SRF Ltd
Chairman Speech
Dear Shareholders,
It is a great privilege to be able to share my thoughts with you for
the first time since taking over as the Chairman and Managing Director of SRF Limited in
April 2022.
This year, we bid farewell to the patriarch of our Group, Mr. Arun
Bharat Ram, who expressed his desire to step down as the Executive Chairman and Director
of SRF Limited. The amount of value SRF has created under his leadership - is
extraordinary, as he leaves behind a strong foundation for future generations. Having said
that, SRF will continue to benefit from his valuable knowledge and wisdom from
time-to-time as a mentor to the Board of Directors and the management.
As I take on the role of Chairman and Managing Director with a great
sense of responsibility and humility, I look forward to leading SRF into the future with
an outstanding team at my side.
Firmly rooted. Growing responsibly.
We chose "Firmly rooted. Growing responsibly" as the theme of
our annual report this year as we prepare to shape our future growth journey based on a
powerful combination of experience and energy. Experience of a Company that has succeeded
for decades, and the energy of a young Company with fresh opportunities. SRF products
touch millions of lives every day and we work hard to remain relevant and current to the
customers we serve and respond appropriately to changes taking place in our environment.
As an organisation that continues to evolve, grow, and progress into
the future, we are also making concerted efforts towards identifying our ESG
(Environmental, Social and Governance) risks and opportunities. It was therefore
imperative for us to adopt ESG as part of our Company aspirations. In March 2022, we
introduced and launched our Company's new ASPIRATIONS 2030. The five pillars of our
ASPIRATIONS 2030 are:
We will continuously strive to be known for our:
• Professional Reputation and Value System
• Customer Advocacy
• Innovation and Technology Leadership
• Operational Excellence
• Environment & Social Responsibility
Our efforts in ESG encompass management of water use, protecting
ecosystems and reducing community impacts related to operations, among others. I invite
you to read the ESG section of this report for more on our work towards our environmental
responsibility.
Financial Performance
FY 2021- Rs 22 was an extraordinary year. Despite the ongoing COVID-19
pandemic, widespread supply bottlenecks, and increasingly higher energy and raw materials
prices, we achieved robust operational and financial performance.
From a financial point of view, in FY 2021- Rs 22, the Company achieved
a 58% increase in profit after tax at Rs 1,889 crore compared to Rs 1,198 crore last year.
The Company's revenue for the year stood at Rs 12,434 crore as against Rs 8,400 crore in
the previous year, recording an overall growth of 48%.
Business Performance
Let me now talk about some of the milestones achieved by each of our
business segments during the year.
Chemicals Business
In FY 2021 - Rs 22, the Chemicals Business accomplished strong growth
of 43.8% Year-over-Year (Y-o-Y) to achieve record revenues of Rs 5,240.8 crore.
Our Specialty Chemicals Business performed remarkably well in the year,
driven by strong demand in both the exports and domestic markets. Our new product
portfolio is being enhanced continuously, which also helps us expand and strengthen our
customer base further. Our customers are demanding more-and-more complex molecules, a
demand that is being met by our robust in-house R&D team, giving the Company an
overall edge in the marketplace. With rapid strides in the development of new products and
process technologies, we launched four new products in the agrochemicals and two in the
pharmaceuticals segment during the year. In addition, we are also seeing traction in the
Active Ingredients (AI) space and building our capabilities on this front.
As we grow our revenues, we will continue to invest in this business to
sustain healthy growth rates over the next few years. In this regard, I am pleased to
share that the Board of Directors have approved the setting up of dedicated facilities to
produce agrochemicals intermediates at Dahej, Gujarat, at a cost upwards of Rs 200 crore.
In addition to that, the Board approved a project to set up a Pharma Intermediates Plant
(PIP) at a cost of Rs 190 crore, which will strengthen SRF's pharma capabilities. Similar
investments alongside improved efficiencies, optimum utilisation of capacities, and other
initiatives to reduce the environmental costs of manufacturing were also announced
throughout the year.
Overall, as India's largest specialty chemicals player, SRF, in FY
2021- Rs 22, continued to maintain its 'preferred partner' status with most of its marquee
global customers.
Poised for sustainable growth, our Fluorochemicals Business delivered a
strong performance during the year. This was largely on account of higher volumes in
refrigerants, blends, and chloromethanes, in both the domestic and exports markets. Our
capabilities on backward integration allow us to control costs as well as propel the
business forward.
As an organisation that continues to evolve, grow, and progress into
the future, we are also making concerted efforts towards identifying our ESG
(Environmental, Social and Governance) risks and opportunities.
