Companies Act, 1956, Mr. Salil
Singhal and Dr. Y.K. Alagh retire by rotation at the ensuing Annual
General Meeting and both being eligible, offer themselves for
reappointment.
Auditors
M/s Lodha & Company, Chartered Accountants and statutory auditors of
your Company retired at the conclusion of ensuing Annual General
Meeting and are eligible for reappointment. The Company has received a
letter from them to the effect that their reappointment, if made, would
be within the prescribed limits under Section 224 (1B) of the Companies
Act, 1956.
Corporate Governance
Your Company has been following the principles and practices of good
Corporate Governance. A separate report on Corporate Governance, with a
certificate from the Statutory Auditors confirming compliance with the
Corporate Governance requirements, forms part of the Annual Report.
Management Discussion and Analysis
Management Discussion and Analysis report forms part of the Annual
Report.
Conservation Of Energy, Research and Development, Technology
Absorption, Foreign Exchange Earnings and Outgo
The information as required under Section 217 (1) (e) of the Companies
Act, 1956 read with Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 is annexed forming part of this
report..
Particulars of Employees
A statement giving the particulars of employees as required under
Section 217 (2A) of the Companies Act, 1956 read with the Companies
(Particular of Employees) Rules, 1975 is annexed forming part of this
report.
Acknowledgements
Your Directors acknowledge with sincere gratitude, the co-operation and
help extended by all the stakeholders of your Company including its
esteemed shareholders, government departments and agencies, financial
institutions and banks, customers, vendors and employees.
For and on behalf of the Board
Shreekant Somany
Place: New Delhi Chairman and
Dated: 21st May, 2013 Managing Director
Mar 31, 2012
The Directors have pleasure in presenting the 44th Annual Report
together with the Audited Accounts of the Company for the year ended
31st March, 2012.
Financial Results
Rs.in lacs
Particulars 2011-12 2010-11
Gross Revenues from Operations 92,397 75,553
Net Revenues from Operations 87,323 71,433
Other income 107 122
Profit before Interest,
depreciation and tax 7,456 6,810
Interest and finance charges (net) 2,065 1,712
Profit Before Depreciation 5,391 5,098
Less: Depreciation 1,822 1,727
Profit before tax 3,569 3,371
Less: Provision for tax (net) 1,094 1,028
Profit after tax 2,475 2,343
Add: Balance brought forward 6,182 4,370
Surplus available for appropriation 8,657 6,713
Appropriations
Proposed dividend on equity shares 276 242
Tax on proposed dividend 45 39
Transferred to general reserve 250 250
Balance carried to balance sheet 8,086 6,182
Total 8,657 6,713
Operating Results
Your Company withstood the slowdown in the construction and real estate
industry affected by a deceleration in growth, inflation and rising
interest rates. Your Company reported a 22.3% growth in gross revenues
at Rs.92,397 lacs compared with Rs.75,553 lacs in the previous year, on
account of higher offtake of value-added products in our manufacturing
capacity and expansion of outsourced business. The growth was further
backed by a robust sales and distribution network and the strong brand
recall of your Company. The EBIDTA improved to Rs.7,456 lacs as against
Rs.6,810 lacs in the previous year, growing by 9.5%.
The net profit margins continued to remain under pressure throughout
the year on account of rising costs of raw materials, power and fuel,
rising interest rates and rupee depreciation. As a result of which your
Company's profit before and after tax remained at a Rs.3,569 lacs and
Rs.2,475 lacs each, registering a growth of 5.9% and 5.6% respectively
over the previous year.
Dividend
Spurred by the growth of the business, your Director's recommended a
dividend of 40% on equity shares at Rs.0.80 per share (face value of Rs.2/-
each) for the year under review as against 35% on equity shares at
Rs.0.70 per share in the previous year.
Corporate Highlights
Inorganic capacity expansion: Your Company acquired 26% equity stake in
Vintage Tiles Private Ltd. (which has set up a new plant at Morbi,
Gujarat) with an annual capacity of producing 2.65 million square
meters of polished vitrified tiles (soluble salt and double charge
categories) at an investment of Rs.503.10 lacs. The plant has started
production since January 2012 and your Company is entitled to buy and
sell the entire production of VTPL under its own brand name. This is
expected to increase the volumes of value-added large format tiles.
Technological upgradation: Your Company has invested significantly in
upgrading its assets by introducing the game changing digital print
technology for ceramic wall and floor and glazed vitrified tiles. In
the year under review, your Company installed three state-of-the-art
digital printers for producing value-added digital tiles which are
expected to enhance your Company's realisations over vanilla variants.
Two more machines have been ordered and expected to be commissioned by
June 2012.
