AnnualReport 1011
AnnualReport 1011
AnnualReport 1011
annual report
2010-11
Contents
Chairmans Message Company Information Notice 10 15 24 6 8
Directors Report
Auditors Report
46 50
Financial Statements
2010 -11
we find BETTER ways to manufacture
SRF entered into a joint venture to set up a Biaxially Oriented Poly Ethylene Terephthalate (BOPET) films plant in Bangladesh and obtained board approval for setting up a Biaxially Oriented Polypropylene (BOPP) films plant in South Africa.
we always find
highpoints
we find ways to manage relationships BETTER
SRF Foundation, the social wing of SRF, bagged the Best in CSR Practice award at the 5th Indys Awards function for its contribution in the field of education as well as community development in and around its plant locations.
a better way
chairmans message
credit Thefor developments must go to those who deserve it the most our people.
Dear shareholders, I am happy to share with you your companys spectacular performance in 2010-11 which saw it cross several new milestones. We surpassed previous years all time high consolidated net profit after tax (PAT) of Rs. 324 crore by 49 per cent thereby setting a new record at Rs. 484 crore during the year. Though the profitability in large measure was propelled by a dramatic improvement in the demand for packaging films, the other businesses also made significant contributions. At SRF, we continued to demonstrate our business leadership by building and augmenting new product and process capabilities. We made significant headway in our effort to complete approvals of our newly developed Polyester Tyre Cord Fabrics from some of the leading tyre majors. We diversified our product portfolio especially for the auto and the electrical segments by developing and commercialising poly carbonate based engineering plastics. And, we further stepped up our R&D efforts to discover and develop molecules for some of the worlds leading pharma and agrochemicals manufacturers. The capability of the R&D team in the Chemicals Business is increasing all the time and we believe that they will be the growth-driver for the future of the Chemicals Business. Simultaneously we continued to work towards strengthening our long-term fundamentals and global competitiveness through continuous investments in adding, replacing and upgrading capacity and technology. Recognising the distinctive potential of growth in all our businesses, we embarked upon several projects worth around Rs. 1500 crore during the year. We also took several strategic initiatives to expand our global operations. We entered into a joint venture to set up a Biaxially Oriented Poly Ethylene Terephthalate (BOPET) films plant in Bangladesh and obtained board approval for setting up a Biaxially Oriented Polypropylene (BOPP) films plant in South Africa. These developments clearly point to a brighter future. And, the credit must go to those who deserve this the most - our people who made concerted efforts to achieve a remarkable breakthrough in our companys performance. We continued to draw on our talent pool and our management way of TQM to build and improve upon our organisational capabilities in tune with changing business imperatives. Using IT as a platform we set off on a path of knowledge management making a paradigm shift in the way we contribute and collaborate across the company. Among other people development initiatives we worked on integration of our overseas units with the parent company through relevant policies and systems. More importantly, we launched a companywide campaign to reiterate our commitment to living the organisational values. We also created and communicated a brand charter which defined what we stood for as an organisation. Sure, all these efforts are aimed at enabling our colleagues to align with our companys business proposition, which revolves around ethical values. There is no gainsaying the fact that adherence to these values is a bedrock of all our actions. Another vehicle that drives our businesses is the creation of societal value through sustainable means. Pursuing a purpose of changing the lives of the underprivileged in our community we continued to work on the identified areas of Education, Health CareHIV AIDS, Natural Resource Management (NRM), and Affirmative Action in support of SC/ST, the historically disadvantaged people in India. In particular, we expanded our ambit of work in education through our social wing, SRF Foundation. We intensified our efforts to improve infrastructure and teachers training in all the 40 schools we have adopted in the Mewat region of Haryana. Many other companies, government agencies, NGOs, employee volunteers, educational institutes and the community at large joined us in our efforts to transform the lives of the children in these schools. Its truly satisfying to be able to contribute towards community development in a meaningful manner. Recognitions for our socially and environmentally responsible work further inspire us all to reaffirm our commitment to the cause. Its a matter of great pride for all of us that our Chemicals Business was conferred with the prestigious CII-ITC Sustainability Award-2010 for the third year in a row for its endeavor towards sustainable economic, environmental and social development. You will be happy to know that a consortium of Netherlands based Civil Society Organisations, selected our NRM project, the only one in Asia, as a unique example of NGOBusiness Partnership to be presented at a learning event at Erasmus University, Rotterdam during the year. In line with our proactive approach towards managing climate change, we undertook an ISO 14064-compliant study to measure the carbon footprint of its Chemicals Business based at Bhiwadi during the year. The journey continues. We will continue to engage with our customers. We will continue to create value for our society. And, we will continue to spur innovation. Let me assure you that we will remain committed to bringing continuous improvements in all that we do the work ethos that reflect in the new tagline of your company, We always find a better way. I look forward with confidence to achieve total excellence. With kind regards,
company information
Board of Directors
Arun Bharat Ram, Chairman Ashish Bharat Ram, Managing Director Kartikeya Bharat Ram, Dy Managing Director S P Agarwala K Ravichandra, Director (Safety & Environment)
Auditors
M/s Deloitte Haskins & Sells, Chartered Accountants
Company Secretary
Anoop K Joshi
Bankers
ICICI Bank State Bank of India State Bank of Patiala Standard Chartered Bank Citibank NA Yes Bank Limited HDFC Bank The Royal Bank of Scotland
Registered Office
C-8, Commercial Complex, Safdarjung Development Area, New Delhi-110016, India
Corporate Office
Block-C, Sector-45, Gurgaon-122003, Haryana, India
Notice
Notice is hereby given that the 40th Annual general meeting of SRF Limited will be held on Thursday, the 28th July, 2011 at 3.30 pm at the Laxmipat Singhania Auditorium, PHD House, 4/2 Siri Institutional Area, August Kranti Marg, New Delhi-110 016 to transact the following businesses: 1. To receive, consider and adopt the audited Balance Sheet of the Company as at 31st March, 2011 and the Profit & Loss Account for the year ended on that date together with the Reports of the Auditors and Directors thereon. 2. To appoint a Director in place of Mr S P Agarwala, who retires by rotation and being eligible, offers himself for re-election. 3. To appoint a Director in place of Mr Vinayak Chatterjee, who retires by rotation and being eligible, offers himself for re-election. 4. To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution: RESOLVED that M/s Deloitte Haskins & Sells, Chartered Accountants, New Delhi (Registration No. 015125N) be and are hereby re-appointed as Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the next Annual general meeting at a remuneration to be fixed by the Audit Committee/ Board of Directors and service tax thereon and re-imbursement of travelling and other incidental expenses, if any, incurred in connection with the audit. 5. To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution: RESOLVED that subject to such consents and permissions, if any, as may be necessary, approval of the Company be and is hereby accorded in terms of Sections 269, 309 and other applicable provisions, if any, of the Companies Act, 1956 and the Schedule(s) thereto, including any statutory amendment or re-enactment thereof, to the re-appointment of Mr Kartikeya Bharat Ram as Deputy Managing Director for a fresh tenure of five years effective from 01.06.2011 on the terms, conditions and remuneration, including minimum remuneration as are hereinafter specifically given:
Tenure
Five years with effect from 01.06.2011
Functions
Mr Kartikeya Bharat Ram shall be responsible for Human Resources, Information Technology, Total Quality Management, Corporate Communication functions and other responsibilities as may be entrusted to him by the Chairman and/or the Board, from time to time.
Remuneration
Subject to the overall limit on remuneration payable to all the managerial personnel taken together, remuneration payable to Mr Kartikeya Bharat Ram shall comprise salary, perquisites and commission, as may be decided by the Remuneration Committee/Board of Directors within an overall ceiling of 5% of net profits of the Company, computed in the manner laid down in Section 349 of the Companies Act, 1956.
Minimum Remuneration
In the event of absence or inadequacy of profits in any financial year, remuneration payable to Mr Kartikeya Bharat Ram shall be decided by the Remuneration Committee subject to the provisions of the Companies Act, 1956 and such approval, if any, as may be required.
Termination
Appointment of Mr Kartikeya Bharat Ram as Deputy Managing Director may be terminated by either party
giving to the other three calendar months notice in writing. In the event of termination of this appointment of Mr Kartikeya Bharat Ram by the Company, he shall be entitled to receive compensation in accordance with the provisions of the Companies Act, 1956 or any statutory amendment or re-enactment thereof. RESOLVED FURTHER that the Remuneration Committee/Board of Directors be and is hereby authorised to alter, vary and increase the remuneration in the event of any liberalization/revision in the levels of permissible managerial remuneration, notwithstanding the overall remuneration set out as above, as may then be prescribed/ permissible. RESOLVED FURTHER that the Remuneration Committee be and is hereby authorised to decide from time to time the salary, perquisites and commission payable to Mr Kartikeya Bharat Ram during his tenure with effect from 01.06.2011 within the approved ceiling of remuneration. RESOLVED FURTHER that powers and authorities delegated by the Board/Committees through Gurgaon, May 9, 2011 Regd. Office: C-8, Commercial Complex, Safdarjung Development Area New Delhi-110016 6.
resolutions/General Power of Attorney to Mr Kartikeya Bharat Ram, from time to time including power to subdelegate shall remain valid upon his re-appointment. To consider and if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution: RESOLVED that pursuant to Section 309 and other applicable provisions, if any, of the Companies Act, 1956 and subject to such permissions as may be necessary, approval be and is hereby accorded to the payment of a sum not exceeding 1% per annum of the net profits of the Company, calculated in accordance with the provisions of Sections 198, 349 and 350 of the Companies Act, 1956, to all or any of the Directors of the Company other than the Managing/Whole-time Directors, if any, in such manner and in all respects as the Remuneration Committee/Board of Directors may determine and that such payment be made in respect of profits of the Company for the whole or proportionately for a part of each of its financial years during a period of 5 years commencing from 1st April, 2011.
By Order of the Board for SRF LIMITED (Anoop K Joshi) Vice President & Company Secretary
Notes
1. Explanatory Statement as required under Section 173(2) of the Companies Act, 1956 is annexed. 2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT ANOTHER PERSON AS HIS PROXY TO ATTEND AND ON A POLL, TO VOTE INSTEAD OF HIMSELF. THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. A BLANK FORM OF PROXY IS ENCLOSED AND IF INTENDED TO BE USED, IT SHOULD BE RETURNED, DULY 4. 3. COMPLETED, TO THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN FORTYEIGHT HOURS BEFORE THE SCHEDULED TIME OF THE MEETING. The Register of Members and Share Transfer Books of the Company will remain closed from Friday, the 15th July, 2011 to Friday, the 22nd July, 2011 (both days inclusive) for the purposes of holding the Annual General Meeting. Members holding shares in physical form are requested to notify change in address and bank mandate, bank
particulars, if any, under their signatures to Karvy Computershare Private Limited,17-24, Vittal Rao Nagar, Madhapur, Hyderabad 500 081, the Registrar & Share Transfer Agent, quoting folio Nos. Members holding shares in electronic form may update such details with their respective Depository Participants. In terms of SEBI Circular dated 20th May, 2009 and 7th January, 2010 pertaining to (i) transfer of physical shares (ii) deletion of name of the deceased shareholder(s) where the shares are held in the name of two or more shareholders (iii) transmission of shares to the legal heir(s), where deceased shareholder was the sole holder of shares; and (iv) transposition of shares- when there is a change in the order of names in which physical shares are held jointly in the names of two or more shareholders, of the listed companies, the transferee(s) are requested to furnish copy of their Permanent Account Number (PAN) Card along with the other documents to the RTA for the above mentioned purpose, irrespective of the value of the transaction. 5. Members seeking any information regarding accounts should write to the Company at its Corporate Office at Block C, Sector 45, Gurgaon- 122 003 (Haryana) at least seven days before the date of the meeting so as to 6.
enable the management to keep the information ready. All amounts of unclaimed dividend declared up to the financial year ended 31st March, 2003 have been transferred to the General Revenue Account of the Central Government/Investor Education and Protection Fund as required by the Companies Act, 1956. 7. Pursuant to Section 205A of the Companies Act, 1956, dividends which remain unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account are required to be transferred to the Investor Education and Protection Fund of the Central Government. Section 205C of the Act states that no claims shall lie against the Fund or the Company in respect of individual amounts which were unclaimed and unpaid for seven years as aforesaid and transferred to the Fund. Shareholders are advised that those who have not encashed their dividend warrant(s) so far for the financial years ended 31st March 2004 and thereafter may send their outdated dividend warrants to the Company at its Corporate Office or to the Registrar and Share Transfer Agent, M/s Karvy Computershare Private Limited for issue of demand drafts in lieu thereof.
Mr S P Agarwala
Mr S P Agarwala (70) is well-known in the business circles of Delhi. He is Director of the Company since 1997.
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Notice
No Director other than Mr S P Agarwala is concerned or interested in the Resolution. At its meeting held on 26th February, 2011, the Board of Directors had re-appointed Mr. Kartikeya Bharat Ram as Deputy Managing Director of the company for a further period of 5 years with effect from 01.06.2011.Members approval is sought to the re-appointment. The terms of his re-appointment and remuneration including minimum remuneration are set out in the resolution. As per the requirements of Section 302 of the Companies He is strategic advisor to leading corporates and Government agencies in the areas of economic policy and infrastructure planning and implementation. He is currently the Chairman of CII-National Committee on Urban Infrastructure (Indias largest industry association) and was the Chairman of CII (Northern Region) for the year 2000-01. He is also a member of the Task Force on Reforms in Housing & Urban Development of the Government of India. Mr Kartikeya Bharat Ram is a member of the Shareholders/ Mr Vinayak Chatterjee is a member of the Shareholders/ Investors Grievance Committee, Remuneration Committee and Audit Committee of the Board and has no shareholding in the Company. Directorships in other public companies Avantha Power & Infrastructure Ltd
* Chairman
Mr Vinayak Chatterjee
Mr Vinayak Chatterjee (51) is a graduate in Economics from St Stephens College, Delhi and a Post-graduate in Management from the Indian Institute of Management, Ahmedabad.
Act, 1956, the abstract of the terms & conditions of reappointment of Mr. Kartikeya Bharat Ram, Deputy Managing Director has already been circulated to the members. Mr Kartikeya Bharat Ram (40) holds a Masters degree in Business Administration on Corporate Strategy from Cornell University, USA and has 17 years working experience in senior positions including in the Companys international subsidiaries.
Investors Grievance Committee and Committee of Directors- Financial Resources and has no shareholding in the Company. Directorships in other public companies KAMA Holdings Limited Committee Membership - Committee of Directors Financial Resources -
No Director other than Mr Vinayak Chatterjee is concerned or interested in the Resolution. Mr Kartikeya Bharat Ram is interested in the resolution. Mr Arun Bharat Ram and Mr Ashish Bharat Ram, who are relatives of Mr Kartikeya Bharat Ram, may be deemed to be interested in the resolution. No other Director of the Company is concerned or interested in the resolution.
Item No. 5
By a resolution dated 25.07.2006, the shareholders had appointed Mr Kartikeya Bharat Ram as President & Executive Director of the Company for a period of five years with effect from 01.06.2006. Mr Kartikeya Bharat Ram was re-designated as Deputy Managing Director w.e.f 20.01.2007. The existing tenure of Mr Kartikeya Bharat Ram continues upto 31.05.2011.
Item No. 6
By a Special resolution passed on 25th July, 2006, the members had authorised the payment of a sum upto 1%
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Notice
of the net profits of the Company, calculated in accordance with Sections 198, 349 and 350 of the Companies Act, 1956 in respect of each of the five financial years commencing from 1st April, 2006, to some or any of the Directors other than the Managing or Whole-time Directors as the Board may determine. Approval of the shareholders is being sought for a fresh authorisation in favour of the Board for payment of commission at the same rate for a period of 5 years commencing from 1st April, 2011. The proposed resolution is in accordance with Section 309 of the Companies Act, 1956 and the Articles of Association of the Company. The payment of commission authorised thereby is in respect of the whole or proportionately a part of each of the financial years during a period of 5 years commencing from 1st April, 2011. Directors other than the executive Directors are interested in the resolution.
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Directors Report
Your Directors are pleased to present the 40th Annual Report for the year ended 31 March 2011.
Equity Dividend
The Board of Directors of the Company has not recommended
Financial Results
Net Sales Profit Before Interest, Depreciation & Tax (PBIDT) Less: Interest & Finance Charges (Net) Gross Profit Less: Depreciation Profit Before Tax (PBT) Less: Provision For Taxation including Deferred Tax Charge Profit After Taxation (PAT) Add: Profit Brought Forward Surplus available for appropriation 2010-11 2986.06 912.21 83.02 829.19 151.71 677.48 194.04 483.44 627.14 1110.58
(Rs crore) 2009-10 2181.08 649.40 64.24 585.16 131.25 453.91 144.49 309.42 482.07 791.49
any final dividend. During the year, your Company has paid two interim dividends each of Rs. 7 per share aggregating to Rs. 14 per share.
Operations Review
Net sales of the Company grew by 36.91 per cent from Rs. 2181.08 crore in 2009-10 to Rs. 2986.06 crore in 2010-11. Profit before interest, depreciation and tax (PBIDT) including other income increased from Rs.
Appropriation
Interim dividend on Equity Shares Corporate Tax on Dividend Amount transferred to General Reserve Amount transferred to Debenture Redemption Reserve Profit carried to Balance Sheet Total 2010-11 84.71 14.06 50.00 30.25 931.56 1110.58
649.40 crore in 2009-10 to Rs. 912.21 crore in 2010-11. Profit before tax (PBT) increased by 49.25 per cent from Rs. 453.91 crore in 2009-10 to Rs. 677.48 crore in 2010-11. After accounting for the provision for taxation of Rs. 194.04 crore, which includes deferred tax charge and provision relating to earlier years, profit after tax (PAT) grew by
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56.24 per cent from Rs. 309.42 crore in 2009-10 to Rs. 483.44 crore in 2010-11.
turnover of the company was THB 1710.55 million and net profit was THB 26.03 million.
Subsidiary Companies
Restructuring of shareholding in international subsidiaries
During the year, the entire shareholding of the Company in SRF Overseas Ltd. was transferred to SRF Tech textile BV with effect from 1.5.2010.
Other Subsidiaries
SRF Transnational Holdings Ltd. incurred a loss of Rs. 73.58 lakhs during the year 2010-11. SRF Properties Ltd. earned a net profit (PAT) of Rs. 10.62 lakhs during the year 2010-11. SRF Holiday Home Limited has incurred a loss of Rs. 0.25 lakhs during the year 2010-11. SRF Fluorochemicals Limited, SRF Energy Limited and SRF Fluor Private Limited had not started any operations. Annual accounts of the subsidiary companies and the related detailed information can be obtained on request by the
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Directors Report
shareholders of the Company and of the subsidiary companies. These are also available for inspection at the Corporate Office of the Company and at the respective registered offices of the subsidiaries between 11 A.M. to 1 P.M. on all working days. (iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) that the Directors have prepared the annual accounts for the year ended 31st March 2011 on a going concern basis. The Company is controlled by Arun Bharat Ram Group (Promoter Group) being a group as defined under the Monopolies and Restrictive Trade Practices Act, 1969. The Promoter Group consists of various individuals and corporate bodies who are in a position to and who jointly exercise control over the Company. A list of these individuals and corporate entities is as follows: a) Arun Bharat Ram; b) Ashish Bharat Ram; c) Kartikeya Bharat Ram; d) Mrs. Shiela Bharat Ram; e) Mrs. Manju Bharat Ram; f) Mrs. Vasvi Bharat Ram; g) Mrs. Radhika Bharat Ram; h) KAMA Holdings Ltd.; i) KAMA Realty (Delhi) Ltd.; j) Srishti Westend Greens Farms Private Limited; k) Karm Farms Private Limited; l) Karmav Holdings Private Limited; m) Skylark Investments & Trading Pvt. Ltd.; n) Shri Educare Limited.; and o) Shri Educare Maldives Private Limited. 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 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 (www.srf.com) In compliance with the requirements of Clause 49(V), a certificate from Managing Director and the President & Chief Financial Officer was placed before the Board. at a maximum price of Rs. 380 per share from the open market through stock exchanges. Till date, the Company has bought back 58,851 equity shares absorbing an amount of Rs. 1.97 crore.
Directors
S P Agarwala and Vinayak Chatterjee are retiring by rotation at the ensuing Annual General Meeting and being eligible offer themselves for reappointment. Brief resumes of the Directors offering themselves for re-appointment are furnished in the explanatory statement to the notice of the ensuing Annual General Meeting.
Corporate Governance
Certificate of the auditors of your Company regarding compliance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement with the stock exchanges is attached to the report as annexure 1.