Furthermore, in our constant endeavour to offer cutting-edge products
to our customers, we enhanced our portfolio by introducing Anhydrous Hydrogen Chloride
(AHCL) for pharmaceutical applications and ramping-up production of other key products in
the Industrial Chemicals segment. Our Pharma propellant, which is sold under the brand
name of Dymel? HFA 134a/P witnessed a significant increase in sales, expanding to new
geographies and consolidating its customer footprint across the globe.
With large capex such as Polytetrafluoroethylene (PTFE), chloromethane
(CMS), etc. likely to capitalise in the next few quarters, we are looking forward to
exciting times ahead in the Fluorochemicals Business.
Packaging Films Business
In FY 2021 - Rs 22, our Packaging Films Business witnessed robust
growth of 45.2% Y-o-Y to achieve record revenues of Rs 4,779.2 crore. Both our domestic
and international facilities delivered strong performance and contributed to the overall
growth. Over-the-years, SRF's Packaging Films Business has established itself as a
renowned player in the worldwide packaging industry, with a growing market presence across
100+ countries with multi-country and multi-substrate presence. This is a result of the
Business' 'Easy to do Business with' philosophy, our geographical spread, along with
continued focus on enhancing efficiencies, innovative practices, and cost-
competitiveness.
During the year, the Company made an important announcement to further
enhance our leadership position in this segment. We have allocated a capex of Rs 425 crore
to set up an Aluminium Foil manufacturing facility near Indore in Madhya Pradesh, India,
which is expected to be commercialised in approx. 20 months. Our new BOPP film line, which
is currently under construction in Indore is also on track and expected to be commissioned
in the forthcoming quarter.
I am also happy to share that during the year, our Packaging Films
Business was recognised with two prestigious awards. Our facility at Indore was conferred
the Quality Sustainability Award at the international convention, organised by the
International Academy for Quality (IAQ). SRF FLEXIPAK, our South African facility received
the 'Sword of Honour' from the British Safety Council, demonstrating our emphasis on
superior Environment, Health, Safety (EHS) practices.
As a market leader, our focus on sustainability initiatives is our
responsibility and we will continue to work towards innovating films that have a lower
environmental footprint. We aim to foster the 'Circular Economy' where we increasingly
bring waste materials back into the economy.
Technical Textiles Business
In FY 2021 - Rs 22, our Technical Textiles Business demonstrated
promising results of 68.1% Year-overYear to achieve healthy revenues of Rs 2,085.2 crore.
This was achieved on the back of highest-ever sales volumes from the Belting Fabrics and
the Polyester Industrial Yarn segments. This contributed to partially offsetting the weak
demand for Nylon Tyre Cord Fabrics. Overall, the Company is actively focusing on improving
its operational efficiency and productivity paraments in this segment.
Other Businesses
In our Other Businesses, SRF continues to maintain market leadership in
the Coated Fabrics Business, with a high-volume share driven by improved sourcing
initiatives and plant efficiency. In the Laminated Fabrics Business, SRF retained its
price & volume leadership, with the facility operating at full capacity, achieving its
highest-ever sales in the fourth quarter. However, realisations in this segment were
adversely impacted by the continuing surplus supply situation.
Our People are our Real Assets
I would like to emphasise at this point that our passionate workforce
is our core business asset. I want to thank the employees of SRF for their hard work,
dedication, and resilience in scripting our success story.
As most of our teams have now returned to our offices, I have had the
opportunity to rediscover the collaborative culture that makes us such a unique and
extraordinary Company.
Expanding our Community Impact
SRF Foundation, the CSR arm of SRF, has deep expertise in supporting
transformative education initiatives at local and grassroot levels, including improving
student-learning outcomes for more than one lakh fifty thousand students in India. We also
go beyond traditional education by imparting vocational skill training to the youth,
making them employable and contributing citizens of our country.
More importantly, our employees worldwide share our passion for
community service. They volunteer and leverage their skills and experience to make a
difference in the world. I am grateful to my team for their commitment towards making a
positive change in our society.
In closing
On behalf of the Board and management, I thank you, our shareholders,
for your continued support. I am confident that, with the actions we have outlined to
continue driving growth, we will create long-term and sustainable value for our
stakeholders.
| Stay well. |
| Sincerely, |
| Ashish Bharat Ram |
| Chairman & Managing Director SRF Limited |
SRF Ltd
Directors Reports
Dear Members,
Your Directors are pleased to present the 51st Annual Report for the
year ended March 31, 2022.
