DIRECTORS' REPORT To the Members of ROTO PUMPS LTD Your Directors have pleasure in submitting their 40th Annual Report of the Company together with the Audited Financial Statements for the year ended 31st March, 2015. Dividend Your Directors are pleased to recommend a dividend of Rs. 0.60 per share for the current financial year ended 31st March, 2015, which if approved by the members at the forthcoming Annual General meeting would result a Dividend outflow of Rs. 92,72,283/-and dividend Distribution Tax of Rs. 18,87,837/- aggregating a total outflow of Rs. 1,11,60,120/. Share Capital The paid up Equity Share Capital as on 31st March, 2015 was Rs. 3.09 Crores. During the year under review, your Company has not issued any shares, bonus shares or bought back any shares. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company. During the year under review, your Company had subdivided Shares of Rs. 10/- each into five shares of Rs. 2/- each. Transfer of unclaimed dividend to Investor Education and Protection Fund In terms of Section 125(2) of the Companies Act, 2013, the unclaimed dividend relating to the financial year 2006-07 has been remitted to the Investor Education and Protection Fund established by the Central Government. Further the unclaimed dividend relating to the financial year 2007-08 is becoming due for remittance on 06.11.2015 to the said Investor Education and Protection Fund. Year in retrospect Your Company has achieved income from operations of Rs. 9427.95 against previous year's income of Rs. 8958.95 lacs. Domestic sales have been Rs. 3117.72 lacs as compared to Rs. 3336.69 lacs during the previous year. The Export sales during the year were Rs. 6310.23 lacs as compared to Rs. 5622.25 lacs in the preceding year. Export sales include Rs. 3663.71 lacs, sales from Warehouse & Marketing Offices in United Kingdom and Australia against Rs. 3830.13 lacs in the previous year. Revenue from exports constitutes 67.36% of total revenue. There has been increase in the Export sales from all markets except Australia, because of slow down in mining sector, there was a marginal fall. The Domestic sales have been below expectations mainly due to lower sales in projects and infrastructure sector due to Government's inability to implement reforms. Outlook Your company's operations are expected to be better due to rise in Export sales and both US and German subsidiaries contributing to growth in sales. On Domestic front, the situation is not looking encouraging because of Government's inability to bring about reforms due to political compulsions resulting in poor investment in infrastructure sector. Additionally, there is increased pressure on margins due to depressed demand. However, other factors like healthy forex reserve and lower fiscal deficit are favourable symptoms. On the International front also, the scenario does not seem too encouraging. Greece crisis and Chinese action on its economy would have adverse impact on Global business environment. Other emerging economies including South Africa are also not looking encouraging. The silver lining is the positive indications in US and a few European Countries and stability in U.K.'s economy. Your Company is strategically located in these Economies. This would provide growth to your Company in all these key markets. Your Company would continue to grow its export sales in these markets including Middle East. Your Company's new state of the art manufacturing facility has become fully functional during the year under review. This would provide to your Company an edge in supply chain management besides increased possibilities to cater to the demands of discerning global buyers. With the above, subject to any unforeseen circumstances, your Company is expected to register a significant growth in 2015-16. Consolidated Financial Statements The Consolidated Financial Statements of the Company and its subsidiaries, joint venture and associate company have been prepared in accordance with Accounting Standard 21 and 23 issued by the Institute of Chartered Accountants of India, form part of the Annual Report and are reflected in the Consolidated Financial Statements of the Company. The annual accounts of the subsidiaries, joint venture and associate company and related information will be kept at the Registered Office of the Company, as also at the registered offices of the respective subsidiary companies and will be available to investors seeking information at any time. Performance of the Subsidiaries, joint venture and associate companies a. Roto Pumpen GmbH - a wholly owned subsidiary company setup in Germany during the financial year 2011-12 to carry on the sales and marketing of the Company's products in German region to service the customers more effectively. Due to Economic and other strategic reasons, operations of the subsidiary were kept suspended. The subsidiary has commenced its business activities in fourth