Retail outlets: Your Company strengthened its distribution network by
increasing its retail footprint by adding 52 new franchisee-run/self-
managed retail outlets during the year under review. With these
additions, the total number of Somany retail outlets (Somany
Exclusives,
Somany Global and Somany Studios) stood at 127 as on March 2012. This
is expected to improve retail sales and maximise offtake of tiles and
in turn improve profitability.
Recognitions and accreditations: Your Company was awarded the
prestigious Indian Power Brands Award for 2011-12 to facilitate Indian
brands which are globally recognised and appreciated. Further, two
executives of your Company were conferred with two awards in the field
of corporate leadership and marketing excellence. Mr. Abhishek Somany
has been awarded as Corporate Leader of the year and Mr. Sanjeev
Ranjan was awarded as Marketing leader of the Year.
Industrial Scenario and Outlook
The Indian ceramic tile industry estimated at Rs.14,000 crores is almost
equally divided between branded national players and unbranded regional
players mostly based out of Morbi (Gujarat). The branded segment is
witnessing significantly higher growth than the average industry
growth.
The tile industry in India is expected to grow at a CAGR of about 15%
from 2010-15. This trend is likely to continue owing to certain factors
such as increasing disposable incomes, increasing urbanisation, growth
in the Indian middle class, housing shortage in the country and
government's thrust on building infrastructure, which will catalyse the
robust demand of tiles from a medium-term perspective.
Your Company is ready to capitalise on these emerging opportunities
owing to its proactive approach and sound marketing strategies. It has
shown its capability by outperforming the average industry growth and
reporting a five year CAGR of 25.6%.
The pressure on profit margins is likely to remain owing to:
- increase in various cost components like raw materials, energy and
manpower
- interest and rupee depreciation and
- competitive pressures due to continuing creation/expansion of more
capacities
The creation of more capacities in the unbranded segment is however
continuing to throw up great opportunities for the leading branded
manufacturers like your Company to take strategic equity stakes in
these entities. This will expand and further strengthen the outsourced
segment of the business and in turn augment market share, without
investing a huge capital outlay in putting up fresh capacities.
Following this trend, your Company, in April 2012, signed another MOU
to acquire a 26% strategic stake at Rs.325 lacs in Commander Vitrified
Private Limited (CVPL), a Gujarat based tile manufacturing company. The
deal gives your Company complete access to CVPL's production capacity
of 2.65 million square meters per annum of large format polished and
glazed vitrified tiles. This state-of-the-art plant is expected to
start production in June 2012.
Additionally, your Company shall continue to invest in upgrading
existing plants and introducing new technologies to further enhance the
basket of value-added products at relatively lower costs.
Human Resource
Your Company continues to be committed to the skill development and
upgradation of its human resource through in house and outside training
programmes, periodical performance appraisals and welfare activities
and creating an environment conducive for optimum performance and
results. Industrial relations as always remained cordial throughout the
year.
However, availability of skilled/semi-skilled human resource, their
retention at desired compensation levels continues to be a challenge
and a cause of concern.
Public Deposits
Your Company has not accepted any fixed deposits and as such no amount
of principal and interest was outstanding as on the date of balance
sheet.
Subsidiary/Joint Venture Companies
M/s SR Continental Limited, a wholly-owned subsidiary company continued
its business of manufacturing colours used in the ceramic industry and
also business of outsourcing and selling of ceramic tiles. During the
year, it discontinued trading/outsourcing of tile adhesive/grouts.
M/s Somany Global Limited, another wholly- owned subsidiary company
continued its operations of selling imported and other high- end tiles
and sanitaryware through its own and franchisee retail showrooms named
'SOMANY GLOBAL'.
The Annual Report does not contain the financial statement of our
subsidiaries pursuant to circular no 2/2011 dated 8th February, 2011
issued by the Ministry of Corporate Affairs. The Board of Directors
hereby undertakes that the audited accounts and related information of
subsidiary companies, where applicable, will be made available upon
request. The said documents will also be available for inspection
during business hours at registered office of the Company as well as at
the registered office of the subsidiary Companies.
There was no business activity in M/s Somany Keraben Private Limited, a
50:50 joint venture between your Company and M/s Keraben, Spain.
Vintage Tiles Private Limited, a company of which 26% equity share
capital is held by your Company, started production in January, 2012 at
its new tiles plant at Morbi with an annualised capacity of 2.65 mn
sqm.
The statement required under Section 212 of the Companies Act 1956 in
respect of the subsidiary company is appended.
Auditors' Report
All the items on which the Auditors' have commented in their report are
self explanatory and suitably explained in the Notes to the Accounts.
Directors' 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 statement in terms of Section 217 (2AA) of the Companies Act
1956.