Buy-back of Shares
The Board of Directors at its meeting held on 26.2.2011 announced buyback of fully paid up equity shares for an amount not exceeding Rs. 90 crore
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Directors Report
financial statements, which form part of the Annual Report and Accounts.
Fixed Deposits
Your Company discontinued accepting/ renewing fixed deposits since 14 August 2004. Deposits accepted from Public which have matured and are unclaimed are being reflected under Unclaimed fixed deposits (including interest) in Current Liabilities & Provisions (Schedule 8 to the annual accounts).
in Report of Board of Directors) Rules, 1988 are given as annexure 3 to the Directors report.
Industrial Relations
The Company continued to generally maintain harmonious and cordial relations with its workers in all its businesses.
Cost Audit
Mr. Harkesh Kumar Tara, Cost Accountant, has been appointed to conduct cost audit of the accounts maintained by the Company in respect of its nylon products for the financial year 2011-12. The Cost Audit report for audit of nylon for the year 2009-10 conducted by Mr Prakash Kumar Varma, Cost Accountant (M. No. 3541), has been filed with the Ministry of Corporate Affairs on the due date.
Personnel
As required by the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees), Rules, 1975, as amended, the names and other particulars of employees are set out in the annexure 2 to the Directors Report.
Acknowledgements
Your Directors acknowledge with gratitude the co-operation 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 Date: May 9, 2011 Place: Gurgaon Arun Bharat Ram Chairman
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For Deloitte Haskins & Sells Chartered Accountants (Registration No. 015125N) Manjula Banerji Partner (Membership No. 086423)
Annexure 2: Annexure to Directors Report (Statement Pursuant to Section 217(2A) of the Companies Act, 1956)
S.N. Name 1 2 3 4 5 6 7 8 9 Arun Bharat Ram Ashish Bharat Ram Kartikeya Bharat Ram Roop Salotra Sushil Kapoor Rajendra Prasad Rajdeep Anand Suresh Dutt Tripathi Aseem Mehrotra Age Designation (in years) 70 42 40 60 51 53 59 50 50 Chairman Managing Director Remuneration 46,764,000 25,144,000 Qualification B.Sc (Indl Engg) MBA MBA B.E. B.Tech CA, DISA, CISA (USA) B.Tech M.Sc, PGDSW B.E. Exp 44 20 17 39 28 29 39 28 28 DOJ SRF Ltd 1-May-72 2-Sep-02 5-Jul-93 1-Jun-89 1-Jul-82 20-Mar-06 29-Mar-93 11-Feb-02 16-Apr-90 Last Employment Manager, Textile Div, DCM Ltd MD, SRF Overseas Ltd First employment Fenner India Ltd First employment Country Controller, American Express Bank Chief Executive, Chem Aides Principal, Mgt Consultancy MASCON Global Limited Branch Manager, Indographics
Dy. Managing Director 23,342,000 President & CEO (CB 13,764,396 & PFB) President & CEO (TTB) President & CFO President (Projects & R&D) President (Corporate HR) Vice President 13,668,037 10,428,284 12,475,000 7,685,800 6,162,856
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Annexure 3: Annexure to Directors Report (Pursuant to Section 217(1)(e) of the Companies Act, 1956)
A. Conservation of Energy Measures taken:
1. Technical Textile Business, Manali
Saved 105000 Kwh/month during winters by shifting load from Mcquay chiller to the energy efficient VAM chiller. Saved 61200 Kwh/month by optimizing load on Centac air compressor with the arresting of air leakages & segregation of LP/HP lines. Saved 51840 Kwh/month by strengthening of insulation in spinning extruder zone & take-up fumes exhaust pipe. Saved 43200 Kwh/month by adding energy efficient booster pump for Mcquay chillers chilled water. Saved 25200 Kwh/month by balancing of pumping load requirement of process cooling water pump & its motors, thereby reducing the need for running of more pumps. Saved 25200 Kwh/ month by replacing the Trane Condenser pump with an energy efficient pump.
5. Chemical Business
Saved 653400 units/annum by Optimisation of Utility and One of the I-520 comp of 125 KW was stopped at full capacity of plant. Saved 483840 units/annum by optimisation of CMS cooling water circuit and stopping one pump of 90 KW. Saved 42900 units/annum by modification in plant air circuit and stopping one air comp of 110 KW.
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Saved 427680 units/annum by modifications in brine circuit and reducing the brine comp running hrs.
Saved 17,280 Kwh/annum in erema eddy current control drive replacement with AC drive.
Saved 21,600 Kwh/annum by replacing cast aluminium blades in cooling towers with FRP (Fiber rain forced plastic). Saved 13,824 Kwh/annum by stopping 3kw FO day tank heater in summer for 8 months.
Saved 68,400 Kwh/annum by reducing the pressure setting in compressors from 7.0kg/cm2 to 6.5kg/cm2. Saved 1,26,000 Kwh/annum by replacing DC servomotors with high energy efficient AC servomotors in slitter machine. Saved 1,13,400 Kwh/annum by increasing the frequency window of on line UPS to reduce the losses. Saved 49,680 Kwh/annum by optimizing the consumption of cooling water fan based on basin temperature (150 days a year).
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Power and fuel consumption Electricity a) Purchased - Total units (000 KWH) - Total amount (Rs lakhs) - Rate/Unit (Rs) b) Own Generation Through Diesel (000 KWH) - Units per KL of Diesel Oil - Cost/Unit (Rs) - Through Furnance Oil (000 KWH) - Units per KL of furnance Oil - Cost/Unit (Rs) - Through Coal - Unit per MT of Coal - Cost/Unit (Rs) - Through Windmill (000 KWH) - Total amount (Rs lakhs) - Cost/Unit (Rs) Others a) Fuel (for oil boiler) - Quantity (K. Litres) - Total cost (Rs lakhs) - Rate/Unit of KL (Rs) b) LPG - Quantity (K. Litres) - Total cost (Rs lakhs) - Rate/MT (Rs) Electricity (KWH/MT) - Yarn - Fabric - Fluorochemicals - Chloromethanes - Polyester Films LPG (Kgs/MT) - Fabric
2010-11
2009-10
212,214.85 10,340.37 4.87 6,063.60 3,631.94 10.85 35,861.36 4,255.22 6.81 38,294.71 837.19 3.90 31,588.57 183.76 0.58
174,469.38 7,650.28 4.38 6,604.23 4,252.27 9.00 42,725.08 4,179.11 5.93 39,035.89 829.43 4.17 25,023.52 81.77 0.33
10,308.42 3,022.89 29,323.05 2,634.63 1,192.84 45,275.45 1,810.09 3,820.19 925.68 330.22 1,147.87 90.20
9,060.40 2,246.27 24,792.24 3,444.26 1,265.86 36,752.77 2,071.94 3,607.24 907.37 385.67 1,223.60 92.56
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B. Technology Absorption
Research & Development
The R&D centre of the TTB is located at Manali, Tamil Nadu. It is equipped with state-of-the-art facilities including pilot plants and testing laboratories and is used for development of new products and new processes in the field of technical textiles. Products from these activities have been used by a leading European manufacturer as well as for inhouse consumption. Besides, several research projects are in progress with leading Indian and overseas academic and research institutes. 2010-11 (Rs lakhs) 767.58 1845.79 2613.37 0.88% 2009-10 (Rs lakhs) 536.61 1374.86 1911.47 0.88%
Expenditure on R&D Capital Revenue Total Total R&D expenditure as per cent of turnover
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Businesses
SRF has a portfolio of established businesses in industrial intermediates. It classifies its main businesses as: Technical Textiles Business (TTB), Chemicals & Polymers Business (CPB) and Packaging Films Business (PFB).
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tyres. Its main product Nylon Tyrecord Fabric (NTCF) is used in bias tyres of all categories from tyres for Buses & Trucks to tyres for cycles. Having set up Indias only polyester industrial yarn plant in 2009-10, SRF is poised to serve the growing segment of Polyester Tyrecord Fabric (PTCF) used in the reinforcement of radial tyres for Passenger Car and Light commercial Vehicles. SRF is the market leader in NTCF and is now working closely with customers to develop new fabric styles, including unique deniers. These developments would result in better usage of the assets. Having been a market leader in NTCF segment for decades in the country, SRF would now focus on scaling up its PTCF business. SRF is making progress in getting approvals from all the key tyre companies including Global tyre majors. This would provide the platform for SRF to grow into a significant global player in the radial tyre segment of passenger cars and light commercial vehicles in the coming years through appropriate and timely capacity enhancement. The Thailand subsidiary continues with its stable performance and is generating positive cash flows.
it the worlds second largest manufacturer of belting fabrics. SRFs South African subsidiary has posted a robust performance and is now poised to enter Latin American markets and may consider capacity enhancement to increase its level of business.
would reach its peak capacity during the course of the forthcoming year and this segment would post better results. The state-of-the-art project to produce 170 lakh square metre per annum of coated fabric through a new coating line at SRFs existing plant location in Gummidipoondi, with a total investment of approximately Rs 143 Crore, is progressing as per schedule and commercial production is expected to start in the second quarter of 201112. The new facility will offer a wide range of products, including lacquered tarpaulins, fabrics for tensile structures, awnings, auto-canopies, hangar covers etc. In addition, Poly Urethane (PU) Coated Fabrics for several applications will also be introduced.
Belting Fabric
Belting fabric, which is used as reinforcement material for conveyor belts has been witnessing a stable demand. Over the past five years, volume in this segment too has increased at a compounded annual growth rate (CAGR) of about 11 per cent. While SRF has a dominant market share of 60 per cent in the domestic market, it also has a significant global presence making
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Outlook
The NTCF segment of Technical Textiles Business, the largest business of SRF, mainly caters to the bus and truck tyre segment, which accounts for nearly 60 per cent of SRFs NTCF sales. The current radialisation in this segment is 15 per cent. The investments in radial capacities which were announced by tyre companies some time back, are fructifying. Post this development, it is estimated that radialisation would touch a level of around 30 per cent by 2013-14 and 50 per cent by 2017-18. It is projected to stabilse thereafter, as has been observed in other developing economies of the world. India is the second largest two-wheeler producer in the world after China. This segment is growing at around 15 per cent Compounded Annual Rate of Growth (CARG). The share of this segment in NTCF consumption is currently 12 per cent and is projected to reach 30 per cent by 2019-20. With infrastructure & mining sectors expected to grow substantially in the coming years, Off the Road (OTR) tyres, which are already witnessing a high growth are expected to grow in double digits on a sustainable basis for many years. These consume large amount of NTCF thus ensuring a reasonable growth rate.
annual report 2010-11
It is, therefore, expected that in absolute quantity terms, the demand for Nylon Tyre Cord Fabric would grow or remain flat over the next five years, though the application portfolio would show a shift from Buses & Trucks to two-wheelers and Off the Road (OTR) Tyres. The passenger car (PC) tyre radialisation in India has reached a mature level now (over 90 per cent), which predominantly uses Polyester Tyre Cord Fabric as carcass for reinforcement. The car industry is expected to grow substantially in coming years and, therefore, offers an opportunity to SRF to provide PTCF fabrics for radial tyres. Currently, SRF is the only company in India to produce Polyester Tyre cord fabric and is well positioned to benefit from the opportunity. Leveraging its relationship with the global majors on account of its Nylon business, it expects to complete approval of its polyester fabrics for worldwide usage in the coming years, giving it a growth platform for radial tyre re-inforcements globally. In Belting Fabrics, given the expectation of high growth in the domestic mining industry and infrastructure, the outlook is positive in India. This augurs well for SRF, which has over 60 per cent share of
this business in the domestic market. In addition, with the demand for commodities continuing to grow at a high rate globally, mining is expected to be a key driver of economies and this would offer opportunities for global growth in this sector. Coated Fabrics, which was a small business segment so far for TTB, through the investments made and being planned, is expected to grow substantially over the years to become the second largest segment in SRFs Technical Textiles Business. With changing lifestyles, urbanisation, and massive investments in infrastructure, it is expected that products such as signages, awnings and hangar covers would continue to see a double digit growth. Similar growth is expected in the high-end products with the increasing usage of fabric tensile structures for stadiums, homes and exhibition centres. SRF is one of the first large sector companies to foray into the high tensile structure with fabric segments in a significant way and is soon expected to establish a leadership position. With its state-of-the-art facility, it would also have the option of considering exports, in addition to servicing the domestic markets.
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Chloromethanes
SRFs main products in the chloromethanes business are methylene chloride and chloroform.
Fluorospecialities
Building on its presence in the fluorine chemistry industry for almost two
Refrigerants
Refrigerants are primarily used as a cooling medium in the air-conditioning and refrigeration industry. SRF continues to be one of the larger and more credible players in the industry globally. It is the market leader with about 40 per cent share in the domestic market.
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decades, your Company had entered the space of specialty fluorine chemistry in 2003-04. The focus has been to leverage the Companys expertise to produce intermediates and advanced intermediates, which are used to manufacture Active Pharmaceutical Ingredients (APIs) and agrochemicals by its customers. Fluorine-based specialty chemicals are finding increasing usage in the fields of agrochemicals, pharmaceuticals and performance products. To take on the process development for new molecules at the scale necessary to support the Business growth plans, the strength of R&D and process engineering have been significantly augmented, in terms of people, infrastructure and management. Today, a number of projects are in various stages of construction, with production expected to commence from the fourth quarter of 2011-12 at the new site at Dahej in Gujarat. The Business is closely engaged with buyers for most of these products.
Engineering Plastics
Engineering Plastics, a group of polymers comprising polyamides (N6 & N66), Poly Butylene Terephthalate (PBT) and Poly Carbonate (PC), achieved the highest ever sales volumes thereby increasing its market share. The performance was mainly driven by the Automotive and the Electrical industries, the user segments of engineering plastics. The margins, however, remained under pressure due to a competitive market situation. SRF started a dedicated product development center during the year which helped it reduce
the time to market and take up some key product development projects. The Business continued to enhance its skills in R&D and new product development, thereby reducing the cost of processing and developing high end grades. The Company not only developed poly carbonatebased engineering plastics but also commercialised the polymer successfully.
edge R&D and intellectual property, rather than low-cost production alone. The commodity product portfolio is also evolving and focusing on producing and delivering new-generation HFCs and HFC blends to the market, instead of CFCs and HCFCs. The business believes this evolution to be both necessary and welcome, and will position the Company optimally for the next stage of growth, in both commodities and specialty fine chemicals. During 2012-13, the business will increase HFC-134a production capacity, and set up new production facilities for multi-purpose chemicals at Dahej, in Gujarat, which will be the site of choice for most new investments.
Outlook
The Chemicals Business has been re-inventing itself over the previous few years. From being a commodity player in the refrigerant gas space, this business is rapidly expanding into specialty fine chemicals, deriving value from leading-
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shut-down. Operationally, both the plants at Indore ran to full capacity and the Kashipur plant ran mostly on thick film. On the growth front, the Business went ahead with the announcement of two major investments, one line each of a BOPET film in Bangladesh and BOPP film in South Africa.
SRFs strategy for the year will be to focus on increasing exports especially to the developed world where the margins are relatively less volatile, launch Value Added Products and to prepare the business for global expansions. Although we witnessed cyclicality in this business, the long term prospects are encouraging.
Outlook
With the ban on usage of plastics in Gutka laminates and large number of expansions coming up in India and globally, FY 2011-12 is expected to be a year where supply will exceed demand and there will be a pressure on margins.
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Human Resources
During the year, the Human Resources function continued to provide strategic assistance to the organisation in line with the Strategic Roadmap of the HR function for the larger company. Some of the important initiatives that we embarked upon in this year included introduction of a Management Training Scheme, Succession Planning for some key positions in the organisation and revamping of the entire People Development System. These projects are currently under implementation. The overseas units acquired by SRF in the recent past were further integrated with the mainstream company through introduction of policies and extension of the Performance Management System to the South Africa and Thailand operations of SRF. Work continued on other initiatives of strategic importance, including roll-out of the Organisational Values, and strengthening co-operation between businesses and corporate functions. An important landmark was the recommendations presented by the function on how to optimally manage multiple businesses operating at a single location, which is a problem faced by numerous organisations, but has not been successfully tackled by many. At the operational level, the Human Resources Information System (HRIS) was further strengthened and calibrated, and work is underway to extend this functionality to the nonmanagement staff of SRF as well. SRF conducted an Employee Satisfaction Survey internally, which showed an overall employee satisfaction level of close to 80 per cent, and showed a marked improvement on some factors of importance over the last survey conducted in 2008-09. The attrition figures
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the foundation at new sites and enable smooth and quick start up of projects. The management firmly believes that everyone using TQM everyday in ones own work is a great enabler for raising the organisations capability.
Information Technology
2010-11 was a year of consolidation for IT in SRF. The company conducted an IT Application portfolio analysis to determine which IT applications required to be expanded and which ones to be retired. SRF horizontally deployed many beneficial applications to other businesses to derive more value from its IT investments. The usage levels were explored
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and where required necessary steps were taken to improve adoption through system modification and training solutions. SRF expanded to Dahej this year and the IT team ensured that the necessary IT infrastructure and SRF core applications were extended to the new site in a timely manner. In a short time span of 4 months this new site was networked and brought up to the SRF level of IT systems and applications. The company continued on its journey on knowledge management and retention by setting up more collaboration and documentation websites. This leverages the latest developments in IT and communications technologies, essential for bringing about a change in the way the company works with information and collaborate across geographies. It also reduces time to seek and extract information. Alongside, a statutory compliance management solution was developed to keep track of all critical compliances. The company also redesigned and deployed the SRF website which is a window to SRF for many stakeholders. The new website has a much improved look with pertinent content and the navigation is much easier. This also provides a wealth of information about SRF to our shareholders.
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Community Partnerships
Building on its century-old legacy of socially responsible business and philanthropy SRF continues to contribute towards improving the quality of life for its people in the surrounding communities. The company carried on with its commitment of making a meaningful difference in the areas of health, education, natural resource management and affirmative actions on a sustainable basis. Through its social arm, SRF Foundation, the company continued to provide access to high quality education to students from both the privileged and less privileged backgrounds. The company through a unique public-private-community partnership (PPCP) model partnered with other corporates, government agencies, NGOs, employee volunteers, and the community at large for many of its community development projects. Apart from organising many health camps, HIV/AIDS awareness programmes and vocational training programmes, SRF undertook several other community development initiatives under the following programmes during 2010-11: Natural Resources Management (NRM) Project: The project, which benefits more than 3500 families covering 34 villages, aims at enhancing livelihood options by harnessing underutilised land and water resources for the rural poor. Mewat Rural Education Program (MREP): Started in December 2009 in collaboration with the Government of Haryana, MREP aims to provide holistic improvement in 25 primary and 15 Middle schools in 19 villages of Nuh block in Mewat District. Project Shiksha: The project aims to strengthen the primary education through mainstreaming of out-of-school children living in the vicinity of Bhiwadi where the companys chemical plant is located. The focus is on girl child education. School Infrastructure Development: During the financial year, a primary school in the village of Bibi Pur, near SRFs Bhiwadi factory was renovated in partnership with Charity Aid Foundation (CAF) and its NGO partner SARD under the Support My School Campaign of NDTV India. Community Health program: More than 350 patients were benefited from the cataract identification and operation camp that the company had organised in association with the All India Institute of Medical Sciences (AIIMS), New Delhi. Vocational College: The Company set up a vocational college in Chennai during the year, which is now ready to train and develop skilled manpower for the Industry. The venture is also meant to improve the employability of the youth. SriSambandh: As part of this outreach programme, SRF provides customised academic services to the partners who run educational programmes for deprived children.
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MoUs for New Schools: The SRF Foundation on behalf of The Shri Ram School entered into an MOU with the Haryana Government and the Police Department of Haryana to set up and run Dr. Sarvepalli Radhakrishnan School in Bhiwani and co-run a new school in Bhondsi. The foundation also entered into an MoU during the year to provide academic services to Sanskar Valley School in Bhopal, Madhya Pradesh.
committed to ensuring an effective Internal Control environment that provides assurance to the Board of Directors and the management that there is a structured system for: business planning and achievement of goals evaluating & managing risks ensuring reliability of financial and operational reporting ensuring legal and regulatory compliance protecting companys assets prevention and detection of fraud and error validation of IT security
Interrelated control systems, covering all financial and operating functions, assure fulfillment 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 financial and audit control systems are periodically reviewed by the Audit Committee of the Board of Directors which provides strategic guidance on Internal Controls.
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Risk Management
The objective of SRFs risk management framework is to identify emerging challenges that may adversely affect the Company, and manage risks in order to provide reasonable assurance for achieving the companys objectives. The Board of Directors is apprised of the developments in risk management in the Company on a periodic basis.