quarters of the year under review. b. Roto Pumps Americas, Inc. - a wholly owned subsidiary company setup in USA. The subsidiary has further setup a wholly owned subsidiary company in the name and style of Roto Pumps North America, Inc. to carry on sales and marketing of Company's products in North American region and also maintain warehouse facility to carry inventory. The subsidiary has not commenced its business activities during the year under review. c. Roto Overseas Pte Ltd - a joint venture Company setup in Singapore with Mr. Ed Lemke of South Africa. Your Company holds sixty percent stake in the joint venture company. The Joint Venture Company has further acquired fifty one percent stake in Ecochem Pumps Pty Ltd, a company engaged in the business of sales and marketing of pumps and related equipment mainly in Southern African Region. This would facilitate easy entry of your Company's products into the vast South African Market. Your Company made sales of Rs. 110.21 lacs during the year under review to ecochem pumps pvt. ltd, South africa. Statements containing the salient features of financial statements of wholly owned subsidiary companies, Joint Venture and associate company in the prescribed format AOC-1 is annexed at Annexure-A. Particulars of Loans, Guarantees or Investments Your Company has made following investments during the year under review; a. Rs. 9,11,250/- to acquire 12,500 equity shares of Euro 1 each in the share capital of Roto Pumpen GmbH, an existing wholly owned subsidiary company in Germany; b. Rs. 46,72,500/- to acquire 75,000 equity shares of USD 1 each in the share capital of Roto Pumps Americas, Inc. a new wholly owned subsidiary company in USA; c. Rs. 2,34,24,000/- to acquire 4,80,000 equity shares in the share capital of Roto Overseas Pte Ltd, a joint venture company in Singapore; Your Company has also given a loan of Rs. 17,63,750/- to Roto Pumpen GmbH, an existing wholly owned subsidiary company in Germany; Your Company has not provided any guarantees during the year under review. Fixed Deposits The Company has neither accepted nor renewed any deposits during the year under review. Related Party Transactions All Related Party Transactions that were entered into during the year under review were on an arm's length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 ('the Act') and the Listing Agreement. There were no materially significant Related Party Transactions made by the Company during the year that would have required Shareholder approval under Clause 49 of the Listing Agreement. All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. Details of the transactions with Related Parties are provided at not no 28 of the accompanying standalone financial statements. Risk Management The Company has formulated a risk management policy to put in place a procedure to inform the Board about the risk assessment and minimization procedure. The Company has also formed a Risk Management Committee comprising of Directors and Executives of the Company to assess the risk and minimization procedures and report the same to the Board at the meetings. Internal Control System and its adequacy Your Company has an adequate internal control system commensurate with the size of the Company and nature of its business. Further, in terms of provisions of section 138 of the Companies Act, 2013 and rules made thereunder, your Company has appointed Kapoor Tandon & Co., Chartered Accountants as Internal Auditor of the Company to conduct internal audit of the functions and activities of the Company. Based on the report of internal audit function, the Board undertakes corrective action in their respective areas and thereby strengthens the controls. Directors and Key Managerial Personnel Pursuant to the provisions of the Companies Act, 2013 read with the Articles of Association of the Company, Mr. Arvind Veer Gupta, Director DIN: 00334233 retires from the Board by rotation, and is eligible for re-appointment. The present term of appointment of Mr. Harish Chandra Gupta, Chairman & Managing Director, Mr. Anurag Gupta, Dy Managing Director and Mr. Arvind Veer Gupta, Wholetime Director will be expiring on 31st March, 2015. The Board of Directors of the Company has re-appointed them for a further period of three years from 1st April, 2016 subject to your and requisite approvals. Annual Evaluation of Board Performance and Performance of its Committees and of Directors: Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees. The Nomination and Remuneration Committee has laid down the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Directors. Independent Directors and their meetings The Independent directors were provided an insight about their roles, duties, rights and responsibilities. They were given a fair idea and knowledge about the working, strategy and the organizational structure of the company so that they could adapt to the company