As on: Apr 27, 2024 11:44 PM
Dear Members,
Your Directors are pleased to present the 34th Annual Report and the Audited Financial Statements for the financial year ended 31st March, 2023.
1. Financial Highlights
A summary of the Company's financial results for the year ended 31st March, 2023 vis-a-vis financial results for the previous year ended 31st March, 2022, is as under:
2. Operational Performance and State of Companys Affairs
During the year under review, Net Sales & Other Income of the Company was ` 14114.83 lakhs as compared to
` 13395.48 lakhs in the previous year registering increase of 5.37% over the previous year.
However, the Profit for the year is ` 413.09 lakhs compared to ` 1038.18 lakhs in the previous year registering a sharp decrease of 60.21% mainly on account of increase in raw material cost, employee cost and other expenditure by about 14.50%, 15.30% and 13.26% respectively which was worsened by drop in realization prices of major products. A detailed overview has been provided under Management Discussion and Analysis Report.
3. Dividend
Based on the Company's Performance, your Directors recommend a Dividend of ` 2 /- per equity share (20 %) on equity share capital of 1,14,46,290 equity shares of ` 10/-each for the year ended 31st March, 2023 as against ` 3/- per equity share (30%) in the previous year . Outgo on account of current dividend shall be ` 228.92 lakhs.
4. Transfer to Reserves
During the year under review, the Company has not transferred any amount to the General Reserve.
5. Material changes and commitments, if any, affecting the financial position of the company, having occurred since the end of the Year and till the date of the Report
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.
6. Share Capital
The paid up Equity Share Capital as at 31st March, 2023 stood at ` 1144.629 lakhs. During the year under review, the Company did not issue any Equity Shares. Further, the Company has not issued any convertible securities or shares with differential voting rights nor has granted any stock options or sweat equity or warrants. There has been no change in the capital structure of the Company during the year.
7. Human Resource Development (HRD) & Industrial Relations
The Company continues to focus on the development of its human resources to improve its performance and skills. The Company has approximately 308 employees and it is their precious contribution that has primarily resulted in our Company's position in the industry.
The Company aims to create an environment where employees feel valued and appreciated. In addition to training, various employee engagement activities like yoga sessions, motivational lectures, personality development programs and cricket league matches have been organised to inculcate a sense of belonging among employees across all plants.
The Company has adopted a safety first theme across all plants . Visible controls and fool proof systems are being provided to ensure prevention of accidents. Regular communication, periodic reviews of practices and training has also been conducted on a continuous basis to maintain world class safety standards.
The relationship with the workmen and staff remained cordial and harmonious during the year and management received full cooperation from employees at all the units and locations.
8. Management Discussion and Analysis
Please refer to the detailed Management Discussion and Analysis on page no 10.
9. Internal Control Systems
The Company has adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods.
10. Key Financial Ratios
Refer Note No 44 to the Notes to Standalone Financial Statement as on 31st March, 2023.
11. Cautionary Statement
Statements in this Management Discussion and Analysis section of this report describing the Company's objectives, estimates and expectations may be "forward looking statements" within the meaning of the applicable laws and regulations. Actual results might differ materially from those either expressed or implied.
12. Directors' Responsibility Statement
As stipulated under the provisions contained in Section 134(3) (c) read with Section 134(5) of the Companies Act, 2013 ("Act"), the Board of Directors, to the best of its knowledge and belief and according to the information and explanations obtained by it, hereby states that: i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; ii. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for that period; iii. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. the directors have prepared the annual accounts of the Company on a going concern basis; v. 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 vi. 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.
13. Directors and Key Managerial Personnel
The Board of Directors is chaired by Executive Promoter Chairman and Managing Director and has an optimum combination of Executive, Non- Executive and Independent Directors.
Ms. Eaga Smruthi (DIN: 09268342) is retiring by rotation and being eligible offers herself for reappointment. You are requested to appoint her. Additionally it is also proposed to remunerate her for taking responsibility of International Marketing of the company's products in Central and South American Markets.
The composition of the Board, meetings of the Board held during the year and the attendance of the Directors thereat have been mentioned in the Report on Corporate Governance in the Annual Report.
The Company has Code of Conduct for Directors and senior management personnel. All the Directors and senior management personnel have confirmed compliance with the said code.
14. Declaration of Independence
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16(1) (b) of Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force).
15. Board Evaluation
In terms of the applicable provisions of the Act, the SEBI Listing Regulations, Nomination and Remuneration Committee and the Board of Directors have approved a framework, which lays down a structured approach, guidelines and processes to be adopted for carrying out an evaluation of the performance of all the Directors, the Board as a whole and its Committees. The evaluation process has been separately explained in this Annual Report, as a part of the Report on Corporate Governance.
For the year under review, the Board carried out the evaluation of its own performance and that of its Committees and the individual Directors and the evaluation results, as collated and presented, were noted by the Board.
16. Meetings of the Board
The Board met 5 (Five) times during the financial year. The meeting details are provided in the Report on Corporate Governance that forms part of this Annual Report.
The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Act and the SEBI Listing Regulations.
17. Internal Financial Control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
18. Auditors
Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, in the 33rd Annual General Meeting M/s. Gokhale & Sathe, Chartered Accountants, Mumbai (Reg. No.: 103264W) were appointed as the Statutory Auditors of the Company for a term of five years commencing from Financial year 2022-2023 to 2026-2027.
