Directors' Report TO THE SHAREHOLDERS Your Directors have the pleasure of presenting their Annual Report, together with the Audited Financial Statements of the Company for the year ended March 31, 2015. GENERAL & CORPORATE MATTERS During the year under review, your Company has reported a best ever performance in its history, both in terms of Revenue and Profit from Operations, when viewed in the context of intensely competitive landscape prevailing in the industry. Gross revenue from operations for the year grew by around 54% to Rs.69606.32 lacs as compared to Rs.45237.86 lacs during the previous year mainly driven by higher sales revenue in cables business segment. The Exports revenue including project exports, stood at Rs.7038.61 lacs during the year under review as compared to Rs 4185.07 lacs for the previous year. Despite a significant increase in finance costs with interest rates remaining at elevated levels throughout the year, the Profit (before depreciation and tax) for the year increased by robust 140% and stood at Rs.7497.38 lacs as compared to Rs.3127.38 lacs in the previous year due to increased revenue from both i.e. cables and EPC business segments and better products mix. Although the EPC business segment recorded comparatively moderate growth in Revenue which increased by approx. 32% to Rs.20071.01 lacs, its profitability improved substantially owing to gradual strengthening of execution capabilities and award of a large project after a long wait in telecom cable networking arena in which the Company possesses requisites skill and knowledge quotient meeting the contemporary technological requirements. The current business verticals of the EPC segment, viz. Telecom, Power and Sewerage pipeline are now geared up for sustained improvement in performance with comfortable backlog of orders in hand and in pipeline. During the year under review, your Company consolidated its position further in the industry through optimum capacity utilisation and new products launches as per evolving industry standards. To keep abreast with the latest trends in the industry, your Company was also vigilant about technological upgradation of its production facilities, with the aim of improving assets performance and cost competitiveness. The domestic telecom cable industry is expected to grow at a reasonable pace over the medium-term but competitive conditions are likely to persist. As per conceived strategy, the Company has been fairly successful in de-risking its business model during last few years from being a manufacturer of telecommunication cables to a comprehensive end-to-end solution provider across the broader communications industry networks besides diversifying into power distribution and sewerage pipeline projects, etc. The Company's focus in future, therefore, shall be to sustain momentum in both the business segments namely, cables and EPC, by leveraging its inherent strength of products development as per evolving industry standards and superior project execution capabilities to drive both the near-term and long-term growth. With a view to achieve a better value addition in certain niche telecommunication cable products, the Company has equipped itself for supplying connectorised cable assemblies for various carrier network applications and is geared to meet the increasing demand for such products in the domestic and overseas market places. The recent spectrum auction by the Government of India will lead to accelerated investment by telecom operators in data network expansion including last mile connectivity through deployment of fibre in addition to rolling out new networks and upgrading the existing ones. The Company, therefore, envisages a new stream of revenue from Fibre-To-The-Home and last mile connectivity cable products and accordingly has equipped itself for manufacturing and supplying products, the full benefit of which is expected to accrue in future which will further add to the performance of the Company. DIVIDEND AND RESERVES After considering the Company's profitability, free cash flow and overall financial performance, the Board of Directors of the Company is pleased to recommend a Dividend of Rs. 5/- per equity share of Rs.10/- each (i.e. 50%) for the financial year ended March 31, 2015. The total quantum of Dividend on equity shares, if approved by the Members, will be about Rs. 592.54 lacs while about Rs 120.63 lacs will be paid by the Company towards Tax on Dividend and Surcharge/Education Cess thereon. Your Board also recommends a transfer to General Reserve of Rs. 1141.15 lacs leaving a surplus of Rs. 6350.48 lacs in the statement of Profit and Loss to be carried forward. DEPOSITS Your Company has not accepted any Deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis, Report on Corporate Governance and a Certificate by the Managing Director (CEO) confirming compliance by all the Board Members and Senior Management Personnel with Company's Code of Conduct and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES As a part of its initiative under Corporate Social Responsibility (CSR), the Company has undertaken CSR activities in the areas of promoting education and employment enhancing skills directed towards improving the quality of life and increasing the resources of the surrounding communities, in the area where the Company operates. These activities are largely in accordance with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR activities during the year were implemented through Madhav Prasad Priyamvada Birla Apex Charitable Trust, a registered trust under Section 12A of the Income Tax Act, 1961. The Annual Report on CSR activities is given in Annexure-I, which is attached hereto and forms a part of the Directors' Report. DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013 : (a) that in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013, have been followed and there are no material departures from the same; (b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and the profit of the Company for the year ended on that date; (c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) that