Strategic Risks
Strategic plans for the Companys businesses take into account likely risks in the industrial environment from competition, changing customer needs, obsolescence and technological changes. Annual plans that are drawn up consider the risks that are likely to impact the Companys objectives in that year, and the counter-measures put in place. All major new project proposals include a view on risks and counter-measures, at the time of evaluation. Appropriate structures have been put in place to proactively monitor and manage risks.
The Company has laid down detailed policy guidelines to deal with all aspects of financial risks viz. liquidity risks, credit risks and market risks.
Operational Risks
SRF has a combination of well documented Centrally issued policies & divisionally evolved procedures to manage operational risks. The Company has a well-defined delegation of power and relies on a TQM system of control points, comprehensive budgetary controls and review systems to monitor its operations. In addition, internal audits verify compliance to defined policies and procedures.
Cautionary Statement
Statements in this document relating to future status, events, or circumstances, including but not limited to statements about plans and objectives, are forward-looking statements based on estimates and the anticipated effects of future events on current and developing circumstances. Such statements are subject to numerous risks and uncertainties and are not necessarily predictive of future results. Actual results may differ materially from those anticipated in the forward-looking statements. SRF cannot be held responsible in any way for such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.
Financial Risks
With a diverse business portfolio, SRF is exposed to numerous financial risks. These primarily emanate from foreign currency exchange risk from exports of its products, imports of raw material and capital goods and servicing of
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Board of Directors
Composition of the Board
As on 31 March 2011, SRFs Board consisted of 10 Directors, of which four are executives of the Company (including the Chairman, who is an Executive Chairman) and six are independent. Table 1 gives the details of the Board during the year 2010-11.
Mr Arun Bharat Ram is the father of Mr Ashish Bharat Ram and Mr Kartikeya Bharat Ram. * Directorship in Foreign companies, Indian private limited companies and companies under Section 25 of the Companies Act, 1956 are not included.
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Legal firm(s) and consulting firm(s) that have a material association with the Company
Are not material supplier, service provider or customer or lessor or lessee of the Company, which may affect independence of the Director Are not a substantial shareholder of the Company i.e. do not own two percent or more of the block of voting shares Are not less than 21 years of age.
As mandated by Clause 49 of the Listing Agreement, none of the Directors is a member of more than ten Board level committees nor are they Chairman of more than five committees in which they are members.
Table 2: Board Meeting Attendance Record of the Directors in 2010-11 Name of the Director Mr Arun Bharat Ram Mr Ashish Bharat Ram Mr Kartikeya Bharat Ram Mr S P Agarwala Mr K Ravichandra Mr Vinayak Chatterjee Mr Satish K Kaura Mr M V Subbiah Mr Subodh Bhargava Mr Piyush G Mankad Number of Board Meetings Held 6 6 6 6 6 6 6 6 6 6 Number of Meetings Attended 6 6 5 6 4 5 5 4 5 6 Attended Last AGM? Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
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Remuneration of Directors
Table 3 gives the remuneration paid or payable to the Directors of SRF Limited and Table 4 gives details of Service Contracts Table 3: Remuneration Paid or Payable Name of Director Mr Arun Bharat Ram Mr Ashish Bharat Ram Mr Kartikeya Bharat Ram Mr S P Agarwala Mr K Ravichandra Mr Vinayak Chatterjee Mr Satish K Kaura Mr M V Subbiah Mr Subodh Bhargava Mr Piyush G Mankad Total Salary 132.00 72.00 66.00 4.08 274.08 Sitting Fees+ 2.45 1.60 0.70 0.80 1.00 1.20 7.75 Perquisites 75.00 35.00 24.60 2.92 137.52 Provident Fund & Superannuation@ 35.64 19.44 17.82 72.90 Commission (Provided) 225.00 125.00 125.00 5.00 5.00 5.00 5.00 5.00 5.00 505.00 (Rs/lakhs) Total 467.64 251.44 233.42 7.45 7.00 6.60 5.70 5.80 6.00 6.20 997.25
+ Includes sitting fee for attending the meetings of the Board of Directors and Committee Meetings including non statutory Committees of Directors @ Having regard to the fact that there is global valuation for Company as a whole for compensated absences and for contribution to gratuity fund, the amount applicable to an individual is not ascertainable and hence not included above
Table 4: Details of Service Contracts Name of Director Mr Arun Bharat Ram Mr Ashish Bharat Ram Mr Kartikeya Bharat Ram Mr K Ravichandra Tenure 5 years w.e.f. 15.06.2008 5 years w.e.f. 23.05.2010 5 years w.e.f 01.06.2011 subject to shareholders approval 3 years w.e.f. 01.10.2009 Notice Period 6 months by either party 3 months by either party 3 months by either party 3 months by either party Severance Fee Nil Nil Nil Nil
The Company has not issued any convertible securities to any Director
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The Board periodically reviews compliance reports of all laws applicable to the Company, prepared by the Company as well as steps taken by the Company to rectify instances of non-compliances. In addition to the above, pursuant to the revised Clause 49, the minutes of the Board meetings of your Companys unlisted subsidiary companies except the foreign subsidiaries and a statement of all significant transactions and arrangements entered into by the unlisted subsidiary companies are also placed before the Board.
Code of Conduct
The Companys Board has laid down a Code of Conduct for all Board members and senior management of the Company. The Code of Conduct is available on the website of the Company, www.srf.com. All Board members and designated senior management personnel have affirmed compliance with the Code of Conduct. A declaration signed by the Managing Director to this effect is enclosed at the end of this report.
Risk Management
The Company has laid down procedures to inform the Board members about the risk assessment and minimisation procedures. These procedures are being periodically reviewed to ensure that management controls risk through means of a properly defined framework.
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During 2010-11, the Audit Committee of SRF met five times on 7 May 2010, 23 July 2010, 20 September 2010, 26 October 2010 and 20 January 2011. Table 6 gives the attendance record of Directors who are members of the Audit Committee. Table 6: Attendance Record of Audit Committee Meetings during 2010-11 Name of Director Mr M V Subbiah Mr Vinayak Chatterjee Mr S P Agarwala Mr Subodh Bhargava Mr Piyush G Mankad Category Independent Independent Independent Independent Independent Number of Meetings Held 5 5 5 5 5 Number of Meetings Attended 3 5 5 4 5
All the members of the Audit Committee are financially literate while Mr. M.V.Subbiah, Chairman of the Audit committee, a known industrialist, is an accounting and financial management expert. Mr Anoop K Joshi, Company Secretary, is the Secretary to the Committee. The terms of reference of the Audit Committee are as per the guidelines set out in the Listing Agreement with the Stock Exchanges read with Section 292A of the Companies Act, 1956. These broadly include approval of annual internal audit plan, review of financial reporting systems, ensuring compliance with regulatory guidelines, discussions on quarterly, half yearly and annual financial results, interaction with statutory, internal and cost auditors, recommendation for appointment and
remuneration of statutory auditors and cost auditors. In addition, the Committee also reviews: a. b. c. Managements discussion and analysis of Companys operations, Periodical internal audit reports Letters of statutory auditors to management on internal control weakness, if any d. Statement of significant related party transactions e. Financial statements, in particular, investments made by the subsidiary companies, f. Risk framework.
Remuneration Committee comprised three Directors all of whom are independent. During 2010-11, the Remuneration Committee met on 25 February 2011. Table 7 gives the attendance record of Directors who are members of the Remuneration Committee.
b) Remuneration Committee
As on 31 March 2011, SRFs
Table 7: Attendance Record of Remuneration Committee Meetings during 2010-11 Name of Director Mr Satish K Kaura (Chairman) Mr S P Agarwala Mr Vinayak Chatterjee Category Independent Independent Independent Number of Meetings Held 1 1 1 Number of Meetings Attended 1 1 1
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Table 8: Shareholder and Investor Complaints Received and Redressed During 2010-11 Total Complaints Received 465 Total Complaints Redressed 465 Pending as on 31 March 2011 Nil
Management
Management Discussion and Analysis
This is given as a separate chapter in this Annual Report.
CEO/CFO certification
The Certificate in compliance with Clause 49(V) of the Listing Agreement was placed before the Board of Directors.
Disclosure Requirements
Disclosures on materially significant related party transactions are given at note no. 7 in the Notes to Accounts The Company has followed the Accounting Standards notified under Rule 3 of the Companies (Accounting Standards) Rules, 2006 in preparation of its financial statements The Company has complied with the regulations issued by SEBI and terms and conditions of Listing Agreement with the Stock Exchanges In compliance with the SEBI regulations on prevention of insider trading, the Company has laid down a comprehensive Code of Conduct for its management and staff. The code lays down guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with the shares of the Company, and cautioning them of the consequences of violations
Shareholders
Reappointment/Appointment of Directors
S.P. Agarwala and Vinayak Chatterjee, Directors are retiring by rotation and being eligible, offer themselves for reappointment. The present tenure of service contract of Kartikeya Bharat Ram, Deputy Managing Director is upto 31 May 2011. Kartikeya Bharat Ram has been re-appointed as Deputy Managing Director for a period of 5 years w.e.f. 1st June 2011 subject to approval by shareholders at ensuing Annual General Meeting. Brief resume of these Directors are given in the Notice of the 40th Annual General Meeting.
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English) and Jansatta (in Hindi). In addition, these results are posted on the website of the Company, www.srf.com. The website also contains other information regarding SRF available in the public domain. SRF communicates with its institutional shareholders through analysts briefing and individual discussions between the fund managers and the management team. The presentation, if any, made to analysts and funds managers is posted on the Companys website.
2008-09
2.30 P.M.
2009-10
3.30 P.M.
Nil
Postal Ballot
During the year, no resolution was passed through Postal Ballot.
Compliance
Mandatory Requirements
The Company is fully compliant with the applicable mandatory requirements of Clause 49 of the Listing Agreement.
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Chart 1: Share prices of SRF Limited versus Nifty for the year ended 31 March 2011
SRF
Nifty
Note: Both Nifty and SRF share prices are indexed to 100 as on 1 April 2010
case. For the cases for shares above 1,000, the Shareholders/ Investors Grievance Committee meets to approve valid transfer requests. After transfer, the physical shares are sent to the shareholders. The total number of shares transferred in physical form during the period from 1 April 2010 to 31 March 2011 was 35,642.
DP forwards the DRF and share certificates to the Registrar and Share Transfer Agent (RTA)
RTA after processing the DRF confirms or rejects the request to Depositories
If confirmed by the RTA, depositories give the credit to shareholder in his /her account maintained with DP
Depository System
Shareholders can trade in the Companys shares only in electronic form. The process for getting the shares de-materialised is as follows: Shareholder submits the shares certificate along with Dematerialisation Request Form (DRF) to Depository Participant (DP)
This process takes approximately 10-15 days from the date of receipt of DRF. As the trading in the shares of the Company can be done only in the electronic form, it is advisable that the shareholders who have the shares in physical form get their shares dematerialised.
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Table 12: Pattern of Shareholding by Ownership as on 31 March 2011 Category Shareholding Number of Shares Held Promoters Mutual Funds & UTI Banks, Financial Institutions, Insurance Companies Central Government/State Government Foreign Institutional Investors Private Corporate Bodies Indian Public NRIs / OCBs Others (including shares in transit) Total
@ Including holdings by NSDL and CDSL
Shareholding % 47.44 8.35 3.87 0 13.23 5.02 21.37 0.65 0.09 100.00
Outstanding GDRs/ ADRs/ Warrants or Any Convertible Instruments, Their Conversion Dates and Likely Impact on Equity
As on 31 March, 2011, there were no outstanding GDRs/ ADRs/ Warrants or any convertible instruments
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Financial Statements
Auditors Report
To The Members of SRF Limited 1. We have audited the attached Balance Sheet of SRF LIMITED (the Company) as at March 31, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: a. b. c. d. e. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i. ii. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011; in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
2.
3.
4.
iii. in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 015125N) Manjula Banerji Partner (Membership No. 086423) Gurgaon, May 9, 2011
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c. ii.
In respect of its inventory: a. b. As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.
c.
iii. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: a. The Company has not granted any loans during the year. At the year end, the outstanding balance of loan is Rs. Nil and the maximum amount involved during the year is Rs. 606.02 lakhs in respect of unsecured loan granted to a wholly owned subsidiary in the previous year. The rate of interest and other terms and conditions of such loan are, in our opinion, prima-facie, not prejudicial to the interests of the Company. The receipts of principal amounts and interest have been regular/ as per stipulations. There are no overdue amount in respect of loan granted as referred to in paragraph (iii)(a) above and interest thereon.
b. c. d.
According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. According to the information and explanations given to us and having regard to the view taken by the Company that the transactions, which are subjected to the provisions of sub-section (6) of section 299 of the Companies Act, 1956 (the Act), are not required to be entered in the register maintained in pursuance of section 301 of the Act, there were no transactions during the year that were required to be entered in this register. Notwithstanding the Companys view regarding the provisions of sub-section (6) of section 299 of the Act in respect of certain transactions, exceeding the value of Rs. 5 lakhs entered into during the year with parties listed under the provisions of sub-section (3) of section 301 of the Act, these have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.
v.
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vi. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public which have matured and are being reflected under Unclaimed fixed deposits (including interest). According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal on the Company. vii. In our opinion, the internal audit functions carried out during the year by the Company and firms of Chartered Accountants appointed by the Management has been commensurate with the size of the Company and the nature of its business. viii. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of nylon and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company. ix. According to the information and explanations given to us in respect of statutory dues: a. The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Works Contract Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. We are informed that there are no undisputed statutory dues that are outstanding at the year-end for a period of more than six months from the date they became payable. The details of dues of Income-tax, Wealth Tax, Sales Tax, Service Tax, Excise Duty, Customs Duty and Cess which have not been deposited as on March 31, 2011 on account of disputes are given below: Nature of the dues Forum where Dispute is pending Period to which the amount relates (various years covering the period) 1996-1997 1983-2008 1992-2008 2006 2005-2010 2004-2006 1998-2005 2007-2008 1987-2008 1988-2010 2006-2007 2007-2008 Amount* (Rs. lakhs)
b.
Excise Duty
High Court Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Upto Commissioner (Appeals)
213.79 6046.97 278.46 2.50 241.49 45.43 29.23 673.30 102.28 37.74 26.53 6.00
High Court Upto Commissioner (Appeals) Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Upto Commissioner (Appeals) High Court Sales Tax Appellate Tribunal Upto Commissioner (Appeals)
Sales Tax
* amount as per demand orders including interest and penalty wherever quantified in the Order. The following matters, which have been excluded from the above table, have been decided in favour of the Company but the department has preferred appeals at higher levels. The details are given below:
48
Excise Duty
Supreme Court High Court Customs, Excise & Service Tax Appellate Tribunal (CESTAT)
Service Tax
Customs, Excise & Service Tax Appellate Tribunal (CESTAT) High Court Rajasthan Tax Board
2005
7.05
Sales Tax
1995-1996 2001-2002
158.84 22.43
In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions or debenture holders. As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4 (xii) of the Order, is not applicable. As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4 (xiv) of the Order, is not applicable. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by wholly owned subsidiaries from banks are not, prima-facie, prejudicial to the interests of the Company. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained. In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long - term investment. As the Company has not made any preferential allotment of shares during the year, paragraph 4 (xviii) of the Order is not applicable. According to the information and explanations given to us, no security has been created for debentures issued during the year since they are unsecured.
xiv. xv.
xvi. xvii.
xviii. Since, the Company has not raised any money by way of public issue during the year, paragraph 4 (xx) of the Order, is not applicable. xix. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company has been noticed or reported during the year. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 015125N) Manjula Banerji Partner (Membership No. 086423) Gurgaon, May 9, 2011
49
SOURCES OF FUNDS
Shareholders Funds Share capital Reserves and surplus 1 2 6152.41 157848.12 164000.53 6152.41 120648.33 126800.74
3 70718.11 10498.58 81216.69 4 20942.24 266159.46 75019.36 18914.38 93933.74 20591.14 241325.62
APPLICATION OF FUNDS
Fixed assets Gross block Less : Depreciation Net block Capital work in progress 5 288698.46 108061.37 180637.09 14298.31 194935.40 20189.87 270722.37 93548.44 177173.93 12707.43 189881.36 16461.67
Investments current assets, loans and advances Inventories Sundry debtors Cash and bank balances Loans and advances
6 7
43872.99 44260.39 6385.53 15019.47 109538.38 8 56100.66 2403.53 58504.19 51034.19 266159.46 14
Net current assets Notes to the accounts In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Manjula Banerji Partner Place: Gurgaon Date: May 9, 2011 Arun Bharat Ram Chairman Subodh Bhargava Director Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer
Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary
50
PROFIT AND LOSS AccOUNT FOR THE YEAR ENDED MARcH 31, 2011
Schedule Year ended March 31, 2011 (Rs. lakhs) Year ended March 31, 2010 (Rs. lakhs)
INCOME
Gross Sales (including conversion income) * Less : Excise duty Net Sales (including conversion income) Other income 326735.91 28129.64 298606.27 9 11956.16 310562.43 * Includes tax deducted at source on conversion income - Rs. 0.03 lakhs (Previous Year - Nil) 234432.24 16324.48 218107.76 6815.92 224923.68
EXPENDITURE
Raw materials consumed (Increase) \ Decrease in Stock Purchases of goods for resale Manufacturing and other expenses Interest and finance charges Depreciation Transfer from revaluation reserve Profit before tax Provision for taxation Current tax Deferred tax charge Relating to earlier years Profit after tax Balance brought forward from the previous year Profit available for appropriation Appropriations Interim Dividend Corporate dividend tax Transfer to general reserve Debenture redemption reserve Balance carried to balance sheet Earnings per share - basic / diluted (Rs.) (Refer note 8 of Schedule 14) Notes to the accounts In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Manjula Banerji Partner Place: Gurgaon Date: May 9, 2011 Arun Bharat Ram Chairman Subodh Bhargava Director Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary 14 10 11 12 13 5 163590.43 (4480.40) 1463.91 58677.52 8392.30 15210.10 (39.29) 242814.57 67747.86 18400.00 999.50 4.15 48344.21 62713.76 111057.97 8470.50 1406.84 5000.00 3025.00 93155.63 79.90 112710.65 (2617.32) 3641.66 45867.26 6804.79 13213.20 (87.49) 179532.75 45390.93 11850.00 2483.87 115.04 30942.02 48206.80 79148.82 8470.50 1439.56 3500.00 3025.00 62713.76 51.14
51
AUThORISED
12,00,00,000 (Previous Year - 12,00,00,000) Equity shares of Rs. 10 each 10,00,000 (Previous Year - 10,00,000) Preference Shares of Rs. 100 each 12,00,000 (Previous Year - 12,00,000) Cumulative Convertible Preference Shares of Rs. 50 each 2,00,00,000 (Previous Year - 2,00,00,000) Cumulative Preference Shares of Rs. 100 each 12000.00 1000.00 600.00 20000.00 33600.00
ISSUED
6,64,49,244 (Previous Year - 6,64,49,244) Equity Shares of Rs.10 each 6644.92 6050.36 101.51 0.54 6152.41 6644.92 6050.36 101.51 0.54 6152.41
Of the subscribed and paid-up capital - 20,34,848 (Previous Year - 20,34,848) equity shares allotted as fully paid up as bonus shares by capitalisation of reserves Share capital suspense represents 5,408 (Previous Year - 5,408) equity shares which are awaiting allotment to the erstwhile shareholders of Flowmore Polysters Limited (FPL) pending settlement of calls in arrears in respect of their shareholding in FPL Nil (Previous Year - 1,81,425) equity shares of Rs. 10 each fully paid up, bought back and extinguished in accordance with section 77A of the Companies Act, 1956
As at March 31, 2011 (Rs. lakhs) 5527.11 21026.28 5610.60 739.75 9075.00 263.51** 22450.24 93155.63 157848.12
Represents amount received pursuant to Montreal Protocol Phaseout Programme of Refrigerant Gases The cash flow hedge reserve represents gain on mark to market of foreign currency derivatives in the nature of cash flow hedge net of deferred tax of Rs. 128.76 lakhs (Previous Year - Rs. 777.16 lakhs) Represents - Rs. 39.29 lakhs transferred to profit and loss account
52
SECURED LOANS
Debentures Loans from banks On cash credit / working capital demand loan Term loans* 2(i) 2(ii) & (3) 351.24 55366.87 70718.11 (1) 15000.00
UNSECURED LOANS
Short term loans and advances Banks Others** 10498.58 10498.58 81216.69
* Includes Rs. 26894.83 lakhs (Previous Year - Rs. 10356.99 lakhs) repayable within a year. ** Includes Nil (Previous Year - Nil) for Commercial Paper issued by the Company. The maximum amount due during the year is Rs. 2500 lakhs (Previous Year - Rs. 2500 lakhs)
Security Note/clauSe
As at March 31, 2011 (Rs. lakhs) 15000.00 As at March 31, 2010 (Rs. lakhs) 15000.00
Loan
Security
1.
