BOARD'S REPORT & MANAGEMENT DISCUSSION AND ANALYSIS To The members Your Directors have pleasure in presenting the 39th Annual Report on the business and operations of the Company together with the audited financial statements for the financial year ended March, 31 2015. REVIEW OF OPERATIONS /STATE OF AFFAIRS: The highlights of the Company's performance are as under: Your company posted total revenue of Rs. 2817.53 lacs for the financial year 2014-15 as against Rs. 2823.42 lacs in the corresponding period of previous year. During the current financial year company has booked the orders of Rs. 2970.74 lacs as against the order booking of Rs. 2868.95 lacs in the last financial year, an increase of 3.54%. However net sales during the financial year 2014-15 has been slightly decreased by 1.25% to 2710.02 lacs as compared to net sales of Rs. 2744.50 lacs in the previous year due to non receipt of dispatch clearances from the clients on account of various factor of their project implementation status The profit before tax stood at Rs. 791.73 lacs as against Rs. 848.26 lacs in the previous year. The net profit for the year stood at Rs. 532.54 lacs compared to Rs. 570.14 lacs of previous year. Reasons of decrease in profit include increase in depreciation; due to change in depreciation method and payment of CSR expenses besides lower sales. The EPS for the year stood at Rs. 10.81 compared to EPS Rs. 11.57 of previous year. DIVIDEND: The Directors of your Company are pleased to recommend a dividend of Rs.2.75 (27.50%) per Equity Share of Rs.10/- each for the year ended March 31, 2015. (Previous year Rs.2.75 (27.50%) per Equity Share of Rs. 10 each). The above dividend would be paid subject to approval by the Members in the ensuing Annual General Meeting. The proposed dividend will absorb Rs.163.08 lacs including Dividend Distribution Tax of Rs.27.58 lacs. This dividend is tax free in the hands of the shareholders. TRANSFER TO RESERVES: During the year, your company has transferred Rs 100.00 Lacs to the General Reserves. (Previous year Rs. 100.00 Lacs). SHARE CAPITAL: The paid up Equity Share Capital as on 31st March, 2015 was Rs. 492.70 Lakhs divided into 49.27 Lakhs equity shares of Rs. 10/-each. There is no change in Equity share Capital of the Company during the year. Your directors or promoters do not hold any instruments convertible into the equity shares of the Company. DIRECTORS & KEY MANAGERIAL PERSONNEL: Executive Directors and KMPs : At the Annual General Meeting (AGM) of the Company held on September 26, 2014 the Members had appointed Mrs. Radhica Sharma (DIN 006811597) as a Whole-time Director and designated her as the Dy. Managing Director, Shri Kunal Jain (DIN 01475424) as Whole-time Director and designated him as the executive Director and Shri Ashok Jain continuing as the Chairman & Managing Director, these directors are considered as the executive directors and Key Managerial Personnel's of the Company. Independent Directors : CA Mahendra Kumar Shah, (DIN 00014556), Shri Khushal Chandra Jain (DIN 00007916) and Shri Praful Ratilal Turakhia (00366398) were appointed as the Independent Directors under the Companies Act, 2013 for a term of 5 years with effect from 1st April 2014. The Company has received necessary declaration from each independent director under Section 149(6) of the Companies Act, 2013 that they meet the criteria of Independence and Clause 49 of the Listing Agreement. Other Key Managerial Persons : The Board has appointed Mrs. Monica Jain as a Chief Financial Officer and CS Ritu Tiwari as a Company Secretary w.e.f. 01st April, 2014 on the recommendation of the Nomination & Remuneration Committee and designated them as the Key Managerial Personnel. Further that CS Ritu Tiwari due to her personal reason has resigned from the post of Company Secretary w.e.f 23rd December, 2014 and the Board has appointed CS Devendra Kumar Sahu as a Company Secretary w.e.f. 23rd March, 2015 designated as a Key Managerial Personnel. Directors seeking re-appointment: Shri Ashok Jain, (DIN 00007813), director is liable to retire by rotation at the ensuing annual general meeting and being eligible offers himself for re-appointment. Further that the tenure of Shri Ashok Jain as a Chairman & Managing Director is being completed on 30th June, 2016, therefore, the Board upon the approval of the Nomination and Remuneration Committee has re-appointed him for a further period of three years w.e.f. 1st July, 2016. Your directors recommend to pass necessary resolutions to that effect as set out in the notice of the Annual General Meeting. BOARD MEETING AND THE BOARD: A. Number of meetings of the Board: Four (4) meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the Corporate Governance Report which forms part of this report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. B. Policy on Directors' appointment and remuneration: The Company's Policy is to have an appropriate mix of executive and independent Directors to maintain the independence of the Board and separate its function of governance and management. The Policy for Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) is uploaded on Company's website. (Link:-<http://www.fluidomat.com/> investor-relation.html) and has been attached to this Report as "Annexure-1" C. Board Evaluation: Pursuant to the Provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance. The performance evaluation of all the independent directors have been done by the entire Board excluding the director being evaluated. On the basis of performance evaluation done by the Board, determines whether to extend or continue their terms of appointment, whenever the respective term expires. The directors expressed their satisfaction with the evaluation process. COMMITTEES OF THE BOARD: In accordance with the Companies Act, 2013 and other purposes the Board has the following six (6) committees: (a) Audit Committee (b) Nomination and Remuneration Committee (c) Stakeholders' Relationship Committee (d) Risk Management Committee (e) Corporate Social Responsibility Committee (CSR) (f) Internal Complaints Committee (ICC) under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. A detailed note on the Board and its committees is provided under the Corporate Governance Report section in this report. DIRECTORS' RESPONSIBILITY STATEMENT: In terms of Section 134(3)(c) of the Companies Act, 2013, your