Financial Results
(Rs in Crores)
| Particulars |
Standalone |
Consolidated |
|
2021-22 |
2020-21 |
2021-22 |
2020-21 |
| Revenue from operations |
9,953.44 |
6,988.32 |
12,433.66 |
8,400.04 |
| Other income |
135.31 |
63.30 |
115.51 |
66.35 |
| Total Income |
10,088.75 |
7,051.62 |
12,549.17 |
8,466.39 |
| Profit Before Interest, Depreciation & Tax (PBIDT) |
2,668.72 |
1,804.78 |
3,218.71 |
2,199.68 |
| Less: Interest & Finance Charge |
94.45 |
111.21 |
115.93 |
133.95 |
| Less: Depreciation and amortisation charge |
419.23 |
383.60 |
517.23 |
453.08 |
| Profit Before Tax (PBT) from continued operation |
2,155.04 |
1,309.97 |
2,585.55 |
1,612.65 |
| Less: Provision For Taxation including Deferred Tax Charge |
648.03 |
384.91 |
696.63 |
414.40 |
| Profit After Taxation (PAT) from continued operation |
1,507.01 |
925.06 |
1,888.92 |
1,198.25 |
| Profit Before Tax (PBT) from discontinued operations |
- |
- |
- |
(2.73) |
| Less: Provision For Taxation including Deferred Tax Charge |
- |
- |
- |
(2.42) |
| Profit After Taxation (PAT) from discontinued operations |
- |
- |
- |
(0.31) |
| Total Profit After Taxation (PAT) from continuing and
discontinued operations |
1,507.01 |
925.06 |
1,888.92 |
1,197.94 |
| Add: Profit Brought Forward |
4,551.58 |
3,828.76 |
5,113.66 |
4,117.69 |
| Total |
6,058.59 |
4,753.82 |
7,002.58 |
5,315.63 |
| Interim dividend on Equity Shares |
211.89 |
141.31 |
211.89 |
141.31 |
| Other comprehensive income arising from re-measurement of
defined benefit obligation |
4.75 |
(1.57) |
4.92 |
(1.84) |
| Amount transferred to Debenture Redemption Reserve |
- |
62.50 |
- |
62.50 |
| Profit carried to Balance Sheet |
5,841.96 |
4,551.58 |
6,785.77 |
5,113.66 |
Operations Review
Total revenue from operations of the Company on standalone basis
increased by 42.43 per cent from Rs 6988.32 Crores in 2020-21 to Rs 9953.44 Crores in
2021-22. The profit before interest, depreciation and tax (PBIDT) including 'other income'
on a standalone basis increased from Rs 1804.78 Crores in 2020-21 to Rs 2668.72 Crores in
2021-22.
Profit before tax (PBT) from continuing operations on a standalone
basis increased by 64.51 per cent from Rs 1309.97 Crores in 2020-21 to Rs 2155.04 Crores
in 2021-22. After accounting for the provision for tax of Rs 648.03 Crores, profit after
tax (PAT) on continuing operations on a standalone basis increased by 62.91 per cent from
Rs 925.06 Crores in 2020-21 to Rs 1507.01 Crores in 2021-22
Total revenue from operations of the Company on consolidated basis
increased by 48.01 per cent from Rs 8400.04 Crores in 2020-21 to Rs 12433.66 Crores in
2021-22. The profit before interest, depreciation and tax (PBIDT) including 'other income'
on a consolidated basis increased from Rs 2199.68 Crores in 2020-21 to Rs 3218.71 Crores
in 2021-22.
Profit before tax (PBT) from continuing operations on a consolidated
basis increased by 60.32 per cent from Rs 1612.65 Crores in 2020-21 to Rs 2585.55 Crores
in 2021-22. After accounting for the provision for tax of Rs 696.63 Crores, profit after
tax (PAT) on continuing operations on a consolidated basis increased by 57.64 per cent
from Rs 1198.25 Crores in 2020-21 to Rs 1888.92 Crores in 2021-22.
Transfer to Reserves
In view of the statutory provisions of the Companies Act, 2013 the
Board of Directors has decided not to transfer any amount to the reserves consequent to
declaration of dividend.
Share Capital
During the year, to commemorate 50th anniversary of the Company, the
Board at its meeting held on October 15, 2021 allotted 23,69,80,820 Bonus Shares to the
eligible shareholders of the Company in the proportion of 4 (four) new fully paid-up
equity share of Rs 10/- each for every 1 (one) existing fully paid-up equity share of Rs
10/- each by capitalising a sum of Rs 236,98,08,200 out of securities premium account of
the Company.
Further, the Nomination and Remuneration Committee allotted 195,000
equity shares of Rs 10/- each at par under Part B- SRF ESPS, 2018 of the SRF Long Term
Share Incentive Plan, 2018 to eligible employees on November 1, 2021.
In view of the above, the paid up share capital of the Company
increased from Rs 59,24,52,050 divided into 5,92,45,205 equity shares of Rs 10/- each to
Rs 296,42,10,250 divided into 29,64,21,025 equity shares of Rs 10/- each.
Equity Dividend
During the year, your Company has paid two interim dividends of Rs 12
per share (before bonus issue) and Rs 4.75 per share (after bonus issue) amounting to Rs
211.89 Crores. The Board of Directors of the Company has not recommended any final
dividend.