1500 (Previous Year 1500), 13%, Listed, Secured Redeemable Non-Convertible Debentures of Rs. 10 lakhs each. Terms and conditions a) Redeemable at face value in three annual installments in the ratio of 30%, 30% and 40% commencing from the end of 4th year from the date of allotment. b) Call option at the end of 3rd year with step up of 0.5% p.a. if call option is not exercised.
Debentures are secured by legal mortgage in English form on certain immoveable properties of the Company situated in Gujarat. In addition, these debentures are secured by hypothecation of Companys moveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh and Kashipur in the State of Uttarakhand and an equitable mortgage of Companys immoveable properties, both present and future, situated at Viralimalai, Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Kashipur in the State of Uttarakhand, Malanpur (save and except superstructures) and Indore in the State of Madhya Pradesh. Secured by hypothecation of stocks, stores and book debts, both present and future at Manali, Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh, Kashipur and Pantnagar in the State of Uttarakhand.
2.
i) Cash credit / working capital demand loans ii) Term loan from banks
351.24 3626.70
11226.76 -
53
Loan
Security
3.
Term loans from banks are secured by:a)AHypothecation of Companys moveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh and Kashipur in the State of Uttarakhand. Of the above, term loan of Rs. 46047.57 lakhs (Previous Year Rs. 17403.67 lakhs) is additionally secured by hypothecation of Companys moveable properties both present and future, at Pantnagar in the State of Uttarakhand. b) Equitable Mortgage of Companys immoveable properties, both present and future, situated at Viralimalai, Gummidipoondi (freehold land) in the State of Tamil Nadu, Jhiwana in the State of Rajasthan and Kashipur in the State of Uttarakhand. Term Loans aggregating to Rs. 5370.57 lakhs (Previous Year Rs. 7102.17 lakhs) are additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Indore in the State of Madhya Pradesh. Term Loans aggregating to Rs. 3620.57 lakhs (Previous Year 4914.67 lakhs) is additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Gummidipoondi (leasehold land) in the State of Tamil Nadu. Term Loan of Rs. 41997.57 lakhs (Previous Year Rs. 12591.17 lakhs) is additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Malanpur (save and except superstructures) in the State of Madhya Pradesh. Term Loans of Rs. 38377.00 lakhs (Previous Year Rs. 7676.50 lakhs) are additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Manali in the State of Tamil Nadu. Out of the loans as at 3(i), the term loans aggregating to: a) Rs. 12009.00 lakhs (Previous Year Rs. 14676.50 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Gummidipoondi (leasehold land) in the State of Tamil Nadu.
54
Loan
Security
b) Rs. 10259.00 lakhs (Previous Year Rs. 12489.00 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Indore in the State of Madhya Pradesh. c) Rs. 5800.00 lakhs (Previous Year Rs. 7000.00 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Malanpur in the State of Madhya Pradesh (save and except superstructures). d) Rs. 9420.57 lakhs (Previous Year Rs. 11914.67 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Manali in the State of Tamil Nadu. e) Rs. 15629.57 lakhs (Previous Year Rs. 19591.17 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Pantnagar in the State of Uttarakhand. (ii) Term loan from banks 3942.60 29201.43 Term loans from Banks are secured by hypothecation of Companys moveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh, Kashipur and Pantnagar in the state of Uttarakhand. Out of the loans as at 3(ii), term loan of Rs. 38.01 lakhs (Previous Year Rs. 114.79 lakhs) is additionally secured by a charge on a fixed deposit of Rs. 30.00 lakhs with a bank. Out of the loans as at 3(ii), term loans aggregating to Rs. 38.01 lakhs (Previous Year Rs. 114.79 lakhs) are to be secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi (Freehold & leasehold) in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh, Kashipur and Pantnagar in the state of Uttarakhand. Total 70718.11 75019.36
Such hypothecation and equitable mortgage ranking pari-passu between term loans from banks / others and subject to prior charges created / to be created on certain specified moveable assets for working capital facilities mentioned in 2 above.
55
(Rs. lakhs)
(Rs. lakhs)
1726.43
654.49
308.45
2072.47
700.28
370.98
213.00
858.26
1214.21
1026.15
Capital-work-in-progress including capital advances of Rs. 2991.25 lakhs (Previous Year - Rs. 2237.36 lakhs)
56
ScHEDULE 6: INVESTMENTS
As at March 31, 2011 (Rs. lakhs) As at March 31, 2010 (Rs. lakhs)
LONG TERM
(valued at cost unless there is a decline in value, other than temporary) Trade Investments Unquoted 15,75,000 (Previous Year - 15,75,000) Equity shares of Rs. 10 each fully paid up of Arkay Energy (Rameshwaram) Limited 42,21,535 (Previous Year - 42,21,535) Equity shares of Rs. 10 each fully paid up of Malanpur Captive Power Limited Equity investment in Jingde Yangtze - Ganga Fluorine Chemical Co. Limited (Joint Venture)* Advance against investment in SRF Cord GmbH Non-trade investments Investment of Shares, Units, etc. Unquoted 25,00,000 (Previous Year - 25,00,000) Preference shares of Rs. 10 each fully paid up of SBL Industries Limited Less: Provision for diminution in value 6,70,000 (Previous Year - 6,70,000) Equity shares of Rs. 10 each fully paid up of Sanghi Spinners Limited Less: Provision for diminution in value Investment in subsidiaries Nil (Previous Year - 2,28,93,366) Equity shares of USD($) 1 each fully paid up of SRF Overseas Limited (A wholly owned subsidiary) 32,54,184 (Previous Year - 32,54,184) Equity shares of Rs. 100 each fully paid up of SRF Transnational Holdings Limited (A wholly owned subsidiary) Less: Amount written off 8,000 (Previous Year - 8,000) Equity shares of Rs. 100 each fully paid up of SRF Properties Limited (A wholly owned subsidiary) 20,002 (Previous Year - 2) Equity shares of USD($) 1 each fully paid up of SRF Fluor Private Limited (A wholly owned subsidiary) # Rs. 79 20,000 Equity shares allotted during the year 4,70,000 (Previous Year - 2,50,000) Equity shares of Rs. 10 each fully paid up of SRF Holiday Home Limited (A wholly owned subsidiary) 2,20,000 Equity shares allotted during the year 1,28,920 (Previous Year - 1,05,360) Equity shares of Euro 100 each fully paid up of SRF Global BV (A wholly owned subsidiary) 23,560 Equity shares allotted during the year 50,000 (Previous Year - 50,000) Equity shares of Rs. 10 each fully paid up of SRF Energy Limited (A wholly owned subsidiary) 1472.57 8514.85 1472.57 250.00 (250.00) 11.69 (11.69) 250.00 (250.00) 11.69 (11.69) 157.50 422.15 157.50 422.15 141.43 66.58
(1472.57) 589.56 #
47.00
25.00
7959.51
6534.60
5.00
5.00
57
As at March 31, 2011 (Rs. lakhs) 50,000 (Previous Year - 50,000) Equity shares of Rs. 10 each fully paid up of SRF Fluorochemicals Limited (A wholly owned subsidiary) 5.00
CURRENT INVESTMENTS
Non-trade investments Units of Mutual Funds Quoted
2,50,00,000 (Previous Year - Nil) Units of Rs. 10 each of SBI Mutual Fund - SBI Debt Fund Series - 370 Days - 12 Growth Unquoted 3,54,71,831 (Previous Year - Nil) Units of Rs. 10.08 each of Kotak Floater Long Term Fund Daily Dividend Reinvestment Option 2,51,95,750 (Previous Year - Nil) Units of Rs. 10 each of ICICI Prudential Interval Fund II Quarterly Interval Plan -B 2,40,00,000 (Previous Year - Nil) Units of Rs. 10 each of Kotak Quarterly Interval Plan Series 6 - Dividend Aggregate book value of quoted investments Aggregate book value of unquoted investments - Units of mutual funds - Others Market value of quoted investments Net asset value / repurchase price of units of mutual funds - unquoted
* Refer Note 11 of Schedule 14.
2500.00
3575.49 2519.58 2400.00 20189.87 2500.00 8495.07 9194.80 20189.87 2500.00 8503.80
Purchase Units Nos. Details of investments purchased and sold during the year Mutual Funds current Investments Quoted SBI Mutual Fund - SBI Debt Fund Series -370 Days -12 Growth Unquoted Reliance Liquidity Fund-Daily Dividend Reinvestment Option* Reliance Money Manager Fund - Institutional Option - Daily Dividend Plan* Reliance Liquid Fund - Treasury Plan - Institutional Option - Daily Dividend Option* Kotak Liquid (Institutional Premium) - Daily Dividend Reinvestment* Kotak Flexi Debt Scheme Institutional - Daily Dividend Reinvestment* Kotak Floater Short Term Scheme Institutional - Daily Dividend Reinvestment* Kotak Floater Long Term Scheme Institutional - Daily Dividend Reinvestment* Templeton IndiaTreasury Management Account Super Institutional Plan - Daily Dividend Reinvestment*
annual report 2010-11
58
Purchase Units Nos. Templeton India Ultra Short Bond Fund Super Institutional Plan Daily Dividend Reinvestment* SBI Magnum Insta Cash Fund - Daily Dividend Reinvestment Option* SBI - SHF - Ultra Short Term Fund - Institutional Plan - Daily Dividend Reinvestment Option* Canara Robeco Liquid Super Institutional Daily Dividend Reinvestment Fund* Canara Robeco Treasury Advantage Super Institutional Daily Dividend Reinvestment Fund* ICICI Prudential Institutional Liquid Plan - Super Institutional Daily Dividend Reinvestment* ICICI Prudential Flexible Income Plan Premium - Daily Dividend Reinvestment* ICICI Prudential Interval Fund II Quarterly Interval Plan - B Kotak Quarterly Interval Plan Series 6 - Dividend Equity Shares SRF Holiday Home Limited (Equity shares face value of Rs. 10 each) SRF Overseas Limited (Equity shares face value of USD($) 1 each) SRF Fluor Private Limited (Equity shares face value of USD($) 1 each) SRF Global BV (Equity shares face value of EURO 100 each)
* Units purchased includes dividend reinvested during the year
Sold (at cost) Units Nos. 48692643 68228870 82422183 24908413 20446111 8620267 3823646 22893366 Amount (Rs. lakhs) 4874.91 11428.54 8247.16 2504.54 2536.77 8622.22 4042.74 8514.85 -
Amount (Rs. lakhs) 4874.91 11428.54 8247.16 2504.54 2536.77 8622.22 4042.74 2519.58 2400.00 22.00 9.08 1424.91
48692643 68228870 82422183 24908413 20446111 8620267 3823646 25195750 24000000 220000 20000 23560
CURRENT ASSETS
Inventories Stores and spares (at cost or under) Stock in trade (at cost or net realisable value, whichever is lower) Raw materials Stock-in-process Finished Goods Sundry debtors# Debts over six months Unsecured - Considered good - Considered doubtful Other debts Unsecured - Considered good 44140.68 33864.34 119.71 283.33 158.59 257.48 24873.24 6495.35 8518.86 43872.99 11467.76 4178.51 6115.73 24903.10 3985.54 3141.10
59
As at March 31, 2011 (Rs. lakhs) Less: Provision for doubtful debts cash and bank balances Cash in hand Cheques in hand With scheduled banks on Current accounts Deposit accounts## Unclaimed dividend accounts 44543.72 283.33 44260.39 24.02 29.59 4111.49 1775.36 445.07 6385.53
As at March 31, 2010 (Rs. lakhs) 34280.41 257.48 34022.93 26.00 0.62 1813.53 4428.95 265.87 6534.97
6318.93 16.22 6335.15 16.22 6318.93 568.03 2207.68 1417.90 6217.22 16729.76 82190.76
Maximum amount outstanding during 2010-11 (Rs. lakhs) 1953.08 452.03 1752.23 16.85 2009-10 (Rs. lakhs) 1413.65 97.92 928.99 -
Includes Rs. 275.36 lakhs (Previous Year Rs. 193.70 lakhs) as margin money and Nil (Previous Year - Rs. 4235.25 lakhs) deposit for interim dividend.
includes Rs. 1046.40 lakhs (Previous year - Rs. 1024.95 lakhs) as interest free security deposits for accommodation taken on lease for Companys officers / directors and various offices taken on lease by the Company 60
CURRENT LIAbILITIES
Acceptances Sundry creditors: Total outstanding dues of Micro and Small enterprises Total outstanding dues to creditors other than Micro and Small enterprises# Book Overdraft Security deposits Unclaimed dividend* Interim dividend payable Corporate dividend tax Unclaimed fixed deposits (including interest)* Interest accrued but not due on loans 23382.74 146.34 30539.86 506.29 445.07 11.99 1068.37 56100.66 623.98 1779.55 2403.53 58504.19
PROVISIONS
Provision for taxation (net of payments) Employee Benefits
# Sundry Creditors include Rs. 27.49 lakhs (Previous Year - Rs. 0.37 lakhs) due to SRF Overseas Limited and Nil (Previous Year - Rs. 123.06 lakhs) due to SRF Technical Textiles (Thailand) Limited, the wholly owned chain subsidiaries of SRF Limited * Will be credited to Investor Education and Protection Fund if not claimed within seven years from the date of issue of dividend / Interest Warrant, and the date the Fixed Deposits have matured
Claims Export Incentives Dividend on current non-trade investments Profit on sale of investment in subsidiary Provision no longer required written back Scrap sales Profit on sale of fixed assets Exchange fluctuation Interest - from customers* - on loans and deposits* - on income tax refunds - from others Miscellaneous*#
* Includes income-tax deducted at source Rs. 4.10 lakhs (Previous Year Rs. 5.14 lakhs) # Includes gain of Rs. 6417.04 lakhs (Previous Year - Nil) on account of cancellation / net settlement of certain long term contracts relating to sale of Certified Emission Reductions (CERs).
61
Year ended March 31, 2010 (Rs. lakhs) 9989.81 114188.60 124178.41 11467.76 112710.65
Year ended March 31, 2010 (Rs. lakhs) 1195.20 16633.05 850.14 116.47 3645.38 888.25 3046.05 2244.19 9092.23 810.54 1348.57 568.97 252.93 504.87
62
1643.81 21322.79 929.52 268.50 3990.19 1089.07 5095.64 1392.46 11911.80 1382.33 1768.29 624.63 269.64 590.41
Year ended March 31, 2011 (Rs. lakhs) Travel Auditors Remuneration - Audit Fees - For limited review of unaudited financial results - For corporate governance, consolidated financial statements and other certificates - For tax audit Directors sitting fees Selling commission Provision for doubtful debts / advances Bad debts / advances written off Fixed assets / inventory written off Increase / (decrease) in excise duty on closing stock Miscellaneous expenses
*
Year ended March 31, 2010 (Rs. lakhs) 732.94 36.00 21.00 5.95 5.00 7.50 578.00 199.01 65.86 287.87 2731.29 45867.26
793.41 45.00 24.00 5.20 5.00 7.75 1120.27 176.94 30.52 251.74 121.25 3817.36 58677.52
Includes Research and development expenses as per schedule 12a. # Includes Nil (Previous Year - Rs. 15.00 lakhs) donation paid to a political party Indian National Congress
Raw materials consumed Salaries, wages, bonus, etc. Contribution to provident fund, superannuation, employees state insurance, gratuity and other funds Workmen and staff welfare expenses Power and Fuel Rent Stores, spares and components consumed Repairs and maintenance - Building - Plant and machinery - Other maintenance Insurance Rates and taxes Travel Professional and legal charges Depreciation Miscellaneous
Year ended March 31, 2010 (Rs. lakhs) 3656.29 1550.14 1598.36 6804.79
(ii)
USE OF ESTIMATES The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balance of assets and liabilities, revenues and expenses and disclosures relating to contingent liabilities. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.
(iv) DEPREcIATION
a. Depreciation on fixed assets is provided on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956 or at rates arrived at on the basis of the balance useful lives of the assets based on technical evaluation / revaluation of the related assets, whichever is higher, except in case of the following assets where depreciation is provided at the rates indicated against each assets: Vehicles Mobile Phones b. c. d. 21% 31.67% 95% Data Processing Equipments -
Depreciation is calculated on a pro rata basis except that, assets costing upto Rs. 5,000 each are fully depreciated in the year of purchase. On assets sold, discarded, etc. during the year, depreciation is provided upto the date of sale / discard. In respect of revalued assets, a transfer is made from the revaluation reserve to the profit and loss account for the sum of the differences as below: the difference between the amounts of depreciation on revalued value at rates based on useful life prescribed by valuers and on the historical cost at rates prescribed in Schedule XIV, if the former is higher. where assets are discarded / disposed off, the difference between the written down value as per the revalued value and historical cost.
64
e. f.
No write-off is made in respect of leasehold land as the lease is a perpetual lease. Depreciation (amortization) on intangibles is provided on straight line method as follows: Trademark and technical knowhow over a period of ten years Software over a period of three years Goodwill over a period of ten years
(v)
FOREIGN cURRENcY TRANSAcTIONS Transactions in foreign currencies are recorded on initial recognition at the exchange rate prevailing on the date of the transaction. All monetary items are re-stated at the exchange rate prevailing as at the date of the balance sheet and the loss or gain is taken to the profit and loss account as exchange fluctuation. The Company uses foreign exchange forward and option contracts to hedge its exposure to movements in foreign exchange rates relating to certain firm commitments and highly probable forecast transactions. Effective April 1, 2007, the Company designates such contracts in a cash flow hedge relationship by applying the principles set out in Accounting Standard (AS) 30 - Financial Instruments: Recognition and Measurement. Forward and option contracts are fair valued at each reporting date. The resultant gain or loss from these contracts that are designated and effective as hedges of future cash flows are recognised directly in Cash Flow Hedge Reserve under Reserves and Surplus, net of applicable deferred income taxes and the ineffective portion is recognised immediately in profit and loss account. Amount accumulated in Cash Flow Hedge Reserve are reclassified to profit and loss account in the same periods during which the forecasted transaction affects the profit and loss. Hedge Accounting is discontinued when the hedging instrument expires, or is sold or terminated or exercised or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in Cash Flow Hedge Reserve is retained there until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss is immediately transferred from the Cash Flow Hedge Reserve to the profit and loss account. Contracts that are not designated as hedges of future cash flows are fair valued at each reporting date and the resultant gain or loss is recognised in the profit and loss account.
(vii) INVENTORIES
Stores and spares are valued at cost or under. Stock in trade is valued at cost or net realizable value, whichever is lower. The bases of determining the cost for various categories of inventory are as follows: Stores, spares and raw materials Stock in trade Process stocks and finished goods By products Direct cost plus appropriate share of overheads and excise duty, wherever applicable At estimated realizable value Weighted average rate
65
(viii) INVESTMENTS
Long term investments are valued at cost unless there is a decline in value other than temporary. Current investments are stated at lower of cost or fair value.
(x)
PROVISIONS AND cONTINGENT LIABILITIES The Company recognizes a provision when there is a present obligation as a result of past events and it is more likely than not that an outflow of resources would be required to settle the obligation and a reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
(xii) RESERVES
a. b. c. Revaluation reserve represents the difference between the revalued amount of the assets and the written down value of the assets on the date of revaluation net of withdrawals therefrom. Capital receipts are credited to capital reserve. Cash flow hedge reserve represents the gain or loss arising out of adjusting the hedging instruments to mark to market net of applicable deferred income taxes.
(xiii) TAXATION
a. b. The income tax liability is provided in accordance with the provisions of the Income tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
2.
CAPITAL COMMITMENTS
The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs. 12965.89 lakhs (Previous Year - Rs. 4283.70 lakhs). Further, the Company is to make investment in the following companies i) ii) SRF Cord GmbH - Nil (Previous Year Euro 98000). SRF Holiday Home Limited Rs. 353.00 lakhs (Previous Year Nil)
66
3.
As at March 31, 2010 (Rs. lakhs) 5652.81 249.38 897.00 2881.55 210.10
Amount deposited Rs. 315.92 lakhs (Previous year - Rs. 222.60 lakhs) Amount deposited Rs. 7.16 lakhs (Previous Year - Rs. 7.16 lakhs) Amount deposited Rs. 8.00 lakhs (Previous Year Rs. 119.06 lakhs) In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs. 30300.00 lakhs and levied a stamp duty of Rs. 2372.50 lakhs and imposed a penalty of Rs. 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs. 2776.18 lakhs and not the entire undertaking valued at Rs. 30300.00 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Honble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Honble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal. As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs. 1793.81 lakhs (Previous Year - Rs. 1813.21 lakhs) and Rs. 38.00 lakhs (Previous Year - Rs. 28.10 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.