the annual financial statements have been prepared on a going concern basis; (e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; (f) that system to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS The Company's system of financial and compliance controls with reference to the financial statements and risk management is embedded in the business process by which the Company pursues its objectives. Additionally, the Audit Committee and the Board of Directors provide risk oversight through their review of potential risks which could negatively impact the operations, the proposed budget and plan, the Company's strategic framework and any risks that may negatively impact it besides inherent risks associated with turnkey projects of EPC business segment. The management is committed to ensure an effective internal control environment commensurate with the size, scale and complexity of the operations, which provides assurance on the efficiency of the Company's operations and safety/security of its assets besides orderly and legitimate conduct of Company's business in the circumstances, which may reasonably be foreseen. The Company has defined organisation structure, authority levels delegated powers, internal procedures, rules and guidelines for conducting business transactions. The Company's system and process relating to internal controls and procedures for financial reporting have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles (GAAP) in India, the Companies Act, 2013 and rules framed thereunder and all other applicable regulatory / statutory guidelines, etc. for disclosure with reference to financial statements. The Company's internal controls over financial reporting interalia includes the policies and procedures that pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP in India and in compliance to other applicable statutory and regulatory provisions, provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of Company's assets that could have a material effect on the financial statements and for preventing and detecting fraud and other irregularities or deliberate mis-statements. Management is responsible for establishing and maintaining adequate disclosure controls and procedures and adequate internal controls over financial reporting with respect to financial statements besides its effectiveness in the context of applicable regulations. The Internal Auditor, the Audit Committee as well as the Board of Directors conduct from time to time an evaluation of the adequacy and effectiveness of the system of internal controls for financial reporting with respect to financial statements. INDUSTRIAL RELATIONS Industrial relations remained cordial throughout the year. Your Directors recognize and appreciate the sincere and hard work, loyalty, dedicated efforts and contribution of all the employees in the growth and performance of the Company during the year. The Company continues to accord a very high priority to both industrial safety and environmental protection and these are ongoing process at the Company's plant and facilities to maintain high awareness levels. The Company has also stressed the need to adopt the highest safety standards on Engineering, Procurement and Construction EPC business segment projects with the emphasis on ensuring that safety on all projects under execution are given a great deal of importance. The Company as a policy re-evaluates safety standards and practices from time to time in order to raise the bar of safety for its people as well as users and customers. RECOGNITION The Company's manufacturing facilities continue to remain certified by independent and reputed external agency as being compliant as well as aligned with the external standards for Quality Management System ISO 9001:2008 and Environmental Management System ISO 14001:2004. During the year, the audits for these Certifications established continuous improvement in performance against these standards. DIRECTORS In terms of Section(s) 149, 152 and all other applicable provisions of the Companies Act, 2013, for the purpose of determining the directors liable to retire by rotation, the Independent Directors are not included in the total number of directors of the Company. Accordingly, Shri D.R.Bansal [DIN 00050612], Director shall retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment as a Director of the Company. Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Smt. Kiran Aggarwal [DIN 06991807] was appointed as an Additional Director in the category of Non-executive Independent Director w.e.f. 10thNovember, 2014 and she holds office as such up to the date of ensuing Annual General Meeting. Smt. Kiran Aggarwal is not disqualified from being appointed as a Director in terms of Section 164 of the Companies Act, 2013. The Company has received requisite notice in writing from a member proposing her candidature as an Independent Director at the ensuing Annual General Meeting. Your Board based on the recommendation of the Nomination and Remuneration Committee recommends appointment of Smt. Kiran Aggarwal as Independent Director not liable to retire by rotation for a period of 5 years with effect from 10th November, 2014. Having regard to the qualifications, wide range of professional experience and association of Shri Y.S.Lodha [DIN 00052861] with the Company and considering the overall performance of the Company and its growth during his tenure, the Board of Directors of the Company based on recommendation of Nomination and Remuneration Committee has approved re-appointment and terms of remuneration of Shri Y.S. Lodha as Managing Director of the Company for a period of five years with effect from 4th November, 2015 subject to approval of shareholders at the ensuing Annual General Meeting of the Company. The details of Directors/Managing Director seeking appointment/re-appointment as required under Clause 49 of the Listing Agreement with Stock Exchanges are given in the Notice of the ensuing Annual General Meeting, which is being sent to the shareholders along with Annual Report. KEY