Management Discussion and Analysis
A detailed section on the Management Discussion and Analysis forms part
of the Annual Report. A review of the Businesses is also given in that section.
ESG Report
ESG Report for FY 2021 - Rs 22 containing the Environment, Social and
Governance Initiatives taken by the Company during the year forms part of the
Annual Report. As stipulated under the Securities and Exchange Board of
India (LODR) Regulations, 2015 ("Listing Regulations"), the Business
Responsibility Report has been prepared for 2021-22 and is presented along with the above
ESG Report.
Subsidiaries, Joint Ventures and Associate companies
As on March 31, 2022, your Company had 7 (seven) wholly owned
subsidiary companies out of which 2 (two) wholly owned subsidiary companies are registered
in India and remaining 5 (five) are registered outside India. 3 (three) of these are
direct wholly owned subsidiaries and rest 4 (four) are step- down wholly owned
subsidiaries. The consolidated profit and loss account for the period ended March 31, 2022
includes the profit and loss account for these 7 (seven) wholly owned subsidiaries for the
Financial Year ended March 31, 2022.
These subsidiaries are:-
1. SRF Global B.V. is a wholly owned subsidiary of the Company
incorporated in the Netherlands. This entity is an SPV formed for the purpose of holding
investments and mobilizing funds for the 4 (four) step-down subsidiaries of the Company.
2. SRF Industries (Thailand) Ltd. (a wholly owned subsidiary of SRF
Global BV) is incorporated in Thailand engaged in the manufacture and distribution of
packaging films.
3. SRF Flexipak (South Africa) (Pty) Ltd. (a wholly owned subsidiary of
SRF Global BV) is incorporated in South Africa engaged in manufacture and distribution of
packaging films.
4. SRF Industex Belting (Pty) Ltd. (a wholly owned subsidiary of SRF
Global BV) is incorporated in South Africa presently in the business of trading in
refrigerant gases and packaging films in South Africa and other neighbouring countries.
5. SRF Europe Kft (a wholly owned subsidiary of SRF Global BV) is
incorporated in Hungary to undertake the manufacture and trading of packaging films in
Hungary.
6. SRF Holiday Home Ltd. is a wholly owned subsidiary of the Company
incorporated in India.
This company is engaged in the business of acquisition and renting of
real estate properties.
7. SRF Altech Limited is a wholly owned subsidiary of the Company
incorporated in India during the year. It shall engage in the business of manufacture of
Aluminum foil.
The consolidated financial statements of the Company prepared in
compliance with applicable Accounting Standards and other applicable laws including all
the above subsidiaries duly audited by the statutory auditors are presented in the Annual
Report.
No subsidiaries were divested during the year. No company has
become/ceased to be a joint venture or associate during the year. A report on performance
and financial position of each of the subsidiaries and associates is presented in a
separate section in this Annual Report. Please refer (AOC-1) annexed to the financial
statements in the Annual Report at page no. 371. The Policy for determining material
subsidiaries as approved may be accessed on the Company's website at the link:
https://www.srf.com/wp-con tent/
uploads/2021/04/2019-02-04-SRF-Limited- Policy-on-Material-Subsidiary-Companies.pdf
The annual accounts of the subsidiary companies will also be kept open
for inspection at the registered office of the Company and of respective subsidiary
companies. Further, the annual accounts of the subsidiaries are also available on the
website of the Company viz. www.srf.com
Directors & Key Managerial Personnel
During the year Dr. Meenakshi Gopinath, Director CSR, retired as
Director in the Annual General Meeting held on August 31, 2021.
Mr. Sanjay Chatrath, President and CEO, Technical Textile Business
retired on October 31, 2021, Your Board places on record its sincere appreciation for the
contribution made by him during his years of service. Mr. Prashant Yadav, President and
CEO (FCB) was also given the additional responsibility of Technical
Textile Business (TTB) w.e.f November 01, 2021 and redesignated as
President and CEO (FCB and TTB)
Mr. Arun Bharat Ram decided to step down as Executive Chairman from the
close of the business hours on March 31, 2022 and was appointed as "Chairman
Emeritus" for a term of five years with effect from April 1, 2022.
The Board in its meeting held on March 28, 2022, had upon
recommendations of Nomination and Remuneration Committee redesignated Mr. Ashish Bharat
Ram as Chairman and Managing Director and Mr. Kartik Bharat Ram as Joint Managing Director
of the Company with effect from April 1, 2022 and has recommended the same to the
shareholders of the Company for their approval in this Annual General Meeting.
Mr. Ashish Bharat Ram, Chairman and Managing Director, is retiring by
rotation and being eligible, offers himself for re-appointment.