All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company. b. c. Liability on account of Bank Guarantees Rs. 1137.53 lakhs (Previous Year Rs. 745.04 lakhs) Guarantees given to a bank for repayment of financial facilities availed by wholly owned subsidiaries: (i) Nil [Previous Year Baht 900.00 millions (Equivalent to USD 27.81 millions)] and Nil (Previous Year USD 6.00 millions). Outstanding amount as at the year end is Nil [Previous Year Baht 825.70 millions (Equivalent to USD 25.52 millions)]
(ii) USD 20 million (Previous Year Nil). Outstanding amount as at the year end is USD 20 million (Previous Year Nil) (iii) AED 10.35 million (Previous Year Nil) and Euro 0.2 million (Previous Year Nil). Outstanding amount as at the year end is Nil (Previous Year Nil) d. The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs. 76.04 lakhs (Previous year - Rs. 416.29 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.
4.
67
5.
MANAGERIAL REMUNERATION
(i) (a) chairman / Managing Director / Deputy Managing Director / Whole time Director Salary Contribution to Provident and Superannuation Funds Value of Perquisites Commission (Provided) Sub-Total (b) Non Executive Directors Commission (Provided) Directors Sitting Fees Sub-Total Total 30.00 7.75 37.75 997.25 30.00 7.50 37.50 778.18 Year Ended March 31, 2011 Rs. lakhs 274.08 72.90 137.52 475.00 959.50 Year Ended March 31, 2010 Rs. lakhs 221.72 58.86 120.10 340.00 740.68
As there is a global contribution to gratuity fund, the amount applicable to an individual employee is not ascertainable and accordingly, contribution to gratuity fund in respect of directors has not been considered in the above computation. Further, the liability on account of compensated absences in respect of directors has not been considered above, since the provision is based on an actuarial basis for the Company as a whole. (ii) computation of managerial remuneration in accordance with section 198 of the companies Act, 1956 Particulars Profit before taxation Add: Wealth tax Managerial Remuneration including commission Loss on sale / write off of assets as per accounts Provision for Doubtful Debts / Advances / investments Sub Total Less: Profit on sale of assets as per accounts Dividend on current, non-trade investments Profit on sale of investment in subsidiary Excess Provision written back Sub Total Profit as per section 349 of the Companies Act, 1956 Maximum remuneration as commission and/or salary including perquisites @ 10% of net profit of Rs. 68377.55 lakhs (Previous Year @ 10% of Rs. 45829.93 lakhs) which can be paid to Managing Directors/Whole time Directors under section 309 of the Companies Act, 1956 Remuneration paid to Managing Directors / Whole Time Directors Maximum commission payable to Non Executive Directors @ 1% of net profit of Rs. 68377.55 lakhs (Previous Year Rs. 45829.93 lakhs) under section 309 of the Companies Act, 1956 Commission payable / paid to Non Executive Directors Year Ended March 31, 2011 Rs. lakhs 67747.86 12.40 997.25 282.26 176.94 1468.85 5.25 473.23 285.15 75.53 839.16 68377.55 6837.75 Year Ended March 31, 2010 Rs. lakhs 45390.93 11.00 778.18 264.87 1054.05 58.12 83.98 472.95 615.05 45829.93 4582.99
959.50 683.77
740.68 458.30
30.00
30.00
68
6.
7.
A.
* Pursuant to the Scheme of Arrangement between Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited (the transferor companies) and Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited, KAMA Realty (Delhi) Limited and KAMA Holdings Limited (the transferee companies) and their respective shareholders and creditors :-
69
a) b)
real estate divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited was transferred and vested in Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited and KAMA Realty (Delhi) Limited respectively ; and investment divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited were transferred and vested in KAMA Holdings Limited with effect from March 31, 2011.
The transferor companies had conducted their business in respect of their respective real estate divisions and investment divisions in trust and on behalf of the respective transferee companies from the appointed date of the said Scheme - April 1, 2010
B.
March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, 2011 2010 2011 2010 2011 2010 2011 2010
369.43 115.28
165.31 2650.54
154.44
9.28 9.60
7.07
9.60
12.00
12.00
84.00
70
(Rs. lakhs) Nature of Transactions Managerial Remuneration paid to(Refer note 5(i) of schedule 14) Interest received / receivable on ICDs / loans from - SRF Overseas Limited Interest on delayed payment - SRF Industex Belting (Pty) Limited Reimbursement of expenses from - SRF Overseas Limited - SRF Technical Textiles (Thailand) Limited - SRF Industex Belting (Pty) Limited - SRF Global BV - KAMA Holdings Limited - SRF Foundation - SRF Polymers Investments Limited - Shri Educare Limited - Others Reimbursement of expenses paid - SRF Overseas Limited - SRF Foundation Loans / deposits given to - SRF Overseas Limited Loans / deposits received back from - SRF Overseas Limited Recovery of sums written off - SRF Foundation Increase in security deposit to - KAMA Realty (Delhi) Limited Donations to - SRF Foundation Investments made in - SRF Global BV 1424.91 6510.95 550.00 4.96 30.00 10.00 45.00 606.02 8256.24 6833.86 0.76 1.08 2.26 6.24 5.18 19.26 8.47 0.19 15.96 39.18 38.49 0.57 14.86 2.01 14.62 3.68 11.92 (a) Year ended (b) Year ended (c) Year ended (d) Year ended
March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, 2011 2010 2011 2010 2011 2010 2011 2010
959.50
740.68
0.92
149.14
4.25
71
(Rs. lakhs) Nature of Transactions - SRF Holiday Home Limited - SRF Energy Limited - SRF Fluorochemicals Limited - SRF Fluor Private Limited Investments provided for - Jingde Yangtze- Ganga Fluorine Chemical Co. Limited Investments sold to - SRF Tech Textile B.V. (including profit on sale Rs. 285.15 lakhs) Guarantees given - SRF Technical Textiles (Thailand) Limited In Millions Baht In Millions USD - SRF Tech Textile B.V. In Million USD - SRF Overseas Limited In Million AED In Million Euro 8800.00 131.43 (a) Year ended (b) Year ended (c) Year ended (d) Year ended
March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, 2011 2010 2011 2010 2011 2010 2011 2010
22.00 9.08
Nature of Transactions Balances outstanding as at the year end:Receivables - SRF Overseas Limited - SRF Tech Textile B.V. - SRF Transnational Holdings Limited - SRF Technical Textiles (Thailand) Limited - SRF Industex Belting (Pty) Limited - SRF Polymers Investments Limited - Shri Educare Limited - KAMA Holdings Limited - SRF Global BV - Others
(a) As at
(b) As at
(c) As at
(d) As at
March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, 2011 2010 2011 2010 2011 2010 2011 2010
0.19 6.05
6.40
72
(Rs. lakhs) Nature of Transactions Payables - SRF Overseas Limited - SRF Technical Textiles (Thailand) Limited - KAMA Holdings Limited Loans given outstanding - SRF Overseas Limited Security Deposits outstanding - SRF Polymers Investments Limited - Bhairav Farms Private Limited - Narmada Farms Private Limited - KAMA Realty (Delhi) Limited Equity Investment outstanding - SRF Overseas Limited - SRF Transnational Holdings Limited Less : Amount written off - SRF Properties Limited - SRF Holiday Home Limited - SRF Energy Limited - SRF Fluorochemicals Limited - SRF Global BV - SRF Fluor Private Limited # Rs. 79 - Jingde Yangtze - Ganga Fluorine Chemical Co. Limited Guarantees outstanding - SRF Overseas Limited In Million AED In Million Euro - SRF Technical Textiles (Thailand) Limited In Millions Baht In Millions USD - SRF Tech Textile B.V. In Million USD 10.35 0.20 1472.57 8514.85 1472.57 300.00 310.00 310.00 30.00 300.00 310.00 310.00 606.02 27.49 0.37 123.06 75.03 (a) As at (b) As at (c) As at (d) As at
March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, 2011 2010 2011 2010 2011 2010 2011 2010
(1472.57) (1472.57) 589.56 47.00 5.00 5.00 7959.51 9.08 589.56 25.00 5.00 5.00 6534.60 # 141.43
20.00
900.00 6.00 -
73
8.
9.
EMPLOYEE bENEFITS
The Company has classified various benefits provided to employees as under: i) Defined contribution plans a) b) c) Superannuation fund Provident fund Employees State Insurance Corporation
The expenses incurred on account of the above benefits have been included in Schedule 12 Manufacturing and other expenses under the head Contribution to provident fund, superannuation, employees state insurance, gratuity and other funds ii) Defined benefit plans a) b) Gratuity Compensated absences earned leaves
In accordance with Accounting Standard (AS) 15 (Revised 2005), actuarial valuation was obtained from the actuary in respect of the aforesaid defined benefit plans using Projected Unit Credit Method. The details of the same are as follows:Gratuity (Funded) Year ended March 31, 2011 Discount rate (per annum) Future salary increase Expected rate of return on plan assets In service mortality 7.5% 6.5% 8% LIC (1994-96) duly modified 58 years 3.00 2.00 1.00 Year ended March 31, 2010 7.5% 6.5% 8% LIC (1994-96) duly modified 58 years 3.00 2.00 1.00 compensated Absences earned leaves (Unfunded) Year ended March 31, 2011 7.5% 6.5% LIC (1994-96) duly modified 58 years 3.00 2.00 1.00 Year ended March 31, 2010 7.5% 6.5% LIC (1994-96) duly modified 58 years 3.00 2.00 1.00
The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards.
74
(Rs. lakhs) Year ended March 31, 2010 1458.60 116.69 403.39 (141.21) 51.01 1888.48 96.49% 1.64% 1.87% 100.00%
(Rs. lakhs) compensated Absences earned leaves (Unfunded) As at March 31, 2011 1021.92 (1021.92) As at March 31, 2010 798.22 (798.22)
75
(Rs. lakhs) compensated Absences earned leaves (Unfunded) Year ended March 31, 2011 118.07 59.87 149.81 327.75 Year ended March 31, 2010 89.13 54.76 15.72 159.61
Experience on actuarial Gain / (Loss) for Benefit Obligation and Plan Assets
(Rs. lakhs) Year ended On Plan Present value of obligation On Plan Assets March 31, 2011 (415.45) (34.96) March 31, 2010 (143.83) 51.02 March 31, 2009 (538.55) (39.30) March 31, 2008 * * March 31, 2007 * *
* The details of experience adjustments arising on account of plan assets and liabilities as required by paragraph 120(n)(ii) of AS 15 (Revised) on Employee Benefits are not available in the valuation report and hence, are not furnished.
76
* The details of experience adjustments arising on account of plan assets and liabilities as required by paragraph 120(n)(ii) of AS 15 (Revised) on Employee Benefits are not available in the valuation report and hence, are not furnished.
The Companys best estimate of the contribution expected to be paid in the next year is Rs. 195.40 lakhs (Previous Year Rs. 120.83 lakhs) for gratuity and Rs. 158.24 lakhs (Previous Year - Rs. 122.74 lakhs) for leave encashment.
Superannuation - Defined Contribution Plan where contributions are made to a Trust which in turn contributes
to ICICI Prudential Life Insurance Co. Limited Apart from being covered under the Gratuity Plan described above, the employees of the Company also participate in a defined contribution superannuation plan maintained by the Company. The Company has no further obligations under the plan except making annual contributions based on a specified percentage of each covered employees salary. From 1st November, 2006, the Company provided an option to the employees to receive the said benefit as cash compensation along with salary in lieu of the superannuation benefit. Thus, no contribution is required to be made for the category of employees who opted to receive the benefit in cash.
10.
SEGMENT REPORTING
A. Business Segments
Based on the guiding principles laid down in Accounting Standard (AS) - 17 Segment Reporting, the Companys business segments include: Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development Chemicals and Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics business and its research and development. Packaging Film Business includes Polyester Films.
Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable. In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:
77
Information about Business Segments Segment Revenue, Results, Assets, Liabilities and capital Employed
Particulars Segment Revenue a) Technical Textiles Business (TTB) - External sales - Inter-segment sales - Total b) Chemicals and Polymers Business (CPB) - External sales - Inter-segment sales - Total c) Packaging Films Business (PFB) - External sales - Inter-segment sales - Total Total Segment revenue Less: Inter Segment revenue Net Sales / Income from Operations Add: Unallocable Income Total Revenue Segment Results (Profit / (Loss) before interest and tax from each segment) a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Segment results Less: i) Interest & Finance Charges Less: ii) Other Unallocable expenses net of income Profit before tax Less: Provision for taxation Profit after tax 15522.27 29392.33 34766.67 79681.27 8392.30 3541.11 67747.86 19403.65 48344.21 19582.26 27680.69 4068.82 51331.77 6804.79 (863.95) 45390.93 14448.91 30942.02 87131.26 87131.26 306918.36 590.69 306327.67 4234.76 310562.43 33648.16 33648.16 219772.97 388.00 219384.97 5538.71 224923.68 74666.65 0.42 74667.07 65769.23 6.77 65776.00 144529.76 590.27 145120.03 119967.58 381.23 120348.81 Year ended March 31, 2011 (Rs. lakhs) Year ended March 31, 2010 (Rs. lakhs)
78
Particulars
OThER INFORMATION
Segment Assets a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Add: Unallocable Assets Total Assets Segment Liabilities a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Add: Unallocable Liabilities Total Liabilities Segment capital Employed (Segment assets less segment liabilities) a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Add : Unallocable assets less liabilities Total capital employed capital Expenditure a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) d) Unallocated Total Depreciation a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) d) Unallocated Total 8365.68 3508.48 2984.90 311.75 15170.81 7641.86 3240.67 1979.75 263.43 13125.71 6878.11 9856.95 2891.07 858.26 20484.39 29498.64 6044.41 16591.42 465.13 52599.60 120900.31 63933.39 48521.97 233355.67 27193.19 260548.86 123715.54 52324.28 38364.82 214404.64 21271.09 235675.73 31043.34 7946.56 14525.74 53515.64 4988.55 58504.19 23297.43 4958.47 9382.66 37638.56 9569.61 47208.17 151943.65 71879.95 63047.71 286871.31 32181.74 319053.05 147012.97 57282.75 47747.48 252043.20 30840.70 282883.90
B.
Geographical Segments
Year ended March 31, 2011 (Rs. lakhs) 230708.97 79853.46 310562.43 Year ended March 31, 2010 (Rs. lakhs) 168699.24 56224.44 224923.68
79
11.
50%
12.
Nature of Derivative
No. of Deals As at March 31, 2011 March 31, 2010 7 1 March 31, 2011 Hedging -
Purpose As at March 31, 2010 Hedging Hedging Conversion of INR denominated Liabilities to USD Conversion of Fixed INR denominated Interest Liability to Floating INR denominated liability
Foreign currency (In Millions) As at March 31, 2011 12.25 March 31, 2010 62.25 13.00
Amount (Rs. lakhs) As at March 31, 2011 7731 March 31, 2010 37738 5836
EUR / INR Option Strips USD / INR Option Strips Principal Only Swap
3 -
1.21
542
Conversion of Fixed INR denominated Interest Liability to Floating INR denominated liability
10000
10000
80
Nature of Derivative
No. of Deals As at March 31, 2011 March 31, 2010 March 31, 2011
Purpose As at March 31, 2010 Floating JPY interest payments (with cap of 7%) in exchange of fixed INR interest receipts USD/ INR Buy for Hedging of Imports Forward Sell Contracts EUR/ INR Buy for Hedging of Imports
Foreign currency (In Millions) As at March 31, 2011 March 31, 2010
5000
USD / INR Sell Forwards USD / INR Buy Forwards EUR / INR Sell Forwards EUR / INR Buy Forwards
1 1 5 20
3 7 3
Forward Sell Contracts USD/ INR Buy for Hedging of Imports Forward Sell Contracts EUR/ INR Buy for Hedging of Imports
Foreign currency Exposures that are not hedged by derivative instruments or otherwise are as follows:
As at March 31, 2011 Particulars Term Loans USD PCFC USD Buyers Credits USD Loan given including interest USD Foreign currency (in millions) 46.96 14.00 17.68 Amount (Rs. lakhs) 20940.16 6242.60 7882.68 As at March 31, 2010 Foreign currency (in millions) 37.88 26.00 27.72 1.84 Amount (Rs. lakhs) 17005.10 11671.40 12444.56 826.31
13.
The details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited as on March 31, 2011 on account of disputes are given below: Name of the Statute Nature of the dues Forum where Dispute is pending Period to which the amount relates (various years covering the period) 1996-1997 1983-2008 1992-2008 2006 2005-2010 2004-2006 1998-2005 2007-2008 1987-2008 1988-2010 2006-2007 2007-2008 Amount* (Rs. lakhs)
Excise Duty
High Court Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Upto Commissioner (Appeals)
213.79 6046.97 278.46 2.50 241.49 45.43 29.23 673.30 102.28 37.74 26.53 6.00
High Court Upto Commissioner (Appeals) Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Upto Commissioner (Appeals) High Court Sales Tax Appellate Tribunal Upto Commissioner (Appeals)
Sales Tax
* amount as per demand orders including interest and penalty wherever quantified in the Order
The following matters, which have been excluded from the above table, have been decided in favour of the Company but the department has preferred appeals at higher levels. The details are given below: Name of the Statute Nature of the dues Excise Duty Forum where Dispute is pending Period to which the amount relates (various years covering the period) 1994-2001 1994-1999 1989-1995 2005 1995-1996 2001-2002 Amount (Rs. lakhs)
Supreme Court High Court Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Customs, Excise & Service Tax Appellate Tribunal (CESTAT) High Court Rajasthan Tax Board
14.
OPERATING LEASES
The Company has entered into operating lease agreements for various premises taken for accommodation of Companys officers / directors and various offices of the Company. These arrangements are both cancellable and non-cancellable in nature and range between three to five years. As at March 31, 2011, the future minimum lease payments under non-cancellable operating leases as set out below: (Rs. lakhs) Particulars Total of future minimum lease payments under noncancellable operating leases for each of the following periods - Not later than one year - Later than one year and not later than five years - Later than five years Lease rent recognized in the profit and loss account As at March 31, 2011 As at March 31, 2010
15.
82
MT MT
1800 59500
1800 59500
b.
Actual production
UNIT Year ended March 31, 2011 11183.79 51879.77 195.10 8332.12 11496.68 2399.44 18.48 31863.28 69992.64 22627.16 1329.42 58254.20 Year ended March 31, 2010 6840.03 49741.86 7121.86 11451.93 2531.37 81.14 34707.22 65322.20 20904.25 966.56 37214.06
Synthetic Filament Yarn including Industrial Yarn/Tyre Cord @/Twine @@ Nylon Tyre Cord Fabric/Industrial Yarn Fabric / Polyester Tyre Cord Fabric* Laminated Fabric Nylon compounding chips@@ Fluorocarbon Refrigerant Gases HFC 134a Hydrofluoric Acid (Anhydrous) @ Gypsum (By Product) Hydrochloric Acid (By Product) Chloromethanes @ Fluorospecialities Chemicals Packaging Films
Installed capacity is as certified by management @ * Excludes captive consumption
MT MT Lakhs SQM MT MT MT MT MT MT MT MT MT
Excludes Nil (Previous Year 323.07 MT) of nylon tyre cord fabric/industrial yarn/industrial fabric produced by the Company on conversion contract * Includes 696.86 MT (Previous Year 523.65 MT) of nylon tyre cord fabric/industrial yarn fabric produced outside the Company by the Companys conversion contractors @@ Includes 325.80 MT (Previous Year 85.56 MT) of nylon compounding chips produced outside the Company by the Companys conversion contractors.
c.
Synthetic Filament Yarn including Industrial Yarn/ Tyre Cord / Twine Nylon Tyre Cord Fabric/ Polyester Tyre cord fabric / Industrial Yarn Fabric* Laminated Fabric# Nylon compounding chips Fluorocarbon Refrigerant Gases HFC 134a Hydrofluoric Acid (Anhydrous) Gypsum (By Product) Hydrochloric Acid (By Product)
767.62
877.09
1958.78
927.53
1874.19
747.33
1285.79
83
As at March 31, 2011 closing Quantity (MT) Chloromethanes** Fluorospecialities Chemicals Packaging Films Others *** Total
* ** *** #
As at March 31, 2010 closing Quantity (MT) 1041.90 99.36 858.10 Value (Rs. lakhs) 178.75 855.68 702.07 113.95 6115.73
As at March 31, 2010 Opening Quantity (MT) 572.76 23.80 354.97 Value (Rs. lakhs) 61.31 208.27 283.84 67.37 3393.62
includes yarn in process of conversion into fabric includes chloromethanes in process of conversion into refrigerant gases figures of others include goods purchased for resale quantity in lakhs SQM
d.