In the preparation of the Annual Accounts, the applicable accounting
standards have been followed.
- The Company has selected such accounting policies, applied them
consistently and made judgments and estimates that were 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 of the
Company for that period.
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.
- The Company has prepared the attached annual Statement of Accounts
for the year ended 31st March, 2012 on a going concern basis.
Consolidated Financial Statements
In accordance with the Accounting Standard AS-
21 and other applicable Accounting Standards on Consolidated Financial
Statements, your Directors have pleasure in attaching the Consolidated
Financial Statements which form part of the Annual Report and Accounts.
Directors
In accordance with the provisions of the Companies Act, 1956, Mr. R. L.
Gaggar, and Mr. G. L. Sultania retire by rotation at the ensuing Annual
General Meeting and are eligible for reappointment.
Auditors
M/s Lodha & Company, Chartered Accountants statutory auditors of your
Company retire at the conclusion of ensuing Annual General Meeting and
are eligible for reappointment. The Company has received a letter from
them to the effect their re appointment, if made, would be within the
prescribed limits under Section 224 (1B) of the Companies Act, 1956.
Corporate Governance
Your Company has been following the principles and practices of good
Corporate Governance. A separate report on Corporate Governance with a
certificate from the Statutory Auditors confirming compliance with the
Corporate Governance requirements, forms part of the Annual Report.
Management Discussion And Analysis
Management Discussion and Analysis report forms part of the Annual
Report.
Conservation Of Energy, Research And Development, Technology
Absorption, Foreign Exchange Earnings And Outgo
The information as required under Section 217 (1) (e) of the Companies
Act, 1956 read with Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 is annexed forming part of this
report.
Particulars of Employees
A statement giving the particulars of employees as required under
Section 217 (2A) of the Companies Act, 1956 read with the Companies
(Particular of Employees) Rules, 1975 is annexed forming part of this
report.
Acknowledgements
Your Directors acknowledge with sincere gratitude, the cooperation and
help extended by the stakeholders including government departments and
agencies, financial institutions and banks, customers, vendors and
employees. The Directors are also thankful to the esteemed
shareholders for their unwavering support and confidence reposed in
your Company and its management.
For and on behalf of the Board
Shreekant Somany
Chairman and Managing Director
Place: New Delhi Dated: 19th May, 2012
Mar 31, 2010
The Directors have pleasure in presenting the 42nd Annual Report
together with the Audited Accounts of the Company for the year ended
31st March, 2010.
Financial results Rs. in Lacs
2009-10 2008-09
Gross sales 56,302 46,277
Sales net of excise 53,694 44,209
Other income 292 158
Profit before interest, depreciation and tax 5,832 4,354
nterest and finance charges (net) 1,329 1,603
Profit before depreciation 4,503 2,75
Less: Depreciation 1,447 1,404
Profit before tax 3,056 1,347
Less: Provision for tax (net) 1,010 473
Profit after tax 2,046 874
Add: Balance brought forward 2,772 2,089
Surplus available for appropriation 4,818 2,963
Appropriations
Proposed dividend on equity shares 207 103
Tax on proposed dividend 36 18
Transferred to general reserve 205 70
Balance carried to balance sheet 4,370 2,772
Total 4,818 2,963
Operating results
Your Company maintained the growth momentum and continued to perform
significantly well on all parameters.
A strong market presence in all customer segments, a very wide range of
product offerings and a growing brand visibility resulted in the
increase in sales turnover to Rs. 56,302 lacs from Rs. 46,277 lacs in
the previous year, a growth of 21.66%.
Improving profit margins, cost reduction and higher volume of business
as mentioned above contributed to higher profit before and after tax to
Rs. 3,056 lacs and Rs. 2,046 lacs from Rs. 1,347 lacs and Rs. 874 lacs,
respectively in the previous year, a growth of 126.87% and 134.10%
respectively.
Expansion / Diversification
The expansion at Kassar (Haryana) plant to additionally produce about
2.45 millions square meters of tiles per annum is at advanced stage of
commissioning and is likely to start trial runs in June 2010.
In addition three new gas based power generators of about one MW each
are under commissioning and will start producing power in the month of
June 2010.
Your Company also acquired land admeasuring 14.42 acres in Gujarat near
its existing plant location at Kadi to take care of future expansion /
diversification plans.
Dividend
Your Directors are pleased to recommend a higher dividend
of Rs. 3/- per share (30%) for the year compared to Rs. 1.50 per share
(15%) for the previous year. The payment of dividend is however subject
to necessary approvals as may be required.
Industrial scenario and future outlook
The growth of ceramic tile industry is mostly dependant on the growth
of real estate sector. All segments of real estate industry from
apartments, independent houses and villas, among others, to shopping
malls, offices, plazas, SEZs commercial complexes, retail outlets, food
chains, entertainment zones have been developing rapidly.