Mr. Vellayan Subbiah was re-appointed as NonExecutive Independent
Director by members at the Annual General Meeting held on August 07, 2018 for the period
of 5 years commencing from April 01, 2019 upto March 31, 2024. The Board is of the view
that it would be to the benefit of the Company if his experience and wisdom would continue
to be utilized by the Board and management on a longterm basis. Accordingly, a proposal to
appoint him as a non-independent and non-executive director was discussed with him and he
graciously agreed to step down as an independent director and resigned from the closing of
Business hours on May 9, 2022 and was appointed as Additional non-independent and
nonexecutive director, liable to retire by rotation, w.e.f May 10, 2022. The Board
recommends his appointment as Non-executive non-Independent Director, liable to retire by
rotation, to the shareholders.
Upon recommendations of Nomination and Remuneration Committee, the
Board appointed Mr. Raj Kumar Jain, as Additional Independent Director w.e.f May 9, 2022
and has recommended his appointment as Independent Director to the shareholders for a term
of 5 years commencing from May 09, 2022 to May 08, 2027.
Brief resume of the Directors who are proposed to be
appointed/re-appointed is furnished in the explanatory statement to the notice of the
ensuing Annual General Meeting.
All the Independent Director(s) have submitted the declaration of
meeting the criteria for independence as provided in Section 149(6) of the Companies Act,
2013 and rules applicable thereunder and as per the SEBI Regulations. They are also
independent of the management.
The Board confirms that independent directors appointed during the year
possess the desired integrity, expertise and experience. The Independent Directors of the
Company have confirmed that they have enrolled themselves in the Independent Directors'
Databank maintained with the Indian Institute of Corporate Affairs ('IICA') in terms of
Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification
of Directors) Rules, 2014. Some of the Directors are exempt from the requirement to
undertake the online proficiency self-assessment test conducted by IICA and the remaining
have cleared the Online Proficiency Test as prescribed under Companies (Appointment and
Qualifications of Directors) Rules, 2014 as amended.
In accordance with the requirements of the Companies Act and the
Listing Regulations, the Company has formulated a Nomination, Appointment and Remuneration
Policy. A copy of the Policy is enclosed as Annexure I and on the website of the Company
at the link:
https://www.srf.com/wp-content/uploads/2022/05/2022-05-09-Rev-NRC-Policy-V6-F.pdf
In accordance with the aforesaid Policy, the Nomination and
Remuneration Committee evaluates the performance of the Executive Directors, Non-
Independent nonexecutive Director and Independent Directors based on the criteria more
particularly described in the enclosed Nomination, Appointment and Remuneration policy.
Board evaluates, its own performance and the performance of its Committees on the criteria
more particularly described in the said policy.
The details of programmes for familiarisation of Independent Directors
with the Company, their roles, rights, responsibilities in the Company, nature of the
industry in which the Company operates, business model of the Company and related matters
are put up on the website of the Company at the link
https://www.srf.com/wp-content/uploads/2022/04/ Familarisation-programme 2022.pdf
During the year 2021-22, Seven meetings of the Board of Directors were
held. For further details, please refer to report on Corporate Governance on page no. 145
of this Annual Report.
Directors' Responsibility Statement
Pursuant to the requirements of Section 134(3)(c) of the Companies Act,
2013, it is hereby confirmed that :
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation relating to material
departures;
(b) the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the company at the end of the
financial year and of the profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of this Act
for safeguarding the assets of the company and for preventing and detecting fraud and
other irregularities;
(d) the directors had prepared the annual accounts on a going concern
basis;
(e) the directors had laid down internal financial controls to be
followed by the company and that such internal financial controls are adequate and were
operating effectively ; and
(f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company during
the financial year with related parties were in the ordinary course of business and on an
arms' length basis and in accordance with the
Transfer Pricing Policy/basis approved by the Audit Committee and/or in
accordance with the Omnibus approval of the Audit Committee. During the year, the Company
had not entered into any contract/ arrangement/ transaction with related parties which
could be considered material in accordance with the Policy on Materiality of Related Party
Transactions. Accordingly, the disclosure of related party transactions as required under
Section 134(3)(h) of the Companies Act, 2013 ('the Act') in Form No. AOC- 2 is not
applicable to the Company for FY 2021 - Rs 22 and hence the same is not provided.
Your Directors draw attention of the members to Note 32 to the notes to
accounts forming part of the financial statements which sets out related party transaction
disclosures.
Particulars of Loans given, Investments made, Guarantees given and
Securities provided
Particulars of loans given, investments made, guarantees given and
securities provided alongwith the purpose for which the loan or guarantee or security was
proposed to be utilised by the recipient are provided in the standalone financial
statement (Please refer to Note 41(d) of Additional Disclosures forming part of the
standalone financial statement).