Turnover*
Year ended March 31, 2011 Quantity (MT) Value (Rs. lakhs) 17391.35 132927.17 5123.45 13527.63 27744.77 10310.51 267.94 1299.70 8197.52 9543.52 96975.12 1.28 1508.67 1917.28 326735.91 28129.64 298606.27 Year ended March 31, 2010 Quantity (MT) 6575.27 49561.66 6995.24 11802.79 2200.12 34652.72 65338.70 20435.11 891.00 36710.93 Value (Rs. lakhs) 9584.34 114474.39 9827.44 38939.63 5409.03 252.46 563.90 5403.78 6573.96 37960.53 6.06 3830.24 1606.48 234432.24 16324.48 218107.76
Synthetic Filament Yarn including Industrial Yarn/Tyre Cord/Twine Nylon Tyre Cord Fabric/ Polyester tyre cord fabric / Industrial Yarn Fabric Laminated Fabric# Nylon compounding chips Fluorochemicals & Allied Products ** HFC 134a Gypsum (By Product) Hydrochloric Acid (By Product) Chloromethanes Fluorospecialities Chemicals Polyester Films Conversion Income Traded goods (goods purchased for resale) Waste/Others Gross Sales Less: Excise Duty Net Sales
* # Net of sales returns and damaged stocks, etc quantity in Lakhs SQM
10929.61 51930.21 183.79 8397.70 11378.19 2511.57 31940.13 70020.56 22241.83 1204.55 57531.96
** Includes sales of Certified Emission Reductions of Rs. 7281.08 lakhs (Previous Year Rs. 25955.90 lakhs)
84
e.
Caprolactam Fluorospar Chloromethanes Sulphuric Acid Chlorine Methanol Caustic Soda Trichloro Ethylene Nylon yarn/Fabric Polyester Chips Fabric* Others Total * quantity in Lakhs SQM
f.
Nylon tyre cord fabric Yarn Chloromethanes Polyester Films Nylon Chips Others Total
g.
Raw Materials Imported Indigenous Stores and Spares Imported Indigenous 9.76 90.24 100.00 40.54 59.46 100.00
85
h.
i.
Interest Technical know-how and Technicians fees Travel and Conveyance Selling Commission Lease rental Legal and Professional Sales Promotion / Market Research Investments Provided / Written Off Others
j.
Export of goods calculated on FOB Value Interest Profit on sale of investment in subsidiary Service fee including recovery of actual expenses incurred
16.
Schedules 1 to 8 form an integral part of the Balance Sheet, Schedules 9 to 13 form and integral part of the Profit and Loss Account and Schedule 14 and the Statement of Additional Information form an integral part of the Balance Sheet and Profit and Loss Account. Previous year figures have been regrouped / recast / rearranged, wherever necessary, to conform to current year classifications.
17.
Arun Bharat Ram Chairman Place: Gurgaon Date: May 9, 2011 Subodh Bhargava Director
Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer
Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary
86
18.
POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMT. IN RS.000) Total Liabilities Sources of Funds Paid-up Capital (Including amount paid up on forfeited shares and shares suspense account) Reserves and Surplus Secured Loans Unsecured Loans Deferred Tax liability
*Net of Current Liabilities and Provisions
Total Assets 26615946 615241 Application of Funds Net Fixed Assets 26615946 19493540
2018987 5103419
PERFORMANcE OF THE cOMPANY (AMOUNT RS. 000) Total Income Total Expenditure Profit before Tax Profit after Tax Earnings per equity share in Rs. Dividend Rate Equity (Proposed) GENERIc NAMES OF THREE PRINcIPAL PRODUcTS/SERVIcES OF cOMPANY (AS PER MONETARY TERMS) Item Code No. (ITC Code) Item Code No. (ITC Code) Item Code No. (ITC Code) 59.02 Product Description 29.03 Product Description 39.20 Product Description Tyre Cord Fabric Halogenated derivatives of Hydrocarbons Polyster Films 31056243 24281457 6774786 4834421 79.90 Nil
Arun Bharat Ram Chairman Place: Gurgaon Date: May 9, 2011 Subodh Bhargava Director
Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer
Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary
87
cASH FLOW STATEMENT FOR THE YEAR ENDED MARcH 31, 2011
Year ended March 31, 2011 (Rs. lakhs) Year ended March 31, 2010 (Rs. lakhs) 45390.93 13213.20 (87.49) 6804.79 (4632.20) 65.86 (58.12) (380.84) (83.98) 60232.15 (11108.72) (5792.53) 17368.52 60699.42 1601.91 (11254.67) 51046.66 (35639.43) 169.46 (61149.48) 64655.35 (66.58) (6540.95) (6833.86) 8256.24 1389.67 380.84 83.98 (35294.76) (147.59) 26140.15 (23164.62) 4483.14
88
Year ended March 31, 2011 (Rs. lakhs) Dividends on Equity Share Capital Dividend Tax Repayment of fixed deposits Interest and Financial charges paid Net cash used in / from financing activities (C) Net increase / (decrease) in cash and cash Equivalents D=(A+B+c) cash and cash equivalents at the beginning of the year (E) Less : Exchange fluctuation on foreign currency bank balances (F) cash and cash equivalents at the close of the year G=(D+E-F) (12526.55) (2126.62) (0.12) (8613.57) (35627.62) (121.63) 6534.97* 27.81 6385.53*
Year ended March 31, 2010 (Rs. lakhs) (7157.72) (1235.45) (1.19) (8443.69) (9526.97) 6224.93 310.04* 6534.97*
* Includes interim dividend deposited with the bank Nil (as at March 31, 2010 - Rs. 4235.25 lakhs, as at March 31, 2009 - Nil), unclaimed dividend with the banks Rs. 445.07 lakhs (as at March 31, 2010 - Rs. 265.87 lakhs, as at March 31, 2009 - Rs. 154.09 lakhs) and margin money with the banks Rs. 275.36 lakhs (as at March 31, 2010 - Rs. 193.70 lakhs, as at March 31, 2009 - Rs. 62.61 lakhs)
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Manjula Banerji Partner Place: Gurgaon Date: May 9, 2011 Arun Bharat Ram Chairman Subodh Bhargava Director Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary
89
Auditors Report
To The Board of Directors of SRF Limited 1. We have audited the attached Consolidated Balance Sheet of SRF LIMITED (the Company) and its subsidiaries (the Company and its subsidiaries constitute the Group) as at March 31, 2011, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management and have been prepared on the basis of the separate financial statements and other information regarding components. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of subsidiaries viz., SRF Overseas Limited, SRF Technical Textiles (Thailand) Limited, SRF Industex Belting (Pty) Limited, SRF Transnational Holdings Limited, SRF Properties Limited, SRF Fluor Private Limited, SRF Holiday Home Limited, SRF Global BV, SRF Tech Textile BV, SRF Energy Limited and SRF Fluorochemicals Limited whose financial statements reflect total assets of Rs. 40999.06 lakhs, as at March 31, 2011, total revenues of Rs. 51237.52 lakhs and net cash flows amounting to Rs. 133.96 lakhs for the year ended on that date as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us and our opinion in so far as it relates to the amounts included in respect of these subsidiaries is based solely on the reports of the other auditors. We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) - 21 - Consolidated Financial Statements as notified under the Companies (Accounting Standards) Rules, 2006. Based on our audit and on consideration of the separate audit reports on the individual financial statements of the Company and the aforesaid subsidiaries and to the best of our information and according to the explanations given to us, in our opinion, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India: i. ii. in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2011; in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and
2.
3.
4.
5.
iii. in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 015125N) Manjula Banerji Partner (Membership No. 086423) Gurgaon, May 9, 2011
90
SOURCES OF FUNDS
Shareholders Funds Share capital Reserves and surplus Loan Funds Secured Loans Unsecured Loans Deferred tax liabilities 4 1 2 3 77157.21 20156.16 97313.37 21610.23 288721.24 83850.22 19326.50 103176.72 21113.30 251675.95 6152.41 163645.23 169797.64 6152.41 121233.52 127385.93
APPLICATION OF FUNDS
Fixed assets Gross block Less : Depreciation Net block Capital work in progress Investments Deferred tax assets current assets, loans and advances Inventories Sundry debtors Cash and bank balances Loans and advances Less: current liabilities and provisions Current liabilities Provisions Net current assets Notes to the consolidated accounts In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Manjula Banerji Partner Place: Gurgaon Date: May 9, 2011 Arun Bharat Ram Chairman Subodh Bhargava Director Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary 15 5 379120.75 175543.43 203577.32 14340.31 217917.63 11615.20 1539.56 50405.72 49265.03 9024.73 17247.73 125943.21 9 65225.32 3069.04 68294.36 57648.85 288721.24 49655.25 3019.02 52674.27 41370.64 251675.95 348244.06 153889.63 194354.43 13251.69 207606.12 712.33 1986.86 30727.58 36095.44 9040.21 18181.68 94044.91
6 7 8
91
cONSOLIDATED PROFIT AND LOSS AccOUNT FOR THE YEAR ENDED MARcH 31, 2011
Schedule Year ended March 31, 2011 (Rs. lakhs) 367273.07 28129.64 339143.43 12695.19 351838.62 Year ended March 31, 2010 (Rs. lakhs) 266192.31 16324.48 249867.83 8064.69 257932.52
INCOME
Gross Sales (including conversion income) * Less : Excise duty Net Sales (including conversion income) Other income
10
* Includes tax deducted at source on conversion income Rs. 0.03 lakhs (Previous Year - Rs. Nil)
EXPENDITURE
Raw materials consumed (Increase) \ Decrease in Stock Purchases of goods for resale Manufacturing and other expenses Interest and finance charges Depreciation Transfer from revaluation reserve Profit before tax Provision for taxation Current tax Deferred tax charge Relating to earlier years Profit after tax Balance brought forward from the previous year Profit available for appropriation Appropriations Interim Dividend Corporate dividend tax Transfer to general reserve Debenture redemption reserve Balance carried to balance sheet Earnings per share - basic / diluted (Rs.) (Refer note 6 of Schedule 15) Notes to the consolidated accounts In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Manjula Banerji Partner Place: Gurgaon Date: May 9, 2011 Arun Bharat Ram Chairman Subodh Bhargava Director Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary 15 11 12 13 14 5 186991.41 (5399.89) 1463.91 73482.61 9595.24 18464.13 (1454.28) 283143.13 68695.49 18582.96 1592.63 96.13 48423.77 56964.89 105388.66 8470.50 1406.84 5010.00 3025.00 87476.32 80.03 127601.01 (2054.55) 3641.66 58814.37 7772.46 15897.31 (1420.97) 210251.29 47681.23 11869.44 3223.88 146.39 32441.52 40958.43 73399.95 8470.50 1439.56 3500.00 3025.00 56964.89 53.62
92
AUThORISED
12,00,00,000 (Previous Year - 12,00,00,000) Equity shares of Rs. 10 each 10,00,000 (Previous Year - 10,00,000) Preference Shares of Rs. 100 each 12,00,000 (Previous Year - 12,00,000) Cumulative Convertible Preference Shares of Rs. 50 each 2,00,00,000 (Previous Year - 2,00,00,000) Cumulative Preference Shares of Rs. 100 each 12000.00 1000.00 600.00 20000.00 33600.00
ISSUED
6,64,49,244 (Previous Year - 6,64,49,244) Equity Shares of Rs.10 each 6644.92 6644.92
Of the subscribed and paid-up capital - 20,34,848 (Previous Year - 20,34,848) equity shares allotted as fully paid up as bonus shares by capitalisation of reserves Share capital suspense represents 5,408 (Previous Year - 5,408) equity shares which are awaiting allotment to the erstwhile shareholders of Flowmore Polysters Limited (FPL) pending settlement of calls in arrears in respect of their shareholding in FPL Nil (Previous Year - 1,81,425) equity shares of Rs. 10 each fully paid up, bought back and extinguished in accordance with section 77A of the Companies Act, 1956
Additions (Rs. lakhs) 71.16* 6240.25### 3025.00*** 568.42 5010.00 30511.43 45426.26
As at March 31, 2011 (Rs. lakhs) 5527.11 22086.73 15848.19 739.77 9075.00 261.63** 135.24 22495.24 87476.32 163645.23
5527.11 22015.57 11062.22 739.77 6050.00 1569.79 (181.07) 17485.24 56964.89 121233.52
Represents amount received pursuant to Montreal Protocol Phaseout Programme of Refrigerant Gases The cash flow hedge reserve represents gain on mark to market of foreign currency derivatives in the nature of cash flow hedge net of deferred tax of Rs.128.76 lakhs (Previous Year - Rs. 777.16 lakhs) *** Created during the year ## Represents - Rs. 1454.28 lakhs transferred to profit and loss account ### Represents additions due to revaluation of fixed assets in SRF Technical Textiles (Thailand) Limited
93
SECURED LOANS
Debentures Loans from banks On cash credit / working capital demand loan Term loans * (1) 2(i), (iii) & (iv) 2(ii) & 3 15000.00 694.79 61462.42 77157.21
UNSECURED LOANS
Short term loans and advances Banks Others ** 19416.58 739.58 20156.16 97313.37 18914.38 412.12 19326.50 103176.72
* Includes Rs. 28429.51 lakhs (Previous Year - Rs. 11081.11 lakhs) repayable within a year. ** Includes Nil (Previous Year - Nil) for Commercial Paper issued by the Company. The maximum amount due during the year is Rs. 2500 lakhs (Previous Year - Rs. 2500 lakhs)
Security Note/clauSe
Loan 1. 1500 (Previous Year 1500), 13%, Listed, Secured Redeemable Non-Convertible Debentures of Rs. 10 lakhs each Terms and conditions a) Redeemable at face value in three annual installments in the ratio of 30%, 30% and 40% commencing from the end of 4th year from the date of allotment b) Call option at the end of 3rd year with step up of 0.5% p.a. if call option is not exercised. 2 i) Cash credit / working capital demand loans ii)Term loan from banks 351.24 3626.70 As at March 31, 2011 (Rs. lakhs) 15000.00 As at March 31, Security 2010 (Rs. lakhs) 15000.00 Debentures are secured by legal mortgage in English form on certain immoveable properties of the Company situated in Gujarat. In addition, these debentures are secured by hypothecation of Companys moveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh and Kashipur in the State of Uttarakhand and an equitable mortgage of Companys immoveable properties, both present and future, situated at Viralimalai, Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Kashipur in the State of Uttarakhand, Malanpur (save and except superstructures) and Indore in the State of Madhya Pradesh. 11226.76 Secured by hypothecation of stocks, stores and book debts, both present and future at Manali, - Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh, Kashipur and Pantnagar in the State of Uttarakhand. 160.86 Bank loans and overdrafts in SRF Overseas Limited are secured by the assignment of insurance policies on inventories on pari-passu basis and working capital facilities are granted to the Company against a floating charge on the trade receivables of the Company on a pari-passu basis.
94
282.83
As at March 31, Security 2010 (Rs. lakhs) - Bank loans and overdrafts in SRF Technical Textiles (Thailand) Limited are secured by mortgage of fixed assets of the Company. 19591.17 Term loans from banks are secured by:a) Hypothecation of Companys moveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh and Kashipur in the State of Uttarakhand. Of the above, term loan of Rs. 46047.57 lakhs (Previous Year Rs. 17403.67 lakhs) is additionally secured by hypothecation of Companys moveable properties both present and future, at Pantnagar in the State of Uttarakhand. b) Equitable Mortgage of Companys immoveable properties, both present and future, situated at Viralimalai, Gummidipoondi (freehold land) in the State of Tamil Nadu, Jhiwana in the State of Rajasthan and Kashipur in the State of Uttarakhand. Term Loans aggregating to Rs. 5370.57 lakhs (Previous Year Rs. 7102.17 lakhs) are additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Indore in the State of Madhya Pradesh. Term Loans aggregating to Rs. 3620.57 lakhs (Previous Year 4914.67 lakhs) is additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Gummidipoondi (leasehold land) in the State of Tamil Nadu. Term Loan of Rs. 41997.57 lakhs (Previous Year Rs. 12591.17 lakhs) is additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Malanpur (save and except superstructures) in the State of Madhya Pradesh. Term Loans of Rs. 38377.00 lakhs (Previous Year Rs. 7676.50 lakhs) are additionally secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Manali in the State of Tamil Nadu.
3.
47797.57
95
Loan
As at March 31, Security 2010 (Rs. lakhs) Out of the loans as at 3(i), the term loans aggregating to: a) Rs. 12009.00 lakhs (Previous Year Rs. 14676.50 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Gummidipoondi (leasehold land) in the State of Tamil Nadu. Rs. 10259.00 lakhs (Previous Year Rs. 12489.00 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Indore in the State of Madhya Pradesh. Rs. 5800.00 lakhs (Previous Year Rs. 7000.00 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Malanpur in the State of Madhya Pradesh (save and except superstructures). Rs. 9420.57 lakhs (Previous Year Rs. 11914.67 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Manali in the State of Tamil Nadu.
b)
c)
d)
e) Rs. 15629.57 lakhs (Previous Year Rs. 19591.17 lakhs) are to be further secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Pantnagar in the State of Uttarakhand. (ii) Term loan from banks 3942.60 29201.43 Term loans from Banks are secured by hypothecation of Companys moveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh, Kashipur and Pantnagar in the state of Uttarakhand. Out of the loans as at 3(ii), term loan of Rs. 38.01 lakhs (Previous Year Rs. 114.79 lakhs) is additionally secured by a charge on a fixed deposit of Rs. 30.00 lakhs with a bank. Out of the loans as at 3(ii), term loans aggregating to Rs. 38.01 lakhs (Previous Year - Rs. 114.79 lakhs) are to be secured by equitable mortgage of Companys immoveable properties, both present and future, situated at Manali, Viralimalai and Gummidipoondi (Freehold & leasehold) in the State of Tamil Nadu, Jhiwana in the State of Rajasthan, Malanpur and Indore in the State of Madhya Pradesh, Kashipur and Pantnagar in the state of Uttarakhand.
96
As at March 31, Security 2010 (Rs. lakhs) 8670.00 Bank loan in SRF Technical Textiles (Thailand) Limited amounting to approximately USD 13.67 million from Bank of Ayudhya, Thailand is secured by mortgage and pledge on the plant and machinery of SRF Technical Textiles (Thailand) Limited and assignment of leasehold rights. 83850.22
Total
77157.21
In respect of SRF Limited, the hypothecation and equitable mortgage ranking pari-passu between term loans from banks / others and subject to prior charges created / to be created on certain specified moveable assets for working capital facilities mentioned in 2 above.
97
Description
As at April 1, 2010
Additions
(Rs. lakhs)
(Rs. lakhs)
Tangible assets 18.06 1418.01 47067.18 15846.49 274.13 381.64 4.63 18.89 3314.63 10809.08 1533.89 563.26 0.06 910.33 3561.01 21.39 8.91 316.23 2266.87 848.45 75.05 5324.12 3366.97 580.97 5710.66 303202.97 137525.60 0.11 559.25 (29.66) 680.98 29.22 13.37 4955.77 10673.16 723.57 12906.17 10673.16 4955.77 694.44 34161.01 10334.16 4228.50 748.63 32786.37 4882.68 362.62 36.67 1203.48 9362.74 70.59 214.71 3589.40 1020.01 1734.72 1246.86 1596.11 1071.25 -
Land
- Freehold
10334.16
339.00
- Leasehold
4228.50
727.27
Roads
1429.61
Buildings
43595.45
2002.26
277783.02
16729.25
4963.08
414.70
Vehicles
1919.70
654.49
Goodwill
1300.44
Trade Marks
1139.70
Technical Knowhow
908.75
Software
641.65
222.13
Total
348244.06
21089.10
Previous year
296348.30
52811.86
Capital-work-in-progress including capital advances of Rs. 3033.25 lakhs (Previous Year - Rs. 2363.73 lakhs)
1. Revaluation of the assets of the SRF Limited was done as on March 31, 2005 and of SRF Technical Textiles (Thailand) Limited has been done in financial year ended March 31, 2011.
98
2. Amount of borrowing cost capitalised to fixed assets during the year Rs. 364.35 lakhs (Previous Year - Rs. 1698.07 lakhs)
3. The deed of assignment in respect of free hold land at Manali, Chennai has been executed in respect of 135.70 acres (Previous Year - 135.70 acres). In addition to aforesaid extent, 0.79 acres were handed over to SRF Limited under a land delivery receipt. Thus, the Company is in possession of 136.49 acres of industrial land at Manali, Chennai.