culture and contribute through active participation and interaction in a better manner. The Nomination and Remuneration Policy adopted by the company deals with the criteria for selection and determining the Independence of Directors and also the Remuneration policy for directors, Key Managerial Personnel (KMP) and other employees. Remuneration policy is annexed at Annexure B. Your Company's Independent Directors meet as least once in a financial year without the presence of Executive Directors or Management Personnel Such meetings are conducted to enable the Independent Directors to discuss matters pertaining to the Company's Affairs and put forth their view. During the year under review, one meeting of the Independent Directors was held on 30th March, 2015. Board and Committee and their meetings Six meetings of the Board were convened and held during the year under review. Details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Act and the Listing Agreement. Directors' Responsibility Statement In accordance with the provisions of Section 134(5) of the Companies Act, 2013, the Board hereby submits its responsibility Statement: (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any. (b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) The directors had prepared the annual accounts on a going concern basis; and (e) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Corporate Social Responsibility The Company has formulated its Corporate Social Responsibility (CSR) Policy to undertake the CSR activities as specified in the schedule VII to the Companies Act, 2013. CSR report is annexed at Annexure C. CSR Policy of the Compnay is placed at the website of the Compnay. Policy on prevention, prohibition and redressal of sexual harassment at Workplace The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, to inquire into complaints of sexual harassment and recommend appropriate action. Your Company has not received any complaint of sexual harassment during the financial year 2014-15. Vigil Mechanism / Whistle Blower Policy The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. Material changes and commitment, if any, affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of the report No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate on the date of this report Significant and Material Orders passed by the Courts or Regulators No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. Auditors a. Statuary Auditors M/s A. Kay. Mehra & Co. Chartered Accountants, Registration no. 050004C were appointed as the Statutory Auditors for a period of one year by the members of the Company at their Annual General Meeting held on 29th September, 2014. In terms of the provisions of Section 139 of the Companies Act, 2013, your Company is required to change the Auditors within a period of three years from 2013-14. It is proposed to appoint the exiting Auditors, M/s A. Kay Mehra & Company, Chartered Accountants to hold office till the concluding of next Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The observations of the Auditors in their report read with notes to accounts are self-explanatory and do not call for any further information. b. Branch Auditors The term of the Branch Auditors of the Warehouse and Marketing Offices of the Company in Australia and U.K., M/s G C Perry & Co., Certified Practicing Accountant, Australia and M/s Layton Lee, Chartered Accountants, U.K., respectively, will expire at the conclusion of the ensuing Annual General Meeting. Board of Director of your Company is seeking authority to appoint Branch Auditors for 2015-16. c. Cost Auditor In terms of the provisions of Companies (Cost Records and Audit) Rules, 2014 as amended, your Company was not required to appoint Cost Auditor to carry out audit of the cost records for the year under review. d. Secretarial Auditors M/s Dayal & Maur, Company Secretaries have been appointed as the Secretarial Auditors to carry out the secretarial audit for the year under review. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed at Annexure-D. Regarding audit observations- i) For filing of forms, the Company is applying for condonation of delay and would file those Forms accordingly. The monitoring system is strengthened to ensure timely compliance in future. ii) For corporate social responsiblity spend, the Company has decided as part of CSR to support research & development of energy based treatments for preventive health care. The Company has committed a sum of Rs. 35.00 lacs as its contribution for this purpose. This will be released as soon as substantial progress has been made on this project. Conservation of energy, Technology absorption, Foreign Exchange earnings and outgo The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished at Annexure- E. Declaration of Independent Directors The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. Board independence Your Company's