DIRECTORS' REPORT Dear Shareholders, Your Directors have pleasure in presenting their 31st Annual Report of the company, along with Audited Accounts for the financial year ended 31st March, 2015. COMPANY'S PERFORMANCE IN FY 2014-15 Your Company has achieved 'Sales and other income' of Rs. 10,162.22 lacs during the Financial Year 2014-15 as compared to Rs. 8,550.27 lacs of the previous Financial Year 2013-14, thereby showing a growth of 18.85%. The total exceptional items - expenses of the Company during the Financial Year 2014-15 is Rs.103.91 lacs as compared to Rs. 58.91 lacs of the previous Financial Year. Profit before exceptional & extraordinary items and tax for the F Y 2014-15 is Rs. 946.94 lacs against Rs. 472.31 lacs of previous year. After making a provision for doubtful debts of Rs. 99.40 lacs during FY 2014-15, your company has reported a net profit of Rs. 494.19 lacs against Rs. 352.92 lacs of previous year. The profit during FY 2014-15 has increased by 40% over the previous year. DIVIDEND AND TRANSFER TO RESERVE Keeping in view the requirements of the business, available growth potentials and for modernization/ automation of existing plant and machinery, the Board of Directors of your company have decided to recommend ploughing back the profits and thus, not recommended any dividend for the financial year under review. The Company has transferred a sum of Rs. 100.00 Lacs in the General Reserve out of the amount available for appropriations and an amount of Rs. 3,365.97 Lacs has been retained in the Profit & Loss Account. EXPORTS Your Directors are pleased to report that the Company's exports are continuously growing. The company has registered a growth of 20.49% in exports during FY. 2014-15, which grew at a rate of 5.96% during FY. 2013-14. During FY. 2014-15, your company exported goods to the tune of Rs. 3,999.17 lacs as against Rs. 3,319.00 lacs during previous financial year. EXPANSION As informed last year, Unit- IV has been set up in the existing factory premises for the production of linear and disc grade bimetals. Regular sale is picking up, specifically of disc grade bimetal/ tri metal applications simultaneous with development activities. Disc grade bimetal/ tri-metal products have growth prospects in the coming years. JOINT VENTURE & ASSOCIATES There has been no material change in the nature of the business of the Companies wherein your Company has a Joint Venture and/ or is associated with. The Investment of your Company in Checon Shivalik Contact Solutions Private Limited (CSCS-a joint venture company) as on 31.03.2015 stands at Rs. 221.45 Lacs (previous year Rs.198.95 Lacs) with addition of Rs. 22.50 Lacs in the form of allotment of 2,25,000 no. of Equity Shares to your Company. The Investment of your Company in Innovative Clad Solutions Private Ltd. (ICS-a joint venture company) as on 31.03.2015 continues to be Rs. 1512.00 Lacs (previous year Rs. 1512.00 Lacs). The Investment of your Company in Shivalik Bimetal Engineers Pvt. Ltd. (SBEPL-an associate company) as on 31.03.2015, stands at Rs. 22.28 Lacs (previous year Rs. 22.28 Lacs). PUBLIC DEPOSITS During the year under review, your Company did not accept any public deposits from the public under section 73 of the Companies Act, 2013. DIRECTORS In accordance with the requirements of Companies Act, 2013 and other applicable provisions, Mr. Rohit Kapur and Lieutenant General Pradeep Khanna (Retd.), Independent non-executive directors, are to retire by rotation at the ensuing Annual General Meeting and, being eligible, have offered themselves for re-appointment. During the year under review, in accordance with provisions of Section 161, 149, 150, 152 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force) and Clause 49 of the Listing Agreement, Mrs. Harpreet Kaur was appointed as Additional Director (Women Director) of the company w.e.f. 10th November 2014 and who holds office up to the date of this Annual General Meeting. The Company has received a notice in writing under Section 160 of the Companies Act, 2013 from a member proposing her candidature for the office of Director, to be appointed as an Independent Non-Executive Director, whose period of office shall be liable to retire by rotation." Pursuant to section 149 and other applicable provisions of the Act, Rules made thereunder, the Board seeks approval of the members for the appointment of Mrs. Harpreet Kaur as Independent Non-Executive Director of the Company, whose period of office shall be liable to retire by rotation. KEY MANAGERIAL PERSONNEL In pursuance to provisions of Section 2(51) read with Section 203 of the Companies Act, 2013 and rules made thereunder and other applicable provisions thereto, Mr. Mukesh Kumar Verma, who is already working in the Company as Chief Financial Officer, designated as Chief Financial Officer as well as Key Managerial Person of the Company by the Board in its meeting held on 28th May, 2014. ANNUAL EVALUATION OF BOARD'S PERFORMANCE In terms of the provisions of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors on recommendation of the Nomination and Remuneration Committee, have evaluated the performances of the Board/Director(s) for the financial year 2014-15. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE During the year, four (4) Board Meetings and four (4) Audit Committee Meetings were convened and held. The details are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. DECLARATION OF INDEPENDENCE Your Company has received declarations from all the Independent Directors u/s 149(6) of the Companies Act, 2013 confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement. CORPORATE GOVERNANCE Your Company is committed to adopting and adhering to the best Corporate Governance practices/requirements as set out by SEBI. As per the requirements under Clause 49 of the listing agreement with Bombay Stock Exchange Limited, the Report on Corporate Governance incorporating, a separate section on 'Management Discussion and Analysis Report' - which is part of the Directors' Report together with Auditors' Certificate regarding Compliance of Corporate Governance, is annexed herewith as 'Annexure- A & B' PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the notes to Financial Statements. AUDITORS The Statutory Auditors, M/s Malik S & Co., Chartered Accountants (Registration No. 00383N), New Delhi, hold office till the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. The certificate from the Auditors have been received to the effect that their re-appointment, if made, would be within the prescribed limit under section 141(3)(g) of the Companies Act, 2013. AUDITORS' REPORT There are no qualifications, reservations, or adverse remarks or disclaimers made by M/s Malik S & Co., Statutory Auditors, in their report. Observations made in the Auditor's Report are self-explanatory and therefore do not call for any further comments under Section 134(1) of the Companies Act, 2013. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s APAC & Associates, Company Secretaries to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as 'Annexure-D' to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. INTERNAL AUDIT Pursuant to the Section 138 of the Companies Act, 2013, the Companies (Accounts) Rules, 2014 and other applicable provisions M/s. AMR & Co., Chartered Accountants, (Firm Registration No. 015422N) were appointed as Internal Auditors of the company for the FY. 2014-15. Internal Audit is regularly conducted to evaluate the adequacy and effectiveness of internal controls and overall risk management. Internal Audit is staffed by professionals with varied skills and expertise. The Audit committee of the board provides directions and monitors the effectiveness of the Internal Audit function. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has adequate internal control systems to ensure operational efficiency, accuracy and promptness in financial reporting and compliance of various laws and regulations. The internal control system is supported by the internal audit process. An Internal Auditor has been appointed for this purpose. The Audit Committee of the Board reviews the Internal Audit Reports and the adequacy and effectiveness of internal controls periodically. The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of business including adherence to the Company's Policies, safeguarding of its assets, the prevention and detection of fraud, the accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as 'Annexure-C' to this Report. RELATED PARTY TRANSACTIONS During the financial year 2014-15, all transactions entered into with the Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no Material Related Party transactions during the year. Thus, disclosure in Form AOC-2 is not required. There were no transactions with related parties, which qualify as material transactions under the Listing Agreement. The Board has adopted Related Party Transaction Policy for determining the materiality of related party transactions and also on the dealings with related parties. This Policy has been displayed on the Company's website at <http://www>. shivalikbimetals.com/images/pdf/related-party-transactions-policy.pdf <http://shivalikbimetals.com/images/pdf/related-party-transactions-policy.pdf>. All transactions with related parties during the year were in the ordinary course of business and at arm's length. There are no related party transactions that may have potential conflict with the interest of the Company at large. The details of the related party transactions as required under Accounting Standard - 18 are set out in Note 37 to the financial statements forming part of this Annual Report. CORPORATE SOCIAL RESPONSIBILITY Pursuant to the Section 135 of the Companies Act, 2013, Schedule VII of the Act, Companies (Corporate Social Responsibility Policy) Rules, 2014 and other applicable provisions, CSR provisions are not applicable to your Company for the Financial Year 2014-15. RISK MANAGEMENT Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Your Company periodically assesses risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans. Your Company, through its risk management process, strives to contain impact and likelihood of the risks within the risk appetite as agreed from time to time with the Board of Directors. As per the requirements of Clause 49 of the Listing Agreement, your Company has constituted a Risk Management Committee to oversee the risk management efforts in the Company under the Chairmanship of Mr. S.S. Sandhu, Chairman & Whole-time Director of the Company. The details of the Committee are set out in the Corporate Governance Report forming part of this Report. During the financial year 2014-15, the Board of Directors have approved the risk management policy and displayed on Company website at <http://www.shivalikbimetals.com/images/pdf/risk-mangement-policy.pdf>. There are no risks, which in the opinion of the Board threaten the existence of your Company. However, some of the risks, which may pose challenges, are set out in the Management Discussion and Analysis that forms part of this Report. WHISTLE BLOWER POLICY / VIGIL MECHANISM Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement and displayed at the Company website at <http://www.shivalikbimetals>. com/images/pdf/whistle-blower-policy.pdf. The policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. More details on the vigil mechanism and the Whistle Blower Policy of your Company have been outlined in the Corporate Governance Report, which forms part of this report. CREDIT RATING M/s CARE Ratings has rated your company BBB for long-term facilities and A3+ for short-term facilities conveyed vide their letter-dated 12.01.2015. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has implemented a policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace. The Company is committed to creating a safe and healthy working environment. The Company believes that all individuals have the right to be treated with dignity and strives to create a workplace, which is free of gender bias and Sexual Harassment. The Company has a zero tolerance approach to any form of Sexual Harassment. The policy has been displayed in the Company's website. There were no complaints received during the Financial Year 2014-15. DIRECTORS' RESPONSIBILITY STATEMENT As required by Section 134 (5) of the Companies Act, 2013, based on the information and representations received from the operating management, the Board of Directors confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; (b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on 31st March, 2015; (c) they 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; (d) they have prepared the annual accounts on a going concern basis; (e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; (f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively. LISTING FEES The annual listing fees for the year under review have been paid to BSE Limited, where your Company's shares are listed. GENERAL SHAREHOLDER INFORMATION General Shareholder Information is given in the Report on Corporate Governance forming part of the Annual Report. NOMINATION AND REMUNERATION & BOARD DIVERSITY POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a Policy for selection, appointment and remuneration of Directors and Key Managerial Personnel, which is displayed at the Company website at <http://www.shivalikbimetals.com/images/pdf/nomination-and-remuneration-and-board> diversity-policy.pdf. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued thereunder and Clause 49 of the Listing Agreement, your Company has formulated the Nomination and Remuneration & Board Diversity Policy on the recommendations of the Nomination and Remuneration Committee. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters has been outlined in the Corporate Governance Report, which forms part of this Report. PARTICULARS OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report and given hereunder. In terms of Section 136(1) of the Companies Act, 2013, the same is open for inspection at the Registered Office of your Company. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Company. Further, the Company has no person in its employment drawing salary of Rs. 60 lacs per annum or Rs. 5.00 lacs per month (Excluding whole-time Directors- details of whom are given hereunder) as defined under the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Other Disclosure:- (i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2014-15 : (iii) the percentage increase in the median remuneration of employees in the financial year 2014-15 : Median - 6.7 % (iv) the number of permanent employees on the rolls of company - 265 nos. (v) the explanation on the relationship between average increase in remuneration and company performance: The company's PAT has increased by 40% from Rs.352.92 lacs during F Y 2013-14 to Rs.494.19 lacs during F Y 2014-15 against which the average increase in remuneration is 7.8% (vi) comparison of the remuneration of the KMP against the performance of the company: Your Company achieved 18.85% growth in 'Sales & other income' and 40% increase in the net profits during the year. There is a small increase of 0.86% in the remuneration of KMP's against the increase in Net Profit of 40%. (vii) variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer: • Adjusted to sub-division of shares in the ratio of 1:5 and issue of Bonus shares in the ratio of 1:1. (viii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: Average increase in the remuneration of all the employees excluding KMP's-10.85% Average increase in the remuneration of KMP's- 0.86% Justification: Increase in salary of KMP's is decided based on the company's performance, individual performance, inflation, prevailing Industry trends and benchmarks. (ix) comparison of the each remuneration of the Key Managerial Personnel against the performance of the company: Each KMP is granted Salary based on his qualification, experience, nature of job, industry benchmark, earlier salaries and many other factors, comparison of one against the other is not feasible. (x) the key parameters for any variable component of remuneration availed by the directors There is no variable component of remuneration availed by the directors except sitting fee payable to non-working directors which is payable based on their attendance during Board Meetings. (xi) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: There is no such employee who received remuneration in excess of the highest paid director. (xii) affirmation that the remuneration is as per the remuneration policy of the company. Remuneration paid to Whole Time Directors is as per the remuneration policy of the company CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo are given as under: (A) Conservation of energy- (i) Some of the steps taken for conservation of energy are; • Energy conservation continues to be area of emphasis and is regularly monitored in every manufacturing unit of the company. • Recycling of process water to conserve natural resources. • Replacement of conventional inefficient bulbs with efficient CFL/LED lights. Reducing load during peak hours. • Lowering the temperature to 350 degrees, when furnace do not have load, defining temperature range of annealing furnace to avoid major temperature change and reducing idle time for attaining required temperature, • Installation of STP for recycling