4. Conveyancing of buildings and other superstructures located at Companys plant at Malanpur in the state of Madhya Pradesh including immovable machinery is linked to the Stamp Duty matter (Refer note 3 (a) of Schedule 15).
5. Out of the Industrial Free hold land measuring 32.41 acres at the Companys plant in Gummidipoondi, the Company does not have clear title to 2.43 acres. 6. Capital work in progress includes pre-operative expenses Rs. 2021.73 lakhs (Previous Year - Rs. 652.28 lakhs).
ScHEDULE 6: INVESTMENTS
As at March 31, 2011 (Rs. lakhs) As at March 31, 2010 (Rs. lakhs)
LONG TERM
(valued at cost unless there is a decline in value, other than temporary) Non-trade investments Quoted 2,901 (Previous Year - 2,901) Shares of Rs. 10 each fully paid up of Mawana Sugars Limited Trade Investments Unquoted 15,75,000 (Previous Year - 15,75,000) Equity shares of Rs. 10 each fully paid up of Arkay Energy (Rameshwaram) Limited 42,21,535 (Previous Year - 42,21,535) Equity shares of Rs. 10 each fully paid up of Malanpur Captive Power Limited Advance against investment in SRF Cord GmbH Non-trade investments Investment of Shares, Units, etc Unquoted 25,00,000 (Previous Year - 25,00,000) Preference shares of Rs. 10 each fully paid up of SBL Industries Limited Less : Provision for diminution in value 6,70,000 (Previous Year - 6,70,000) Equity shares of Rs. 10 each fully paid up of Sanghi Spinners Limited Less: Provision for diminution in value 1,19,000 (Previous Year - 1,19,000) Equity shares of Rs. 10 each fully paid up of SB Packaging Limited Less: Provision for diminution in value 250.00 (250.00) 11.69 (11.69) 49.98 (49.98) 250.00 (250.00) 11.69 (11.69) 49.98 49.98 157.50 422.15 157.50 422.15 66.58 0.48 0.48
CURRENT INVESTMENTS
(valued at lower of cost or fair value) Non-trade investments Units of Mutual Funds Quoted 2,50,00,000 (Previous Year - Nil) Units of Rs. 10 each of SBI Mutual Fund - SBI Debt Fund Series - 370 Days - 12 Growth Unquoted 3,54,71,831 (Previous Year - Nil) Units of Rs. 10.08 each of Kotak Floater Long Term Fund Daily Dividend Reinvestment Option 2,51,95,750 (Previous Year - Nil) Units of Rs. 10 each of ICICI Prudential Interval Fund II Quarterly Interval Plan -B Nil (Previous Year - 1,51,951) Units of Rs 10 each of Sundaram BNP Paribas Floter LT Regular 2,00,000 (Previous Year - Nil) units of Rs. 10 each of Sundaram Fixed Term Plan AV 366 days Dividend 2,00,000 Units (Previous Year - Nil) of Rs 10 each of Birla Sun Life Fixed Term Plan Series CL Dividend
99
2500.00
15.64 -
As at March 31, 2011 (Rs. lakhs) 2,40,00,000 (Previous Year - Nil) Units of Rs. 10 each of Kotak Quarterly Interval Plan Series 6 - Dividend Aggregate book value of quoted investments Aggregate book value of unquoted investments - Units of mutual funds - Others Market value of quoted investments Net asset value / repurchase price of units of mutual funds 8535.07 579.65 11615.20 2500.64 8544.37 Purchase Units Nos. Details of investments purchased and sold during the year Mutual Funds current Investments Quoted SBI Mutual Fund - SBI Debt Fund Series -370 Days -12 Growth Unquoted Reliance Liquidity Fund-Daily Dividend Reinvestment Option* Reliance Money Manager Fund - Institutional Option - Daily Dividend Plan* Reliance Liquid Fund - Treasury Plan - Institutional Option - Daily Dividend Option* Kotak Liquid (Institutional Premium) - Daily Dividend Reinvestment* Kotak Flexi Debt Scheme Institutional - Daily Dividend Reinvestment* Kotak Floater Short Term Scheme Institutional - Daily Dividend Reinvestment* Kotak Floater Long Term Scheme Institutional - Daily Dividend Reinvestment* Templeton IndiaTreasury Management Account Super Institutional Plan - Daily Dividend Reinvestment* Templeton India Ultra Short Bond Fund Super Institutional Plan Daily Dividend Reinvestment* SBI Magnum Insta Cash Fund - Daily Dividend Reinvestment Option* SBI - SHF - Ultra Short Term Fund - Institutional Plan - Daily Dividend Reinvestment Option* Canara Robeco Liquid Super Institutional Daily Dividend Reinvestment Fund* Canara Robeco Treasury Advantage Super Institutional Daily Dividend Reinvestment Fund* ICICI Prudential Institutional Liquid Plan - Super Institutional Daily Dividend Reinvestment* ICICI Prudential Flexible Income Plan Premium - Daily Dividend Reinvestment* ICICI Prudential Interval Fund II Quarterly Interval Plan -B Kotak Quarterly Interval Plan Series 6- Dividend Sundaram BNP Paribas Floter LT Regular Sundaram Fixed Term Plan AV 366 days Dividend Bilra Sun Life Fixed Term Plan Series CL Dividend - Payout * Units purchased includes dividend reinvested during the year
annual report 2010-11
As at March 31, 2010 (Rs. lakhs) 712.33 0.48 15.64 696.21 712.33 1.01 17.32 Sold (at cost) Units Nos. Amount Rs. lakhs
25000000 24990777 254263 45112567 93438552 6983513 40671266 87146870 349860 48692643 68228870 82422183 24908413 20446111 8620267 3823646 25195750 24000000 2981 200000 200000
2500.00 2500.35 2546.12 5026.22 11425.76 701.67 4114.39 8784.23 3500.96 4874.91 11428.54 8247.16 2504.54 2536.77 8622.22 4042.74 2519.58 2400.00 0.34 20.00 20.00
24990777 254263 45112567 93438552 6983513 40671266 51675039 349860 48692643 68228870 82422183 24908413 20446111 8620267 3823646 154932 -
2500.35 2546.12 5026.22 11425.76 701.67 4114.39 5208.74 3500.96 4874.91 11428.54 8247.16 2504.54 2536.77 8622.22 4042.74 15.98 -
100
* The deferred tax assets have been recognised keeping in view the concept of prudence and on the basis of virtual certainty that sufficient future taxable income will be available against which deferred tax assets will be realised.
CURRENT ASSETS
Inventories Stores and spares (at cost or under) Stock in trade (at cost or net realisable value, whichever is lower) Raw materials Stock-in-Process Finished Goods Sundry debtors Debts over six months Unsecured - Considered good - Considered doubtful Other debts Unsecured - Considered good Less: Provision for doubtful debts cash and bank balances Cash in hand Cheques in hand With scheduled banks on Current accounts Deposit accounts# Unclaimed dividend accounts With other Banks on Current accounts@ Deposit accounts
##@@
4709.44
4018.35
119.71 308.98 49145.32 49574.01 308.98 49265.03 26.68 29.64 4156.94 1775.36 445.07 2472.97 118.07 9024.73
158.59 263.30 35936.85 36358.74 263.30 36095.44 29.65 0.62 1840.28 4428.95 265.87 2359.24 115.60 9040.21
101
As at March 31, 2011 (Rs. lakhs) Considered doubtful Less: Provision for doubtful advances Balance with customs and excise authorities Other Deposits ** Advance tax Claims Recoverable Cenvat/Service Tax/VAT recoverable 170.54 6490.24 170.54 6319.70 944.48 2467.46 16.75 1390.81 6108.53 17247.73 125943.21
# ## * ** @
As at March 31, 2010 (Rs. lakhs) 16.22 7313.17 16.22 7296.95 594.89 2434.43 108.55 1419.55 6327.31 18181.68 94044.91
Includes Rs. 275.36 lakhs (Previous Year Rs. 193.70 lakhs) as margin money and Nil (Previous Year Rs. 4235.25 lakhs) deposit for interim dividend. Includes Rs. 118.07 lakhs (Previous Year Rs. 115.60 lakhs) as margin money. Interest bearing loans carrying interest of 9% p.a. or more to a Officer of the Company (repayable beyond seven years) - Nil (Previous Year Nil). Maximum balance outstanding during the year Nil (Previous Year - Rs. 0.73 lakhs). Includes Rs. 1047.48 lakhs (Previous year - Rs. 1025.62 lakhs) as interest free security deposits for accommodation taken on lease for Companys officers / directors and various offices taken on lease by the Company. Name of the banks (other than scheduled banks) and balances lying with each such bank on current account along with the maximum balance outstanding at anytime during the year: Name of the Bank Amount outstanding as at March 31, 2011 (Rs. lakhs) ABSA Bank ABSA CFC Dollar account ABSA CFC Euro account CITI Bank Rand account SBI USD account HSBC call deposit Bank of Bahrain and Kuwait BNP Paribas USD account BNP Paribas current account BNP Paribas Euro account Standard Chartered USD account HSBC Euro account Siam Commercial Bank, Chidlom Siam Commercial Bank, Maptaphut Siam Commercial Bank, Laemchabang Bank of Ayudhya, Maptaphut Siam Commercial Bank (FCD) Standard Chartered Bank, Rayong Standard Chartered Bank (Mauritius) Limited ABN AMRO Euro account, (SRF Tech Textile BV) ABN AMRO USD account ABN AMRO Euro account, (SRF Global BV) Bank of China Total 348.81 143.89 0.76 8.17 0.66 244.88 1.54 0.29 0.63 0.05 0.75 26.34 104.02 95.10 0.01 882.11 0.01 1.81 8.86 35.45 567.66 1.17 2472.97 March 31, 2010 (Rs. lakhs) 318.20 14.90 8.46 0.88 0.66 103.72 1.57 51.60 0.28 19.64 50.55 233.53 350.97 1129.69 0.01 1.71 17.15 1.33 54.39 2359.24 Maximum amount outstanding during 2010-11 (Rs. lakhs) 993.08 209.57 9.09 8.17 0.66 614.38 1.57 18.66 2.09 22.34 97.75 106.81 727.22 213.86 0.01 1271.07 0.01 1.81 8.86 73.91 8695.05 1488.22 2009-10 (Rs. lakhs) 817.95 297.38 8.46 214.29 0.67 384.30 1.57 85.71 8.94 50.39 324.50 138.91 780.20 1503.25 1716.62 0.01 1.71 2405.55 3972.21 70.84
102
@@
Name of the bank (other than scheduled banks) and balance lying with each such bank on deposit account along with the maximum balance outstanding at anytime during the year: Name of the Bank Amount outstanding as at March 31, 2011 (Rs. lakhs) Deposit - Margin money (HSBC) Total 118.07 118.07 March 31, 2010 (Rs. lakhs) 115.60 115.60 Maximum amount outstanding during 2010-11 (Rs. lakhs) 118.07 2009-10 (Rs. lakhs) 118.85
CURRENT LIAbILITIES
Acceptances Sundry creditors: Total outstanding dues of Micro and Small enterprises Total outstanding dues to creditors other than Micro and Small enterprises Book Overdraft Security deposits Interim dividend payable Corporate dividend tax Unclaimed dividend* Unclaimed fixed deposits (including interest)* Interest accrued but not due on loans 146.34 39351.62 539.11 445.07 11.99 1141.22 65225.32 23589.97
PROVISIONS
Provision for taxation (net of payments) Employee Benefits 645.36 2423.68 3069.04 68294.36
* Will be credited to Investor Education and Protection Fund if not claimed within seven years from the date of issue of dividend / Interest Warrant, and the date the Fixed Deposits have matured
103
Year ended March 31, 2011 (Rs. lakhs) Interest - from customers* - on loans and deposits* - on income tax refunds - from others Miscellaneous*# 1.20 173.45 35.61 57.02 6971.43 12695.19
Year ended March 31, 2010 (Rs. lakhs) 9.21 89.00 144.44 74.06 364.16 8064.69
* Includes Income-tax deducted at source Rs. 20.65 lakhs (Previous Year Rs. 14.72 lakhs) # Includes gain of Rs. 6417.04 lakhs (Previous Year - Nil) on account of cancellation / net settlement of certain long term contracts relating to sale of Certified Emission Reductions (CERs).
2812.73
104
Year ended March 31, 2011 (Rs. lakhs) Power and fuel Rent Repairs and maintenance - Buildings - Plant and machinery - Other maintenance Freight Professional and Legal charges Salaries, wages, bonus, etc. Contribution to provident fund, superannuation, employees state insurance, gratuity and other funds Workmen and staff welfare expenses Insurance Rates and taxes Contract conversion charges Travel Auditors Remuneration* - Audit Fees - For limited review of unaudited financial results - For corporate governance, consolidated financial statements and other certificates - For tax audit Directors sitting fees Selling commission Provision for doubtful debts /advances Bad debts / advances written off Fixed assets / inventory / investments written off Loss on sale of fixed assets Increase / (decrease) in excise duty on closing stock Miscellaneous expenses#
* Includes remuneration to other auditors # Includes Nil (Previous Year - Rs. 15.00 lakhs) donation paid to a political party Indian National Congress
Year ended March 31, 2010 (Rs. lakhs) 20766.45 1682.54 152.94 3657.10 1194.94 3738.42 2367.90 13618.13 1181.53 1438.50 727.78 296.35 504.87 806.25 64.42 21.00 8.80 5.00 7.50 644.86 199.01 74.99 287.87 3242.46 58814.37
26038.05 1773.46 280.97 4263.88 1341.49 6023.87 1557.79 16632.22 1812.75 2002.05 776.08 334.44 590.41 918.08 76.92 24.00 6.48 5.00 15.07 1194.33 176.94 30.52 301.72 6.96 121.25 4365.15 73482.61
105
b)
The subsidiaries considered in the preparation of these consolidated financial statements are: Name of Subsidiary country of incorporation Proportion of ownership as at March 31, 2011 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Proportion of ownership as at March 31, 2010 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Indian Subsidiaries SRF Transnational Holdings Limited SRF Properties Limited SRF Holiday Home Limited SRF Energy Limited SRF Fluorochemicals Limited Foreign Subsidiaries SRF Fluor Private Limited SRF Global BV SRF Overseas Limited (SRFO) (100% subsidiary of SRF Tech Textile BV) SRF Tech Textile BV (100% subsidiary of SRF Global BV) SRF Technical Textiles (Thailand) Limited (100% subsidiary of SRF Tech Textile BV) SRF Industex Belting (Pty) Limited (100% subsidiary of SRF Tech Textile BV) c)
India India India India India Mauritius Netherlands British Virgin Islands Netherlands Thailand Republic of South Africa
Joint Venture considered in the preparation of these consolidated financial statement is: Joint Venture country of incorporation Peoples Republic of China Proportion of ownership as at March 31, 2011 Proportion of ownership as at March 31, 2010 50%
The Company has decided to sell its entire 50% stake in Jingde Yangtze Ganga Fluorine Chemical Co. Limited (a joint venture company) to the other partner viz. Central Fluor Group Company Limited and/or their nominee. The sale consideration is under negotiation. Hence the same has not been consolidated.
106
The Company owns 22.60% (Previous year 22.60%) in Malanpur Captive Power Limited and the same has not been considered for the purposes of consolidation, since the Company does not exercise significant influence over Malanpur Captive Power Limited.
(iv) DEPREcIATION
a) Depreciation on all fixed assets is provided on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956 or at rates arrived at on the basis of the balance useful lives of the assets based on technical evaluation / revaluation of the related assets, whichever is higher, except in case of the following assets where depreciation is provided at the rates indicated against each assets: Vehicles Data Processing Equipments Mobile Phones b) c) d) 21% 31.67% 95%
Depreciation is calculated on a pro rata basis except that, assets costing upto Rs. 5,000 each are fully depreciated in the year of purchase. On assets sold, discarded, etc. during the year, depreciation is provided upto the date of sale / discard. In respect of revalued assets, a transfer is made from the revaluation reserve to the profit and loss account for the sum of the differences as below: the difference between the amounts of depreciation on revalued value at rates based on useful life prescribed by valuers and on the historical cost at rates prescribed in Schedule XIV, if the former is higher. where assets are discarded / disposed off, the difference between the write down value as per the revalued value and historical cost.
e) f)
No write-off is made in respect of leasehold land as the lease is a perpetual lease. Depreciation (amortization) on intangibles is provided on straight line method as follows: Trademark and technical knowhow over a period of ten years Software over a period of three years Goodwill, other than goodwill on consolidation, over a period of ten years
107
(v)
FOREIGN cURRENcY TRANSAcTIONS Transactions in foreign currencies are recorded on initial recognition at the exchange rate prevailing on the date of the transaction. All monetary items are re-stated at the exchange rate prevailing as at the date of the balance sheet and the loss or gain is taken to the profit and loss account as exchange fluctuation. The Company uses foreign exchange forward and option contracts to hedge its exposure to movements in foreign exchange rates relating to certain firm commitments and highly probable forecast transactions. Effective April 1, 2007, the Company designates such contracts in a cash flow hedge relationship by applying the principles set out in Accounting Standard (AS) 30 - Financial Instruments: Recognition and Measurement. Forward and option contracts are fair valued at each reporting date. The resultant gain or loss from these contracts that are designated and effective as hedges of future cash flows are recognised directly in Cash Flow Hedge Reserve under Reserves and Surplus, net of applicable deferred income taxes and the ineffective portion is recognised immediately in profit and loss account. Amount accumulated in Cash Flow Hedge Reserve are reclassified to profit and loss account in the same periods during which the forecasted transaction affects the profit and loss. Hedge Accounting is discontinued when the hedging instrument expires, or is sold or terminated or exercised or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in Cash Flow Hedge Reserve is retained there until the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, the net cumulative gain or loss is immediately transferred from the Cash Flow Hedge Reserve to the profit and loss account Contracts that are not designated as hedges of future cash flows are fair valued at each reporting date and the resultant gain or loss is recognised in the profit and loss account.
(vi)
(vii) INVENTORIES
Stores and spares are valued at cost or under. Stock in trade is valued at cost or net realizable value, whichever is lower. The bases of determining the cost for various categories of inventory are as follows: Stores, spares and raw materials Stock in trade Process stocks and finished goods By products Direct cost plus appropriate share of overheads and excise duty, wherever applicable At estimated realizable value Weighted average rate
(viii) INVESTMENTS
Long term investments are valued at cost unless there is a decline in value other than temporary. Current investments are stated at lower of cost or fair value.
(ix)
EMPLOYEE BENEFITS
Companys contributions paid / payable during the year to Provident Fund, Superannuation Fund and Employees State Insurance Corporation are recognized in the profit and loss account. Provision for gratuity, compensated absences and long term retention pay are determined on an actuarial basis at the end of the year and charged to revenue each year.
108
(x)
(xi)
REVENUE REcOGNITION
Sale of goods is recognized at the point of dispatch of goods to customers. Gross sales are inclusive of excise duty and net of value added tax / sales tax. Sale of Certified Emission Reductions (CERs) is recognized as income on the delivery of the CERs to the customers account as evidenced by the receipt of confirmation of execution of delivery instructions.
(xii)
RESERVES
a. Revaluation reserve represents the difference between the revalued amount of the assets and the written down value of the assets on the date of revaluation net of withdrawals there from. b. Capital receipts are credited to Capital reserve. c. Cash flow hedge reserve represents the gain or loss arising out of adjusting the hedging instruments to mark to market net of applicable deferred income taxes.
(xiii) TAXATION
a. The income tax liability is provided in accordance with the provisions of the Income Tax Act, 1961. b. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized on unabsorbed depreciation and carry forward of losses based on virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
2.
CAPITAL COMMITMENTS
The estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) amounts to Rs. 13273.89 lakhs (Previous Year - Rs. 5179.29 lakhs). Further, the Company is to make investment in SRF Cord GmbH of Nil (Previous Year Euro 98000).
3.