definition of 'Independence' of Directors is derived from Clause 49 of the Listing Agreement with Stock Exchanges and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013 :- a) Mr. B. S. Ramaswamy Mr. B. S. Ramaswamy aged about 86 years is a retired IA & AS Officer. He is a Science and Commerce Graduate, Graduate Engineer and the Senior Most Cost and Management Accountant in the Country. He has an experience of over 60 years in the key functions of Finance & Accounts in the Government and various other organizations in the field of Finance, Accounts, Cost Accounting and other allied management functions. b) Dr. Ramesh Chandra Vaish Dr. Ramesh Chandra Vaish aged about 74 years holds degree in M. A., M. Com, LLB, Ph. D. in Economics from University of Florida USA and is a Fellow Member of the Institute of Chartered Accountants of India. Dr. Vaish is an eminent practicing Chartered Accountant having over 44 years of rich and varied experience with specialization in international taxation and finance, tax planning and off-shore investment. Dr. Vaish has an outstanding academic record and after teaching at University of Florida, USA, has worked with Coopers and Lybrand in New York, Singapore, London and New Delhi. Dr. Vaish has been a Senior Counsel, Tax and Business Advisory Services at Pricewaterhouse Coopers, New Delhi, besides being a member of the Company Law Advisory Committee, Regional Tax Advisory Committee, and various fiscal committees of FICCI and ASSOCHAM. c) Mr. Anand Bordia Mr. Anand Bordia aged 71 years is a retired IRS Officer, holds degree in M.A. Mr. Bordia has 35 years of professional experience most of which have been at a senior level in the Government of India and International Organizations. Mr. Bordia has worked in Ministry of Finance and Ministry of Social Justice and Empowerment in the Government of India. Mr. Bordia has been Member Finance in National Highway Authority of India. Mr. Bordia has also worked in Indian Customs and Central Excise Department and held various field positions such as Commissioner of Customs and Director Audit. Mr. Bordia has also worked in the Secretariat of Custom Cooperation Council, Brussels. d) Mr. Vijoy Kumar Mr. Vijoy Kumar aged 72 years is retired Chairman of U. P. Electricity Regulatory Commission, holds degree in B. Sc. Engineering (Electrical) from BIT, Sindri, Bihar. Mr. Vijoy Kumar has worked in Central Electricity Authority from 1965 to 2003 and held prestigious positions such as Secretary Central Electricity Authority, Member Secretary, Western Regional Electricity Board, Member Secretary, Northern Regional Electricity Board, Member Secretary, North Eastern Electricity Board, Advisor Power, North Eastern Council, Director, North Eastern Electric Power Company. e) Mrs. Annapurna Dixit Mrs. Annapurna Dixit aged about 67 years,a retired Information Commissioner, Central Information Commission, is a Graduate in Physics (Hons) and Masters and M. Phil in Education. Mrs. Dixit has worked for over two decades as an Officer in the India Country Office of the United Nations Children's Fund. Mrs. Dixit closely worked with the relevant Ministries of Government of India, State Governments, NCW, NHRC, IMA, NIPCCD and with NGOs for ensuring protection of rights of women and children. Particulars of Employees and related disclosures Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed at Annexure- F. In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is annexed at Annexure G. Details of the Employees posted at the Overseas Warehouse & Marketing Offices of the Company in Australia and United Kingdom, who are drawing remuneration in excess of the limits set out in the said rules are not being circulated with report. The said details may be provided on demand of the shareholders. Listing of Shares The Equity Shares of your Company are presently listed at the BSE Ltd, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001. The Annual Listing fee for the year has been paid. U.P. Stock Exchange Ltd, Kanpur and Delhi Stock Exchange Ltd, New Delhi, where shares of the Company were also listed, have been derecognized by the Securities and Exchange Board of India; hence listing of Company's shares has been discontinued on U.P. Stock Exchange Ltd, Kanpur and Delhi Stock Exchange Ltd, New Delhi. Extract of Annual Return Pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extract of Annual Return in from MGT- 9 annexed at Annexure-H. Corporate Governance The Management Discussion and Analysis Report and the Report on Corporate Governance, as required under Clause 49 of the Listing Agreement, forms part of the Annual Report. Acknowledgements In the Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Company's activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed in your Company. For and on behalf of the Board of Directors Chandra Gupta Chairman & Managing Director DIN: 00334405 Place: Harish Dated : 04.09.2015 |