Corporate Social Responsibility (CSR)
As per the requirements of the Companies Act, 2013, the Company has a
Corporate Social Responsibility Committee comprising of Mr. Kartik Bharat Ram, Joint
Managing Director (Chairman of the Committee), Mr. Lakshman Lakshminarayan, Independent
Director, and Mr. Yash Gupta, Independent Director as other members. Mr. Arun Bharat Ram,
was a member of this committee till March 31, 2022.
The Corporate Social Responsibility Committee has formulated and
recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating
the projects 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.srf.com/wp-content/ uploads/2021/04/25032021-Final-SRF-Corporate-
Social-Responsibility-policy.pdf
The Company would also undertake other need- based initiatives in
compliance with Schedule VII to the Act.
As per the requirements of section 135 (5) of the Companies Act 2013,
the CSR Obligation for FY 2021 - Rs 22 was Rs 18.61 Crores. The Board upon recommendations
of CSR Committee approved the Annual budget of Rs 18.68 Crores towards CSR expenditure
which was duly spent during the year. Moreover, an amount of Rs 2.70 Crores earmarked for
ongoing projects which commenced during FY 2020 - Rs 21 was also spent during the year.
The CSR Obligation for FY 2020 - Rs 21 was Rs 13.25 lakhs out of which
Rs 12.88 lakhs was spent during that year and a credit of Rs 37 lakhs was taken on account
of excess amount spent during FY 2019-20 which was allowed as per the Companies (Corporate
Social Responsibility) Rules, 2014. However MCA through its circular dated 25th August
2021 clarified that the Companies cannot set off excess CSR amount spent prior to FY 2020
- Rs 21. Therefore, the CSR spend for FY 2020 - Rs 21 was lesser to the extent of Rs 37
lacs.
As per the provisions of the Companies Act, 2013, any CSR obligation
which was not discharged during the financial year need to be transferred to one of the
specified funds prescribed under Schedule VII to the Companies Act, 2013 on or before 30th
September, 2021. In compliance with MCA circular dated 25th August, 2021, an amount of Rs
37 lacs was transferred to Clean Ganga Fund, which is a fund specified under Schedule VII
to the Companies Act, 2013, on 28th September, 2021.
Annual Report on CSR activities is annexed herewith as Annexure II.
Risk Management
Enterprise Risk Management is a risk based approach to manage an
enterprise, identifying events that may affect the entity and manage risks to provide
reasonable assurance regarding achievement of entity's objective.
The risks identified by the Company broadly fall into the following
categories viz. strategic risks, operational risks, regulatory risks, financial and
reporting risks, and IT & Cyber risks. The risk management process consists of risk
identification, risk assessment, risk prioritization, risk treatment or mitigation, risk
monitoring and documenting the new risks.
Your Board has laid down a risk management framework and policy to
address the above risks. The objective of the policy is to identify existing &
emerging challenges that may adversely affect the company and manage risks in order to
provide reasonable assurance to the various stakeholders. In the opinion of your Board,
none of the risks which have been identified may threaten the existence of the Company.
The Board has constituted Risk Management Committee consisting of Mr.
Ashish Bharat Ram as Chairman, Mr. Kartik Bharat Ram and Ms. Bharti Gupta Ramola as
members of the Committee.
Internal Financial Controls
The Company believes that Internal Control is a necessary concomitant
of the principle of Governance. It remains committed to ensuring an effective Internal
Control environment that provides assurance to the Board of Directors, Audit Committee and
the management that there is a structured system for:
• close and active supervision by the Audit Committee
• business planning and review of goals achieved
• evaluating & managing risks
• policies and procedures adopted for ensuring orderly Financial
Reporting
• timely preparation of reliable Financial Information
• accuracy and completeness of the Accounting Records
• ensuring legal and regulatory compliance
• protecting company's assets
• prevention and detection of fraud and error
• validation of IT Security Controls
• Entity Level Controls
Interrelated control systems, covering all financial and operating
functions, assure fulfilment of these objectives.
Significant features of these control systems include:
• the planning system that ensures drawing up of challenging goals
and formulation of detailed
strategies and action plans for achieving these goals.
• the risk assessment system that accounts for all likely threats
to the achievement of the plans, and draws up contingency plans to mitigate them.
• the review systems track the progress of the plan and ensure
that timely remedial measures are taken, to minimise deviations from the plan.
The Company uses Enterprise Resource Planning (ERP) supported by
in-built controls that ensures reliable and timely financial reporting. Well-established
& robust internal audit processes, both at the Corporate and the Business levels,
continuously monitor the adequacy and effectiveness of the Internal Controls and status of
compliance with operating systems, internal policies and regulatory requirements. All
Internal Audit findings and control systems are periodically reviewed by the Audit
Committee of the Board of Directors, which provides strategic guidance on Internal
Controls.