water for process use. (ii) The steps taken by the company for utilizing alternate sources of energy; Improving sealing of furnaces. (iii) The capital investment on energy conservation equipment; Rs 8.15 lacs. (B) Technology absorption- (i) the efforts made towards technology absorption; The objective of R&D facility is to develop new products and study the customer needs and suggest them quality solutions which are cost effective and competitive for existing products. (ii) The benefits derived like product improvement, cost reduction, product development or import substitution; Disc Grade Bimetal /Tri-metal for better yield and performance, alternative process for snap disc manufacture, Edge round without material removal, deburring of material without removal of material. (iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - N.A. (a) The details of technology imported - N.A. (b) The year of import- N.A. (c) Whether the technology been fully absorbed- N.A. (d) If not fully absorbed, areas where absorption has not taken place, and the reasons thereof; - N.A. (iv) The expenditure incurred on Research and Development. Rs. 16.78 lacs. (C) Foreign exchange earnings and Outgo The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows. Earnings in Foreign exchange (FOB Value of Exports) Rs. 3,937.45 Lacs Expenditure in Foreign currency Rs. 5,565.60 Lacs Expenditure in Foreign currency on Capex Rs. 31.77 Lacs SIGNIFICANT/ MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future. MATERIAL CHANGES AND COMMITMENTS In terms of Section 134(3)(l) of the Companies Act, 2013, except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report. REQUEST TO THE MEMBERS: Your Directors invite the attention of all Members to note that pursuant to changes in applicable laws and regulations, in order to receive and participate in all corporate actions of the company, you are requested to: - • Inform the Company / our registrar / Depository Participants, if not already done earlier, for updating details of your Permanent Account Number (PAN). The Securities and Exchange Board of India (SEBI) has mandated the submission of PAN by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit the PAN to their Depository Participants with whom they are maintaining their demat accounts. Members holding shares in physical form can submit their PAN details to the Company / Registrar. • Transferee(s) to furnish copy of their PAN Card to the Company / RTA's for registration of transfer of shares, for securities market transactions and off-market / private transactions involving transfer of shares in physical form. • Inform your Depository Participant to reactivate your account for credit actions. Frozen Demat accounts may lead to non-credit / delayed credit of securities allotted to your account. • Update your address with Registrar / Depository Participants to ensure timely receipt of shareholder communication. Members holding shares in electronic form are requested to intimate immediately any change in their address or bank mandate to their Depository Participants with whom they are maintaining their demat accounts. Members holding shares in physical form are requested to advise any change of address immediately to the Company / Registrar and Share Transfer Agents, M/s MAS Services Limited. • Investors are requested to kindly note that any dividend warrant which remains un-encashed for a period of seven years will be transferred to 'Investor Education and Protection Fund' in terms of section 125 of the Companies Act, 2013. Shareholders who have not en-cashed their dividend warrants may kindly contact the Company and lodge their warrants for revalidation. The schedule of transfer of unclaimed / unpaid dividend to the 'Investor Education and Protection Fund' is given in the Corporate Governance Report forming part of this Annual Report. • The Ministry of Corporate Affairs has taken a 'Green Initiative in the Corporate Governance' by allowing paperless Compliances by the Companies and has issued circular stating that service of notice / documents including Annual Report can be sent by e-mail to its members. To support this green initiative of the Government in full measure, members are requested to provide / update their e-mail addresses, in respect of electronic holdings with the Depository through their concerned Depository Participants or send an e-mail at info@masserv.com or investor@ shivalikbimetals.com to get the Annual Report and other documents on such e-mail address. Members holding shares in physical form are also requested to intimate their e-mail address to MAS Services Limited either by e-mail at info@masserv.com or investor@shivalikbimetals.com or by sending a communication at the Company's Registered Office or Head Office or address mentioned below: M/s MAS Services Ltd. T - 34, IInd Floor, Okhla Industrial Area, Phase - II, New Delhi-110020 ACKNOWLEDGEMENTS Your Directors would like to sincerely express their appreciation for co-operation received from the Company's Bankers, Indian Bank, during the year under review, from time to time. Your directors place on record their deep sense of appreciation for the commitment and dedication of all the Company's executives, staff and workers. Your Directors also thank all the Govt. authorities, business associates, customers, vendors and the shareholders and all stakeholders for their continuous support and co-operation to the Company during the year. By order of the Board For Shivalik Bimetal Controls Limited Sd/- S. S. Sandhu Chairman DIN: 00002312 302, Kings I, Royal Retreat, Charmswood Village, Suraj Kund, Faridabad, 121009, Haryana, India Registered Office: 16-18, New Electronics Complex, Chambaghat, Distt. Solan (H. P) CIN: L27101HP1984PLC005862 e-mail: investor@shivalikbimetals.com Place : New Delhi Date : August 11, 2015 |