19. Auditor's Report and Secretarial Audit Report
The Statutory Auditor's Report do not contain any qualifications, reservations, or adverse remarks or disclaimer. The Secretarial Audit Report submitted by the Secretarial Auditor Mr. H. R. Thakur, Practicing Company Secretary, Mumbai, in the prescribed form MR-3 is attached as "Annexure – I" and forms part of this report.
Observations and suggestions of the Secretarial Auditor have been considered by the management of the company. Further the Company has also obtained the Annual Secretarial Compliance Report for the financial year ended 31st March, 2023, thereby confirming compliance of the applicable SEBI Regulations and circulars / guidelines issued thereunder, on behalf of the Company.
20. Cost Audit
For Financial Year 2023-2024, the Company has re-appointed M/s. Shrinivas Diddi and Associates, Cost Accountants, Solapur for conducting cost audit of its cost records pertaining to the products falling under the product categories – Drugs nd pharmaceuticals. M/s. Shrinivas Diddi and Associates are appointed on a remuneration of ` 55,000 plus GST and out of pocket expenses.
The Company is seeking the ratification of the Shareholders for the remuneration to be paid to the cost auditors vide Resolution No. 4 of the Notice of the ensuing Annual General Meeting.
21. Conservation of Energy, Technology Absorption & Foreign Exchange
The statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required in terms of Section134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed to this Report as "Annexure II".
22. Particular regarding Employees Remuneration
Disclosure comprising particulars with respect to the remuneration of directors and employees, as required to be disclosed in terms of the provisions of Section197(12) of the Act and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as "Annexure III".
23. Particulars of Loans, Guarantees or Investments
Company did not give any loans, guarantees and make any Investment covered under the provisions of Section 186 of the Companies Act, 2013.
24. Related Party Transactions
Related Party Transactions entered into during the year under review were approved by the Audit Committee and the Board of Directors, from time to time and the same are disclosed in the Financial Statements of the Company for the year under review. Further, pursuant to the provisions of the Act and the SEBI Listing Regulations, the Board of Directors has, on recommendation of its Audit Committee, adopted a Policy on Related Party Transactions and the said policy is available on the website of the Company i.e.www.smruthiorganics.com. In terms of the provisions of Section 188(1) of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 23 of the SEBI Listing Regulations, all contracts/ arrangements/ transactions entered into by the Company with its related parties, during the year under review, were in the ordinary course of business of the Company and on an arm's length basis.
There were no material Related Party transactions during the year.
25. Corporate Governance
The Company is in full compliance with the requirements and disclosures that have to be made in terms of the requirements of Corporate Governance specified in SEBI Listing Regulations. Corporate Governance Report is enclosed as a part of the Annual Report along with the certificate from the Secretarial Auditor Mr. H. R. Thakur, Practicing Company Secretary confirming compliance of the code of Corporate Governance as stipulated Para E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
26. Audit Committee
The Company has an Audit Committee in place in terms of the provisions of Regulation 18 of SEBI Listing Regulations read with Section 177 of the Companies Act, 2013.
The recommendations made by the Audit Committee to the Board, from time to time during the year under review, have accepted by the Board. Other details with respect to the Audit Committee such as its terms of reference, the meetings of the Audit Committee and attendance thereat of the members of the Committee, are separately provided in this Annual Report, as a part of the Report on Corporate Governance.
Further, detailed information with respect to the other Committees of the Board is also provided in this Annual Report, as a part of the Report on Corporate Governance.
27. Remuneration Policy
The policy on remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and is also available on website of the company www.smruthiorganics. com
28. Vigil Mechanism – Whistle Blower Policy
The Company has a Whistle Blower Policy to report genuine concerns and grievances. The policy provides adequate safeguards against victimisation of persons who use the Whistle Blower mechanism. Details with respect to implementation of the Whistle Blower Policy are separately disclosed in this Annual Report, as a part of the Report on Corporate Governance. The same is also available on the website of the Company at www.smruthiorganics.com.
29. Risk Management Policy
The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing / mitigating the same. The requirements of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with regard to the constitution of a Risk Management Committee are not applicable to our Company.
30. Corporate Social Responsibility (CSR)
The Board of Directors has constituted a Corporate Social Responsibility ("CSR") Committee in terms of the provisions of Section 135 of the Act.
The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014, including a brief outline of the Company's CSR Policy, is annexed to this Report as "Annexure IV". For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on the website of the company www. smruthiorganics.com.
There were two meetings of the CSR Committee held on 14th November, 2022 and 13th March, 2023 which were attended by all members of the Committee.
31. Annual Return
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the Company's website on https://smruthiorganics.com/ investor-relation/.
32. Investor Education and Protection Fund (IEPF)
The Company was not required to transfer any amount to the Investor Education and Protection Fund established by the Central Government (IEPF) during the financial year 2022-23.
33. Compliance with Secretarial Standards
The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
34. Acknowledgements
Your Directors wish to express their grateful appreciation for the co-operation and continued support received from customers, collaborators, vendors, investors, shareholders, banks, regulatory authorities and the society at large during the year. We also place on record our appreciation for the contribution made by our employees at all levels and for their commitment, hard work and support in driving the growth of the Company.