The Company also has a robust & comprehensive framework of Control
Self-Assessment (CSA) which continuously verifies compliance with laid down policies &
procedures and help plug control gaps, CSA comprises Automated and Manual Controls. CSA
Assurance Testing completes the control compliance loop. In addition to this, Compliance
Manager (CM) a facilitating tool sends pre-emptive alert to meet specific calendared
regulatory deadlines in the company.
Listing of Equity Shares
SRF's equity shares are listed at the BSE Ltd. and the National Stock
Exchange of India Ltd.
SRF Limited Long term Share based Incentives Plan, 2018
During the year, 195,000 equity shares were allotted under Part B- SRF
ESPS, 2018 of the SRF Long Term Share Incentive Plan, 2018 to eligible employees. There
has been no change in the said Plan which was approved by the shareholders through postal
ballot on February 26, 2018. The said Plan is in compliance with the Securities and
Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations,
2021. The disclosures prescribed under the said Regulations are given below:
a. In terms of the "Guidance Note on accounting for employee share
based payments" issued by ICAI and Ind AS 102, note no. 34 on Employee Share Based
Payments forms part of the notes to standalone annual accounts appearing on page no. 242
of the Annual Report 2021-22. Note No. 1.B.17 forming part of the Accounting Policies
which refers to this is also appearing on page no. 195 of the Annual Report 2021-22.The
same are also reproduced in the "Investors Section" of the website
(www.srf.com). The weblink for the same is https://www.srf.com/investors/
corporate-governance/
b. During financial year 2018-19 and 2021-22 shares under Part B- SRF
ESPS, 2018 of the SRF Long Term Share Incentive Plan, 2018 were issued directly to the
eligible employees as decided by the Board/Nomination and Remuneration Committee of the
Company. Basic and diluted EPS for 2021-22 was Rs 50.86 per Share.
c. Other Disclosures mandated by the said circular are given in
Annexure III.
Certificate from the Secretarial Auditors of the Company dated May 30,
2022 that SRF Limited Employees Long term Share Based Incentive Plan, 2018 has been
implemented in accordance with these regulations and in accordance with the resolution of
the company shall be placed in the forthcoming Annual general meeting.
Dividend Distribution Policy
In compliance with the Listing Regulations, your Board had formulated a
Dividend Distribution Policy. A copy of the said policy is available on the website of the
Company at https://www.srf.com/wp-content/
uploads/2020/11/Dividend-Distribution-Policy.pdf
Corporate Governance
Certificate of the auditors of your Company regarding compliance of the
conditions of corporate governance as stipulated in regulation 34(3) of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 is attached to the report as Annexure IV.
In compliance with the requirements of the regulation 17(8) of the
aforesaid regulations, a certificate from Chairman and Managing Director and President
& CFO was placed before the Board.
All Board members and Corporate Leadership Team (CLT) have affirmed
compliance with the Code of Conduct for Board and Senior Management Personnel. A
declaration to this effect duly signed by the Chairman and Managing Director is enclosed
as a part of the Corporate Governance Report. A copy of the Code is also placed at the
website of the Company at https://www. srf.com/wp-content/uploads/2020/11/Code-of-Conduct-
for-Directors-and-Senior-Management-Personnel.pdf
Consolidated Financial Statement
The consolidated financial statements of the Company have been prepared
in accordance with the Indian Accounting Standards (Ind AS) to comply with the Accounting
Standards specified under Section 133 of the Companies Act, 2013, read with Companies
(Indian Accounting Standards) Rules, 2015 and other relevant amendments issued thereafter
of the Act.
Audit Committee
As on date, the Audit Committee comprises of Independent Directors
namely, Mr. Lakshman Lakshminarayan (Chairman of the Committee), Ms. Bharti Gupta Ramola
and Mr. Raj Kumar Jain as other members. All the recommendations made by the Audit
Committee were accepted by the Board.
Accounts and Audit
M/s BSR & Co. LLP, Chartered Accountants (Registration No.
101248W/W-100022) were appointed as Statutory Auditors for 5 years in 47th annual general
meeting to hold office from the conclusion of 47th Annual General Meeting until the
conclusion of 52nd annual general meeting.
The observations of the auditors are explained wherever necessary in
appropriate notes to the accounts. The Auditors Report does not contain any qualification,
reservation, adverse remark or disclaimer.
Vigil Mechanism
In compliance with the provisions of the Companies Act, 2013 and
Listing Regulations, the company has established a vigil mechanism for directors,
employees and other stakeholders to report concerns about unethical behaviour, actual or
suspected fraud or violation of the company's code of conduct.
The Vigil Mechanism of the Company consists of Code of Conduct for
employees, Policy against sexual harassment, Whistleblower Policy, Code of Conduct to
Regulate, Monitor and Report Trading by Insiders and Code of Conduct for Directors and Sr.