MANAGERIAL PERSONNEL During the year under review Shri R. Radhakrishnan, President (Commercial) & Secretary retired from the services of the Company w.e.f. August 14, 2014 consequent to attainment of superannuation as per Company's policy. The Board of Directors on the recommendation of the Nomination and Remuneration Committee appointed two new key managerial personnel during the year under review viz. Shri Ashok Mishra as Company Secretary w.e.f. August 14, 2014 and Shri Saurabh Chhajer as Chief Financial Officer w.e.f. February 7, 2015. DECLARATION BY INDEPENDENT DIRECTORS All Independent Directors of your Company viz. Shri J.Veeraraghavan, Shri S.K.Misra, Shri R.C.Tapuriah, Shri Shiv Dayal Kapoor and Smt.Kiran Aggarwal have individually and severally given a declaration pursuant to Section 149(7) of the Companies Act, 2013 affirming compliance to the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with stock exchanges. Based on the declaration(s) of Independent Directors, the Board of Directors recorded its opinion that all Independent Directors are independent of the Management and have fulfilled the conditions as specified in the Companies Act, 2013, rules made thereunder as well as relevant provisions of Clause 49 of the Listing Agreement with stock exchanges. MEETINGS OF BOARD AND COMMITTEES During the year under review, the Board met four times viz. on May 19, 2014, on August 9, 2014, on November 10, 2014 and on February 7, 2015. Details of all Board Committees along with their composition and meetings held during the year under review are given in the Report on Corporate Governance. PERFORMANCE EVALUATION OF BOARD, COMMITTEES & DIRECTORS Pursuant to the Provisions of the Companies Act, 2013 and as stipulated under Clause 49 of the Listing Agreement, the Board of Directors of the Company carried out the formal annual performance evaluation of all the Directors and also its self-evaluation process, interalia, to assess the skill set and contribution that are desired, recognising that competencies and experiences evolves over time. The process was conducted by allowing the Board to engage in candid discussions with each Director with the underlying objective of taking best possible decisions in the interest of the Company and its stakeholders. The Directors were individually evaluated based on structured self-assessment and personal interaction to ascertain feedback on well defined parameters which, interalia, comprised of level of engagement and their contribution to strategic planning and other criteria based on performance and personal attributes of the Directors. During the process of evaluation, the Board of Directors also reviewed and discussed the annual performance evaluation of Directors carried out by the Nomination and Remuneration Committee. A statement in detail indicating the manner, in which formal annual evaluation has been made by the Board of Directors, is given in the Report on Corporate Governance which forms a part of the Annual Report. SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION The Board of Directors in consonance with the recommendation of Nomination and Remuneration Committee (NRC) has adopted a terms of reference which, interalia, deals with the manner of selection of Directors and the Key Managerial Personnel of the Company. The NRC recommends appointment of Director/appointment or re-appointment of Managing Director based on their qualifications, expertise, positive attributes and independence in accordance with prescribed provisions of the Companies Act, 2013 and rules framed thereunder. The NRC, in addition to ensuring diversity of race and gender, also considers the impact the appointee would have on Board's balance of professional experience, background, view points, skills and areas of expertise. The Board of Directors in consonance with the recommendation of Nomination and Remuneration Committee has also adopted the Remuneration Policy for the members of the Board and Executive Management. The said policy earmark the principles of remuneration and ensures a well balanced and performance related compensation package taking into account shareholders' interest, industry practices and relevant corporate regulations in India. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a Vigil Mechanism and Whistle-Blower Policy to deal with instances of fraud and mis-management, if any, and conducting business with integrity, including in accordance with all applicable laws and regulations. The details of the Vigil Mechanism and Whistle-Blower Policy are explained in the Corporate Governance Report and also posted on the website of the Company. AUDITORS Messrs V. Sankar Aiyar & Co., Chartered Accountants (Registration No.109208W), were appointed as Statutory Auditors to hold office until the conclusion of the ensuing Annual General Meeting of the Company. Since Messrs V. Sankar Aiyar & Co. has been functioning as Auditors of the Company since last five consecutive years, the Board of Directors unanimously agreeing to the recommendation of the Audit Committee, further recommends re-appointment of Messrs V.Sankar Aiyar & Co. as Statutory Auditors of the Company for another term of 5 (five) years from the conclusion of the ensuing Annual General Meeting (32nd AGM) till the conclusion of fifth consecutive Annual General Meeting (37th AGM) hereafter, subject to ratification by shareholders in every Annual General Meeting, which is in accordance with the provisions of Section 139 read together with other provisions of Chapter X of the Companies Act, 2013 and the Rules made thereunder. A certificate has been received from them to the effect that their appointment as Auditors, if made, would be in accordance to the provisions of Section 139 and 141 of the Companies Act, 2013 and rules framed thereunder. The Board of Directors has appointed Messrs D. Sabyasachi & Co., Cost Accountants, as Cost Auditors for conducting audit of the cost accounts maintained by the Company in respect of specified products of the Company covered under The Companies (Cost Records and Audit) Amendment Rules, 