This will be further accelerated by Governments plans for large
investment up to USD 1 trillion in building infrastructure in 12th five
year plan (2012-17).
The changing consumers perspective towards the decorative use of
ceramic tiles and its application in indoor and outdoor areas has
brought in new trends and developments in the market, which your
Company has been able to innovate and harness upon.
In view of above developments, the growth prospects of your Company and
the industry continue to be very good for next couple of years.
Human resources
In line with one of the guiding visions for your Company to be the
best employer in the tile industry your Company is continuing with
various human resource development plans including training and skill
up gradation of its employees. Industrial relations, as always,
remained cordial throughout the year.
Public deposit
Your Company has not accepted any fixed deposits and as such no amount
of principal and interest was outstanding as on the date of balance
sheet.
Subsidiary / Joint Venture Companies
During the year under review, the name of wholly-owned subsidiary, M/s.
Somany Retail Limited has changed to M/s. Somany Global Limited. It
continued its operations of selling ceramic tiles and sanitaryware
through its retail showrooms under the brand "SOMANY GLOBAL".
M/s. SR Continental Limited, another wholly-owned subsidiary continued
its business of manufacturing colors used in ceramic industry and
trading / outsourcing of tile adhesives / grouts.
M/s. Somany Keraben Private Limited a 50:50 joint venture between your
Company and M/s. Keraben, Spain continued to market Spanish designs in
India manufactured in the plants of your Company under the brand name
"Synergy".
The statement required under Section 212 of the Companies Act, 1956 in
respect of subsidiary companies is appended.
Auditors Report
All the items on which the Auditors commented in their report are
self-explanatory and suitably explained in the Notes to the Accounts.
As far as clause 1(a) of Auditors Report, fixed assets records of
certain locations are in process and will be completed shortly.
Directors 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 statement in terms of Section 217(2AA) of the Companies Act,
1956.
In the preparation of the Annual Accounts, the applicable accounting
standards have been followed.
- The Company has selected such accounting policies, applied them
consistently, made judgments and estimates that were 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 profit of
the Company for that period.
- 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.
- The Company has prepared the attached annual Statement of Accounts
for the year ended 31st March, 2010 on a going concern basis.
Consolidated financial statements
In accordance with the Accounting Standard AS-21 and other applicable
Accounting Standards on Consolidated Financial Statements, your
Directors have pleasure in attaching the Consolidated Financial
Statements which form part of the Annual Report and Accounts.
Directors
In accordance with the provisions of the Companies Act, 1956, Shri G.
L. Sultania and Shri Salil Singhal retire by rotation at the ensuing
Annual General Meeting and are eligible for re- appointment.
Shri G. G. Trivedi resigned from the Board w.e.f. 20th May, 2009,
however, he is continuing as Chief Executive Officer of the Company.
Your Board of Directors welcomes Dr. Y. K. Alagh who has been appointed
as an Additional Director on 30th October, 2009. He is a noted Indian
economist and former Union Minister of Government of India. Currently,
he is Chairman of Institute of Rural Management, Anand (IRMA). Your
Company has received a notice in writing alongwith a deposit of Rs. 500
from a member under Section 257 of the Companies Act, 1956 signifying
his intention to propose Dr. Y. K. Alagh as Director of the Company at
the ensuing Annual General Meeting of the Company.
Auditors
M/s. Lodha & Company, Chartered Accountants, statutory auditors of your
Company, retire at the conclusion of ensuing Annual General Meeting and
are eligible for reappointment. The Company has received a letter from
them to the effect that their re-appointment, if made, would be within
the prescribed limits under Section 224(1-B) of the Companies Act,
1956.
Corporate Governance
Your Company has been following the principles and practices of good
Corporate Governance. A separate report on Corporate Governance,
together with a certificate from the Statutory Auditors confirming
compliance with the Corporate Governance requirements, forms part of
the Annual Report.
Management Discussion and Analysis
Management Discussion and Analysis report forms part of the Annual
Report.
Conservation of energy, Research and Development, technology absorption
foreign exchange earnings and outgo.
The information as required under Section 217(1)(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 is annexed forming part of this
report.
Particulars of Employees
A statement giving the particulars of employees as required under
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particular of Employees) Rules, 1975 is annexed forming part of this
report.
Acknowledgements
Your Directors acknowledge with sincere gratitude the cooperation and
assistance extended by the central government, state governments,
financial institutions, banks, customers, dealers, vendors and
employees.
For and on behalf of the Board
Place : New Delhi Shreekant Somany
Dated : 17th May, 2010 Chairman and Managing Director