Management Personnel. These taken together constitute the vigil mechanism through which
Directors, employees and other stakeholders can voice their concerns. The Whistle blower
Policy, Code of Conduct to Regulate, Monitor and Report Trading by Insiders and Code of
Conduct for Directors and Sr. Management Personnel can be accessed on the Company's
website at the link: https://www.srf.com/investors/corporate-governance/
Cost Audit
Pursuant to various circulars issued by Ministry of Corporate Affairs,
the Company is required to maintain cost records for all the products being manufactured
by it and get the same audited by a cost auditor.
M/s. H. Tara & Co., Cost Accountants, was appointed to conduct cost
audit of the accounts maintained by the Company for the financial year 2022-23 in respect
of all the relevant product groups of Technical Textiles Business and other Businesses of
the Company.
M/s. Sanjay Gupta & Associates, Cost Accountant, was appointed to
conduct cost audit of the accounts maintained by the Company for the financial year
2022-23 in respect of all the relevant product groups of Chemicals Business and Packaging
Films Business of the Company.
M/s. Sanjay Gupta & Associates, Cost Accountant was nominated as
the Company's Lead Cost Auditor.
The remuneration of the cost auditors for financial year 2022-23 is
subject to ratification by the shareholders. Accordingly a suitable item has been included
in the notice of the ensuing annual general meeting.
The Cost Audit reports for audit of the said products for the financial
year 2020-21, conducted by M/s. H. Tara, Cost Accountants (M. No. 17321) and M/s Sanjay
Gupta & Associates, Cost Accountants (M. No. 18672), have been filed with the Ministry
of Corporate Affairs on August 24, 2021. The due date for filing was August 27, 2021.
Secretarial Auditor
The Board has appointed M/s Sanjay Grover & Associates, Practising
Company Secretary, to conduct Secretarial Audit for the financial year 2021-22. The
Secretarial Audit Report for the financial year ended March 31, 2022 is annexed herewith
as Annexure V to this Report. The Secretarial Audit Report does not contain any
qualification, reservation or adverse remark.
Further, Secretarial Compliance Report dated May 11, 2022 issued as per
SEBI Circular CIR/CFD/ CMD1/27/2019 dated February 08, 2019 was given by M/s Sanjay Grover
& Associates, Practising Company Secretary which was submitted to Stock Exchanges.
Reporting of Fraud
During the year under review, the Statutory Auditors, Cost Auditors and
Secretarial Auditors have not reported any instances of frauds committed in the Company by
its officers or employees, to the Audit Committee under Section 143(12) of the Act,
details of which needs to be mentioned in this Report.
Personnel
The statement containing names of top ten employees in terms of
remuneration drawn and the particulars of employees as required under section 197 (12) of
the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, is provided in a separate annexure forming part of this report.
Further, the report and the accounts are being sent to the members excluding the aforesaid
annexure. In terms of Section 136 of the Act, the said Annexure is open for inspection at
the registered office of the Company during business hours on working days upto the date
of ensuing Annual general meeting. Any shareholder interested in obtaining a copy of the
same may write to the Company Secretary at cs@srf.com
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure VI.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings & Outgo
The details as required under the Companies (Accounts) Rules, 2014 are
given as Annexure VII to the Directors' report.
Annual Return
The Annual Return (MGT-7) of the Company as on 31.03.2022 is available
on the following web link: https://www.srf.com/investors/corporate-governance/
Industrial Relations
The Company continued to generally maintain harmonious and cordial
relations with its workers in all its businesses.
Secretarial Standards
Applicable Secretarial Standards, i.e. SS-1 SS-2 and SS-3, relating to
'Meeting of the Board of Directors' 'General Meetings' and 'Dividend' respectively, have
been duly followed by the Company.
General
Your Directors state that no disclosure or reporting is required in
respect of the following items as there was no transactions on these items during the year
under review :-
1. Details relating to deposits covered under Chapter V of the
Companies Act, 2013.
2. Neither the Chairman, Managing/Deputy Managing Director nor
Whole-time Director received any remuneration or commission from any of the Company's
subsidiaries.
3. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company's operations in
future.
As per the requirement of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition & Redressal) Act, 2013 ('Act') and Rules made thereunder,
your Company has constituted Internal Complaints Committees (ICC). During the year, three
complaints were received which were duly resolved.
Acknowledgements
Your Directors acknowledge with gratitude the cooperation and
assistance received from various agencies of the Central Government and the Governments of
Madhya Pradesh, Rajasthan, Tamil Nadu, Gujarat and Uttarakhand, financial institutions and
banks. Your Directors thank the shareholders for their continued support. Your Directors
also place on record their appreciation of the contribution made by employees at all
levels.
|
For and on Behalf of the Board |
|
Ashish Bharat Ram |
| Date: May 30, 2022 |
Chairman & Managing Director |
| Place: New Delhi |
(DIN - 00671567) |