As at March 31, 2010 (Rs. lakhs) 5652.81 249.38 897.00 2881.55 210.10
109
**** In the matter of acquisition of the Tyrecord Division at Malanpur from Ceat Limited the Collector of Stamps, Bhind (Madhya Pradesh) has by his order dated 07.11.2001 assessed the value of the subject matter of the Deed of Conveyance dated 13.06.1996 at Rs. 30300.00 lakhs and levied a stamp duty of Rs. 2372.50 lakhs and imposed a penalty of Rs. 509.05 lakhs. The said demand was challenged before the High Court of Madhya Pradesh Bench at Gwalior. The High Court accepted the case of the Company that the subject matter of the Deed of Conveyance dated 13.06.1996 is only the superstructures valued at Rs. 2776.18 lakhs and not the entire undertaking valued at Rs. 30300.00 lakhs as claimed by the State. Consequently, the High Court of Madhya Pradesh quashed the order and demands issued by the Collector of Stamps, Bhind (Madhya Pradesh) and allowed the writ petition by an order dated 29th November 2004. Against the said order, the State of Madhya Pradesh preferred a Special Leave Petition before the Honble Supreme Court which the State of Madhya Pradesh has withdrawn to enable it to approach the Honble High Court of Madhya Pradesh at Gwalior in view of the change in law in the State of Madhya Pradesh relating to Letters Patent Appeal. @ As per Business Transfer Agreement with KAMA Holdings Limited, the liabilities of Rs. 1793.81 lakhs (Previous Year - Rs. 1813.21 lakhs) and Rs. 38.00 lakhs (Previous Year - Rs. 28.10 lakhs) respectively towards Excise Duty and Sales tax are covered under Representations and Warranties.
All the above matters are subject to legal proceedings in the ordinary course of business. In the opinion of the management, the legal proceedings, when ultimately concluded, will not have a material effect on the results of the operations or financial position of the Company. b. c. Liability on account of Bank Guarantees Rs. 1504.90 lakhs (Previous Year Rs. 1099.78 lakhs) The Company has been served with show cause notices regarding certain transactions as to why additional customs / excise duty amounting to Rs. 76.04 lakhs (Previous year - Rs. 416.29 lakhs) should not be levied. The Company has been advised that the contention of the department is not tenable and hence the show cause notice may not be sustainable.
4.
MANAGERIAL REMUNERATION
(i) chairman / Managing Director / Deputy Managing Director / Whole time Director Salary Contribution to Provident and Superannuation Funds Value of Perquisites Commission (Provided) Sub-Total (ii) Non Executive Directors Commission (Provided) Professional Consultancy Directors Sitting Fees Sub-Total Total 30.00 13.43 15.07 58.50 1018.24 30.00 7.50 37.50 778.18 Year Ended March 31, 2011 (Rs. lakhs) 274.32 72.90 137.52 475.00 959.74 Year Ended March 31, 2010 (Rs. lakhs) 221.72 58.86 120.10 340.00 740.68
As there is a global contribution to gratuity fund, the amount applicable to an individual employee is not ascertainable and accordingly, contribution to gratuity fund in respect of directors has not been considered in the above computation. Further the liability on account of compensated absences in respect of directors has not been considered above, since the provision is based on an actuarial basis for the Company as a whole.
5.
110
A.
Key Management Personnel (a) Mr. Arun Bharat Ram, Chairman Mr. Ashish Bharat Ram, Managing Director Mr. Kartikeya Bharat Ram, Deputy Managing Director Mr. K. Ravichandra, Whole Time Director Mr. TL Raman, Whole Time Director
* Pursuant to the Scheme of Arrangement between Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited (the transferor companies) and Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited, KAMA Realty (Delhi) Limited and KAMA Holdings Limited (the transferee companies) and their respective shareholders and creditors: a) b) real estate divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited was transferred and vested in Srishti Westend Greens Farms Private Limited, Karm Farms Private Limited and KAMA Realty (Delhi) Limited respectively; and investment divisions of Narmada Farms Private Limited, Bhairav Farms Private Limited and SRF Polymers Investments Limited were transferred and vested in KAMA Holdings Limited with effect from March 31, 2011.
The transferor companies had conducted their business in respect of their respective real estate divisions and investment divisions in trust and on behalf of the respective transferee companies from the appointed date of the said Scheme - April 1, 2010.
B.
Nature of Transactions
Sale of fixed assets to - Shri Educare Limited - SRF Foundation Rendering of services to - SRF Foundation Receiving of services from - KAMA (Realty) Delhi Limited Management contracts including for deputation of employees to - KAMA Holdings Limited - SRF Polymers Investments Limited - SRF Foundation Rent paid to - SRF Polymers Investments Limited - Others Managerial Remuneration paid to (Refer note 4 of schedule 15) Reimbursement of expenses from - KAMA Holdings Limited - SRF Foundation - SRF Polymers Investments Limited - Shri Educare Limited 0.57 14.86 2.01 14.62 3.68 11.92 959.74 740.68 668.09 84.00 605.70 60.00 15.60 2.96 3.51 10.98 30.42
111
Nature of Transactions
(b) Year ended March 31, 2011 March 31, 2010 1.08 25.00 10.00 30.00 550.00 25.00 130.00 45.00 4.96 (Rs. lakhs)
Reimbursement of expenses paid - SRF Foundation Loans / deposits given to - KAMA Holdings Limited Loans / deposits received back from - KAMA Holdings Limited Recovery of sums written off - SRF Foundation Increase in security deposit to - KAMA Realty (Delhi) Limited Donations to - SRF Foundation
Nature of Transactions
Balances outstanding as at the year end:Receivables - SRF Polymers Investments Limited - Shri Educare Limited - KAMA Holdings Limited Payables - KAMA Holdings Limited Security Deposits outstanding - SRF Polymers Investments Limited - Bhairav Farms Private Limited - Narmada Farms Private Limited - KAMA Realty (Delhi) Limited 31.82 6.92 300.00 310.00 310.00 30.00 3.68 16.96 25.00 75.03 300.00 310.00 310.00 -
6.
7.
SEGMENT REPORTING
A. Business Segments
Based on the guiding principles laid down in Accounting Standard (AS) - 17 Segment Reporting, the Companys business segments include:
112
Technical Textiles business: includes nylon tyre cord fabric, belting fabric, coated fabric, laminated fabric, polyester tyre cord fabric and industrial yarns and its research and development Chemicals & Polymers business: includes refrigerant gases, chloromethanes, pharmaceuticals, Certified Emissions Reductions & Allied products, Engineering Plastics and its research and development. Packaging Film Business includes Polyester Films.
Segment revenue, Results and Capital Employed include the respective amounts identifiable to each of the segments. Other unallocable expenditure includes expenses incurred on common services provided to the segments, which are not directly identifiable. In addition to the significant accounting policies applicable to the business segments as set out in note 1 above, the accounting policies in relation to segment accounting are as under:
a)
Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.
b)
Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities and do not include deferred income taxes. While most of the assets / liabilities can be directly attributed to individual segments, the carrying amount of certain assets / liabilities pertaining to two or more segments are allocated to the segments on a reasonable basis.
Information about Business Segments Segment Revenue, Results, Assets, Liabilities and capital Employed
Particulars Segment Revenue a) Technical Textiles Business (TTB) - External sales - Inter-segment sales - Total b) Chemicals and Polymers Business (CPB) - External sales - Inter-segment sales - Total c) Packaging Films Business (PFB) - External sales - Inter-segment sales - Total Total Segment revenue Less: Inter Segment revenue Net Sales / Income from Operations Add: Unallocable Income Total Revenue 87131.26 87131.26 347945.69 590.70 347355.00 4483.62 351838.62 33648.16 33648.16 251842.28 388.01 251454.27 6478.25 257932.52 74666.65 0.42 74667.07 65769.23 6.77 65776.00 185557.09 590.27 186147.36 152036.89 381.23 152418.12 Year ended March 31, 2011 (Rs. lakhs) Year ended March 31, 2010 (Rs. lakhs)
113
Particulars Segment Results (Profit / (Loss) before interest and tax from each segment) a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Segment results Less: i) Interest and finance charges Less: ii) Other Unallocable expenses net of income Total Profit before tax Less: Provision for taxation Profit after tax Other information Segment Assets a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Add: Unallocable Assets Total Assets Segment Liabilities a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Add: Unallocable Liabilities Total Liabilities Segment capital Employed (Segment assets less segment liabilities) a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) Total Add : Unallocable assets less liabilities Total capital employed capital Expenditure a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB)
178470.87 71879.95 63047.71 313398.53 26229.32 339627.85 40776.66 7946.56 14525.74 63248.96 5045.40 68294.36
172648.55 57282.75 47747.48 277678.78 13622.36 291301.14 33947.59 4958.47 9382.66 48288.72 4385.55 52674.27
114
Particulars d) Unallocated Total Depreciation a) Technical Textiles Business (TTB) b) Chemicals and Polymers Business (CPB) c) Packaging Films Business (PFB) d) Unallocated Total
Year ended March 31, 2011 (Rs. lakhs) 900.26 22304.11 10204.16 3508.48 2984.90 312.31 17009.85
Year ended March 31, 2010 (Rs. lakhs) 458.06 52811.86 8991.99 3240.67 1979.75 263.93 14476.34
B.
Geographical Segments
Year ended March 31, 2011 (Rs. lakhs) 248776.46 103062.16 351838.62 310544.01 29083.84 339627.85 20526.39 1777.72 22304.11 Year ended March 31, 2010 (Rs. lakhs) 189266.39 68666.13 257932.52 252199.70 39101.44 291301.14 52599.61 212.25 52811.86
Particulars Revenue India Outside India Total carrying Amount of Segment Assets India Outside India Total Addition to Fixed Assets and Intangible Assets India Outside India Total
8.
115
As at December 31, 2009 (Audited) (Rs. lakhs) ii) current Liabilities iii) Reserves (8.11) (31.22)
9.
Nature of Derivative
Purpose As at March 31, 2011 Hedging March 31, 2010 Hedging Hedging Conversion of INR denominated Liabilities to USD Conversion of Fixed INR denominated Interest Liability to Floating INR denominated liability Floating JPY interest payments (with cap of 7%) in exchange of fixed INR interest receipts USD/ INR Buy for Hedging of Imports Forward Sell Contracts EUR/ INR Buy for Hedging of Imports EUR/USD Sell for Hedging of receivables USD/Baht Sell for Hedging of receivables -
Foreign currency (In Millions) As at March 31, 2011 12.25 March 31, 2010 62.25 13.00 1.21
Amount (Rs. Lakhs) As at March 31, 2011 7731 March 31, 2010 37738 5836 542
EUR / INR Option Strips USD / INR Option Strips Principal Only Swap Interest Rate Swap
3 -
Conversion of Fixed INR denominated Interest Liability to Floating INR denominated liability -
10000
10000
5000
USD / INR Sell Forwards USD / INR Buy Forwards EUR / INR Sell Forwards EUR / INR Buy Forwards Euro / USD Sell Forwards USD / Baht Sell Forwards USD / Baht Buy Forwards
1 1
Forward Sell Contracts USD/ INR Buy for Hedging of Imports Forward Sell Contracts EUR/ INR Buy for Hedging of Imports EUR/USD Sell for Hedging of receivables -
2.00 0.46
1.01
892 203
454
5 20
7 3
38.00 3.54
24.00 0.77
23982 2234
14550 465
0.089
0.51
56.17
309
3.44
1546
0.15
2.21
116
Foreign Currency Exposures that are not hedged by Derivative Instruments or otherwise as follows: Particulars As at March 31, 2011 Foreign currency (in millions) Term Loans - USD PCFC - USD Buyers Credits - USD Buyers Credits Euro Buyers Credits Yen 46.96 14.00 18.08 0.14 10.35 Amount (Rs. lakhs) 20940.16 6242.60 8061.74 86.56 55.61 As at March 31, 2010 Foreign currency (in millions) 37.88 26.00 27.72 Amount (Rs. lakhs) 17005.10 11671.40 12444.56 -
10.
OPERATING LEASES
The Company has entered into operating lease agreements for various premises taken for accommodation of Companys officers / directors and various offices of the Company. These arrangements are both cancellable and non-cancellable in nature and range between three to five years. As at March 31, 2011, the future minimum lease payments under non-cancellable operating leases as set out below: (Rs. lakhs) Particulars Total of future minimum lease payments under noncancellable operating leases for each of the following periods - Not later than one year - Later than one year and not later than five years - Later than five years Lease rent recognized in the profit and loss account 1467.21 5668.39 4259.78 1773.46 621.73 2996.32 3396.12 1682.54 As at March 31, 2011 As at March 31, 2010
11.
The details of subsidiary companies considered in the preparation of Consolidated Financial Statements are as under:
a) Indian Subsidiaries
S. No. a) b) c) d) Particulars SRF Holiday Home Limited (Rs. lakhs) March 31, 2011 100% 47.00 (4.81) SRF Transnational Holdings Limited (Rs. lakhs) March 31, 2011 100% 3254.18 (2295.17) SRF Properties Limited (Rs. lakhs) March 31, 2011 100% 8.00 83.64
e) f) g)
h) i) j)
Financial year of the subsidiary Extent of holding Capital Reserves and Surplus (adjusted for debit balance in profit and loss account, wherever applicable) Total Assets (Fixed Assets + Current Assets) Total Liabilities (Debts + Current Liabilities) Details of Investment (except in case of investment in subsidiaries) Turnover (Including Other Income) Profit Before Taxation Provision for Taxation
42.24 0.05 -
(0.25) -
117
S. No. k) l) S. No.
Particulars
SRF Transnational Holdings Limited (Rs. lakhs) (73.58) SRF Energy Limited (Rs. lakhs)
SRF Properties Limited (Rs. lakhs) 10.62 SRF Fluorochemicals Limited (Rs. lakhs) March 31, 2011 100% 5.00 (0.49) 4.58 0.07 (0.14) (0.14) -
a) b) c) d) e) f) g) h) i) j) k) l)
Financial year of the subsidiary Extent of holding Capital Reserves and Surplus (adjusted for debit balance in profit and loss account, wherever applicable) Total Assets (Fixed Assets + Current Assets) Total Liabilities (Debts + Current Liabilities) Details of Investment (except in case of investment in subsidiaries) Turnover (Including Other Income) Profit Before Taxation Provision for Taxation Profit After Taxation Proposed Dividend
March 31, 2011 100% 5.00 (0.49) 4.58 0.07 (0.14) (0.14) -
b) Foreign Subsidiaries
S. No. a) b) c) d) Particulars SRF Global BV# USD Financial year of the subsidiary Extent of holding Capital Reserves and Surplus (adjusted for debit balance in profit and loss account, wherever applicable) Total Assets (Fixed Assets + Current Assets) Total Liabilities (Debts + Current Liabilities) Details of Investment (except in case of investment in subsidiaries) Turnover (Including Other Income) Profit Before Taxation Provision for Taxation Profit After Taxation Proposed Dividend 17401629 (124159) 100% 7759.39 (55.36) 17290262 (548387) (Rs. lakhs) SRF Tech Textiles BV# (subsidiary of SRF Global BV) USD 100% 7709.73 (244.53) (Rs. lakhs) March 31, 2011
e) f) g)
10985 23778
4.90 10.60
10016829 20061898
4466.50 8945.60
* (84061) (84061) -
* (37.48) (37.48) -
h) i) j) k) l)
* **
Investment in subsidiary USD 17290263 (Equivalent to Rs. 7709.73 lakhs) Investment in subsidiaries USD 26786944 (Equivalent to Rs. 11944.30 lakhs)
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S. No.
Particulars
SRF Overseas Limited# (subsidiary of SRF Tech Textiles BV) AED (Rs. lakhs) 100% 84049966 (32398637) 10186.86 (3926.71)
SRF Technical Textiles (Thailand) Limited# (subsidiary of SRF Tech Textiles BV) Baht 100% 100000300.00 668373232 1470.00 9825.09 (Rs. lakhs)
a) b) c) d)
Financial year of the subsidiary Extent of holding Capital Reserves and Surplus (adjusted for debit balance in profit and loss account, wherever applicable) Total Assets (Fixed Assets + Current Assets) Total Liabilities (Debts + Current Liabilities) Details of Investment (except in case of investment in subsidiaries) Turnover (Including Other Income) Profit Before Taxation Provision for Taxation Profit After Taxation Proposed Dividend Particulars
e) f) g)
78849780 27198451
9556.59 3296.45
1808340629 1039967097
26582.61 15287.52
h) i) j) k) l) S. No.
SRF Industex Belting (Pty) Limited# (subsidiary of SRF Tech Textiles BV) Rand (Rs. lakhs) 100% 13320202 3095906 871.14 202.47 March 31, 2011
(Rs. lakhs)
a) b) c) d)
Financial year of the subsidiary Extent of holding Capital Reserves and Surplus (adjusted for debit balance in profit and loss account, wherever applicable) Total Assets (Fixed Assets + Current Assets) Total Liabilities (Debts + Current Liabilities) Details of Investment (except in case of investment in subsidiaries) Turnover (Including Other Income) Profit Before Taxation Provision for Taxation Profit After Taxation
e) f) g)
69610765 53194657 -
4552.54 3478.93 -
19870 28923 -
8.86 12.90 -
h) i) j) k)
(7488) (7488)
(3.34) (3.34)
119
S. No.
Particulars
SRF Industex Belting (Pty) Limited# (subsidiary of SRF Tech Textiles BV) Rand (Rs. lakhs) -
USD -
(Rs. lakhs) -
l)
Proposed Dividend
# The financial statements of these foreign subsidiaries have been converted into Indian Rupees on the basis of following exchange rates: (i) 1 AED = Rs. 12.12, (ii) 1 USD = Rs. 44.59, (iii) 1 Baht = Rs. 1.47, (iv) 1 Rand = Rs. 6.54
12. 13.
Schedules 1 to 9 form an integral part of the Balance Sheet, Schedules 10 to 14 form an integral part of the Profit and Loss Account and Schedule 15 forms an integral part of the Balance Sheet and Profit and Loss Account. Figures pertaining to subsidiaries have been reclassified wherever considered necessary to bring them in line with the Holding Companys financial statements.
Arun Bharat Ram Chairman Place: Gurgaon Date: May 9, 2011 Subodh Bhargava Director
Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer
Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary
cONSOLIDATED cASH FLOW STATEMENT FOR THE YEAR ENDED MARcH 31, 2011
Year ended March 31, 2011 Rs. Lakhs Year ended March 31, 2010 Rs. Lakhs
120
Year ended March 31, 2011 Rs. Lakhs Taxation Net cash from operating activities (A) (19433.54) 61653.62
Net increase in cash and cash Equivalents D=(A+B+c) cash and cash equivalents at the beginning of the year (E) Less: Exchange fluctuation on foreign currency bank balances (F) cash and cash equivalents at the close of the year G =(D+E-F)
* Includes interim dividend deposited with the bank Nil (as at March 31, 2010 - Rs. 4235.25 lakhs, as at March 31, 2009 - Nil), unclaimed dividend with the banks Rs. 445.07 lakhs (as at March 31, 2010 - Rs. 265.87 lakhs, as at March 31, 2009 - Rs. 154.09 lakhs) and margin money with the banks Rs. 393.43 lakhs (as at March 31, 2010 - Rs. 309.30 lakhs, as at March 31, 2009 - Rs. 62.61 lakhs)
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants Manjula Banerji Partner Place: Gurgaon Date: May 9, 2011 Arun Bharat Ram Chairman Subodh Bhargava Director Ashish Bharat Ram Managing Director Rajendra Prasad President & Chief Financial Officer Kartikeya Bharat Ram Deputy Managing Director Anoop K Joshi Vice President & Company Secretary
121
SRF LIMITED
Regd. Office: C-8, Commercial Complex, Safdarjung Development Area, New Delhi-110 016 Corp. Office: Block-C, Sector-45, Gurgaon-122 003, Haryana
3.30 P.M.
Notes:
1. 2. 3. 4.
Please produce this admission slip duly completed at the entrance for admission to the meeting hall. The attendance counter will open at 3: 00 p.m. Tea, coffee and cold drinks will be served at the meeting. Please bring your copy of the Annual Report to the meeting.
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SRF LIMITED
Regd. Office: C-8, Commercial Complex, Safdarjung Development Area, New Delhi-110 016 Corp. Office: Block-C, Sector-45, Gurgaon-122 003, Haryana
PROXY FORM
I/We of in the district of being .member(s) of SRF LIMITED, hereby appoint ..of .. in the district of or falling him, .of ....................in the district of ............as my/our proxy to vote on my/our behalf at the 40th Annual General Meeting of SRF LIMITED to be held on Thursday, 28 July 2011 and at any adjournment thereof.
Signed this _________________________________ day of ______________________ 2011 Affix Signature_______________________________ 30 paisa Revenue Stamp
Notes:
1. 2. 3. 4. 5.
A Proxy in order to be effective, must reach the Registered Office of the Company not less than 48 hours before the scheduled time of the meeting The member himself or his constituted attorney may sign the proxy Where a proxy is appointed, the member should hand over the attached admission slip to the proxy The Company reserves the right to ask for identification of the proxy A proxy cannot speak at the meeting or vote on a show of hands
Registered Office C-8, Commercial Complex, Safdarjung Development Area, New Delhi- 110 016 Corporate Office Block - C, Sector - 45 Gurgaon - 122003, Haryana, India Tel: 0124-4354400 Fax: 0124-4354500 Web: www.srf.com
studio-A