2014 and fixed their remuneration based on the recommendation of the Audit Committee. The remuneration payable to Cost Auditors is subject to ratification by the shareholders in the ensuing Annual General Meeting of the Company. AUDITORS' REPORT Notes to Financial Statements are self explanatory including with respect to Emphasis of Matter paragraph drawn by the Auditors in their report and therefore, do not call for any further comments or explanations. SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Messrs R.K.Mishra & Associates, Company Secretaries were appointed to undertake the Secretarial Audit of the Company for the year ended 31st March, 2015. There are no adverse remarks or observations made by Messrs R.K.Mishra & Associates in the Secretarial Audit Report. The Report of the Secretarial Auditor is given in Annexure-II, which is attached hereto and forms a part of the Directors' Report. RELATED PARTY TRANSACTIONS All related party transactions entered into during the financial year under review by the Company were on an arm's length basis and in the ordinary course of business. There are no material significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All related party transactions are placed before the meeting(s) of Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the financial year for the transactions which are of a foreseen and repetitive in nature. The statement giving details of all related party transactions entered into pursuant to the omnibus approval together with relevant documents/ information are placed before the Audit Committee for review and approval on quarterly basis. The company has developed a Policy on materiality of Related Party Transactions and dealing with Related Party Transactions. The policy on Policy on materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is uploaded on the company's website and the same is available at the weblink <http://www.vtlrewa.com/pdf/RPTPolicy%20_VTL.pdf> SUBSIDIARY COMPANIES AND JOINT VENTURE The Company has three wholly owned subsidiaries namely August Agents Limited, Insilco Agents Limited and Laneseda Agents Limited. None of the subsidiary companies is a material non-listed Indian Subsidiary company as defined under Clause 49 of the Listing Agreement(s) with stock exchanges. Birla Ericsson Optical Limited was established as a joint venture company, in pursuance to a Joint Venture Agreement entered into by your Company alongwith Universal Cables Ltd. and Ericsson Cables AB, Sweden. Your Directors are pleased to inform that Birla Ericsson Optical Ltd. has achieved satisfactory financial performance during the year under review. There has been no change in the number of subsidiaries or in nature of business of subsidiaries or the Joint Venture. A Statement containing the salient features of the financial statement of subsidiaries and a joint venture as prescribed under the first proviso to sub-section (3) of section 129 of the Companies Act, 2013 read with rule 5 of The Companies (Accounts) Rules, 2014 is attached and forms part of the Annual Report. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the Companies Act, 2013 and Accounting Standard (AS)-21 "Consolidated Financial Statements" read with Accounting Standard (AS)-27 "Financial Reporting of Interests in Joint Venture", the audited Consolidated Financial Statements form part of the Annual Report. The Financial Statements of subsidiary companies have been prepared in the same form and manner as that of the Company. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013 The particulars of Loans, Guarantees and Investment in pursuance to Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements. DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL, ETC. As required under Section 197(12) read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of the ratio of the remuneration of each Director to the median employee's remuneration and such other details as prescribed therein are given in Annexure-III, which is attached hereto and forms a part of the Directors' Report. EXTRACT OF ANNUAL RETURN An Extract of Annual Return as per Section 92(3) of the Companies Act, 2013 is given in Annexure-IV, which is attached hereto and forms a part of the Directors' Report. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 of the Companies Act, 2013, read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of an employee of the Company are given in Annexure-V, which is attached hereto and forms a part of the Directors' Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO As required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules 2014, the information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure-VI, which is attached hereto and forms a part of the Directors' Report. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: (a) Issue of equity shares with differential rights as to dividend, voting or otherwise. (b) Issue of shares (including sweat equity shares) to employees of the Company under any scheme. (c) Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. (d) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. (e) During the year under review, there were no cases filed or reported pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT The Board desires to place on record its grateful appreciation for the excellent assistance and co-operation received from the State Government and continued support extended to the Company by the bankers, investors, suppliers and esteemed customers and other business associates. Your Directors also wish to place on record their deep sense of appreciation to all the employees of the Company for their unstinted commitment and continued contribution in the performance of the Company. Yours faithfully, Harsh V.Lodha Chairman (DIN: 00394094) Y.S.Lodha Managing Director (DIN:00052861) J.Veeraraghavan (DIN:00078998) S.K.Misra (DIN: 00009411) R.C.Tapuriah (DIN: 00395997) D.R.Bansal (DIN: 00050612) Pracheta Majumdar (DIN: 00179118) Shiv Dayal Kapoor (DIN:00043634) Kiran Aggarwal (DIN: 06991807) Directors New Delhi, May 16, 2015 |