directors, to the best of their knowledge and belief and according to the information and explanations obtained by them in the normal course of their work, state that, in all material respects; a) In the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed; b) Appropriate accounting policies have been selected, applied consistently and judgment 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 of the profit of the company for the year ended on that date; c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d) The annual financial statements have been prepared on a going concern basis; e) Proper internal financial controls were in place and the financial controls were adequate and operating effectively; and f) Proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. AUDITORS AND THEIR REPORT: A. Statutory Auditors: The Company's Auditors M/s J.P. Saraf & Co., Chartered Accountants, who were appointed as the statutory auditors for a term of three years at the Annual General Meeting of the Company held on 26th Sept., 2014 are eligible for ratification of their appointment for the year 2015-16. They have confirmed their eligibility under section 141(3)(g) of the Companies Act, 2013. The Notes on financial statement for the year 2014-15 referred to in the Auditor's Report are self-explanatory and do not call for any further comments. The Auditor's report does not contain any qualification, reservation or adverse remark. B. Cost Auditors: Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, amended time to time, The provision regarding Cost Audit under this act is not applicable to Company during the year 2014-15. The Company has filed the Cost Audit Report of the Company for the year 2013-14 on dated 23.09.2014. C. Secretarial Auditors: Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s D.K. Jain & Co., Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Auditors in their report for the year 2014-15 has confirmed the compliances by the Company as covered in their report. In the matter of their observations, for late filing of certain forms like Form DIR-12, MGT-10, etc, were due to procedural requirement, and the same were filed with the additional filing fee as well as approved by the Registrar/MCA also. The Report of the Secretarial Audit for the year 2014-15 in the Form MR-3 is annexed herewith as "Annexure-2". D. Disclosure of frauds against the Company: In terms of the provisions of section 134(3)(ca) of the Companies Act, 2013, there were no fraud committed against the Company by any person under section 143(12) during the year 2014-15. Further that there were no frauds which needs to be reported by the Auditors of the Company to the Central Government. TRANSACTIONS WITH RELATED PARTIES: Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2 is Nil is appended as "Annexure-3" to the Board's report. The Company has not entered into any material contracts, with the related parties during the year 2014-15 and other contracts or arrangement is in the ordinary course of business on arms length basis, which were approved by the Audit Committee and the Board from time to time. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations. CONSOLIDATED FINANCIAL STATEMENTS: Since the Company does not have any subsidiary, associate or joint venture, therefore the requirement for consolidation of the Financial Statements are not applicable to the Company. PERFORMANCE OF SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES: Your company does not have any subsidiary, associate or joint venture company at the beginning or any time during the year 2014- 15 therefore, the disclosure in the Form AOC-1 is not applicable to the Company. PUBLIC DEPOSITS: The Company has not accepted any deposits from the general public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. Further that the Company has not accepted any deposits in contravention of the provisions of the Chapter V of the Companies Act, 2013 and rules made thereunder. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY: No material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this financial statements relate and the date of report. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS: The Company has not provided any loans, guarantees and not made any investments pursuant to Section 186 of the Companies Act, 2013. The Company has given advance against salary or otherwise to employees of the Company as per the terms of appointment and the Company's policy on which no interest was charged. EXTRACTOFANNUAL RETURN: The Extract of the Annual Return in form MGT-9 for the year ended 31st March, 2015 is annexed herewith as "Annexure-4". CORPORATE SOCIAL RESPONSIBILITY (CSR): In view of the requirement under the Companies Act, 2013, the Board have constituted Corporate Social Responsibility Committee (CSR) and adopted policy for CSR. The CSR indicating the activities to be undertaken by the Company was adopted by the Board on the recommendation of CSR Committee. Report on CSR as per Rule 8 of the Companies (CSR Policy) Rules, 2014 is prepared and the same is enclosed as "Annexure-5" of this Report. CORPORATE GOVERNANCE In terms of the SEBI Circulars No. CIR/CFD/POLICY CELL/7/2014 dated September 15, 2014, the compliance of clause 49 is not mandatory to the Company after 1st Oct., 2014. However, your Company firmly believes and adopts the highest standard of practice under Corporate Governance. A separate section on Corporate Governance and a certificate from Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under clause 49 of the listing agreement with the Stock exchange form part of this Annual Report. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure-6". INTERNAL COMMITTEE ON PREVENTION OF SEXUAL HARASSMENT: The Company has framed 'Anti-Sexual Harassment Policy' at workplace and has constituted Internal Complaints Committee (ICC) as per the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under. No complaints with allegations of sexual harassment were reported during the year under review. RISK MANAGEMENT: The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. VIGIL MECHANISM/ WHISTLE BLOWER POLICY: Your company has a Vigil Mechanism in place which also includes a whistle blower policy in terms of the listing agreement for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc. The Vigil Mechanism/Whistle Blower Policy of the Company can be accessed on the Company's website at the link: (<http://www.fluidomat.com/investor-relation.html>) and the same is being attached with this Report as "Annexure-7". All the employees have the right/option to report their concern/grievance to the Chairman of the Audit Committee. During the year under review no protected disclosure from any Whistle Blower was received by the designated officer under the Vigil Mechanism. PARTICULARS OF EMPLOYEES: The information required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) and 5(2) of the Companies (Appointment & remuneration of Management Personnel) Rules, 2014 are given below: A. Ratio of the remuneration of each director to the median employee's remuneration and the percentage increase in remuneration of each Director & Key Managerial Personnel: H. 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: This is based on Remuneration Policy of the Company that rewards people based on their contribution to the success of the company and also ensures that external market competitiveness and internal relativities are taken care of. I. The key parameters for any variable component of remuneration availed by the Directors: The key parameters for variable component of remuneration availed by the directors are as per the Remuneration Policy of the Company. J. Ratio of the remuneration of the highest paid director and employees who are not directors but receive remuneration excess of Highest paid director during the year: None. K. Affirmation that the remuneration is as per the Remuneration Policy of the Company: The Company affirms that remuneration is as per the remuneration policy of the Company: L. Details of employees who received remuneration in excess of Rs. 60 Lakhs or more per annum: During the year, none of the employees received remuneration in excess of Rs. 60 Lakhs or more per annum. In accordance with the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Therefore there is no information to disclose in terms of the provisions of the Companies Act, 2013. PROVISION OF VOTING BY ELECTRONIC MEANS: Your Company is providing E-voting facility under section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Amendment Rules, 2015. The details regarding e-voting facility is being given with the notice of the Meeting. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: A. Economic scenario and Industry outlook: Indian economic growth in 2014 rose to 5.2% from 4.7% last year. According to Economy Survey 2014-15 the economy would grow by 8.1-8.5 per cent under a new calculation method that makes India the world's top-growing big economy. The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected in near future. The medium term to long term growth prospects look positive in view of the Government's determination to bring in reforms. With the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy can look forward to better growth prospects in 2015-16 and beyond. The Economy is expected to grow in future at a higher rate than in 2014-15. Economic situation in the country will improve significantly in the upcoming year, the Economy survey raised concerns over growth pattern in exports, construction and mining activities. Investment activity, which is slowly picking up, needs to be established on a stronger footing. The estimation made by International Monetary Fund (IMF) & Central Statistical office have made projection of growth to the extent of 7.5% during the financial year 2015-16. The IMF has forecasted that India will emerge as fastest growing largest economy in the world at the end of current financial year. Thus economic prospects with satisfactory monsoon & pro investment measures announced by the Union Government is expected to result in a good growth & improvements in economic situation soon. NTPC is implementing projects on fast track to add at least 10,000 MW power generatic capacity in next 2-3 years. These projects are growth engines for engineering & capital goods industries. The company products have wide ranging applications in wide spectrum of industry sectors including Power generation, Coal and ore mining, Chemical and Fertilizer, Steel, Cement and harbour handling in port trust. Thus the company has multiple opportunities to grow with growth in one or the other sector of industry and is cushioned against fall in growth of one or the other sector of industry. During the financial year 2014-15 the sales did not grow inspite of pending orders and readiness of material. The reasons include delay in implementation of projects and liquidity crunch in EPC companies. As the project implementation pace increases the sales will grow. The company has been granted Certification for CE Marking, ISO 14001:2004 & OHSAS 18001:2007 which were reported last year as under process of certification. The company continues with its efforts of modernization and quality improvements by making new investments in plant and machinery. B. Industry structure and developments: Your Company deals only in the one segment i.e. manufacturing and sale of the hi-tech products "Fluid Couplings" which are mainly used in various sector of industries including Thermal Power Plants, Steel, Metal, Cement, Paper, Chemical, Fertilizers, Coal and Ore-mining and Port handling facilities, etc. New projects in these sectors have important contribution towards growth and profitability of the Company. C. Quality Management System: The company continued to be certified under ISO:9001:2008 by British Standard Institution -BSI Management system for the Company's quality system. The Quality Management System in the Company is well defined and is well in place. D. Internal Control System: The Company has adequate internal control systems and procedures in place for effective and smooth conduct of business and to meet exigencies of operation and growth. The transactions are recorded and reported in conformity with generally accepted accounting practices. The internal control systems and procedures ensure reliability of financial reporting, compliance with the Company's policies and practices, governmental regulations and statutes. Internal Audit is conducted by independent firm of auditors. Internal Auditors regularly check the adequacy of the system, their observations are reviewed by the management and remedial measures, as necessary, are taken. Internal Auditors report directly to the Chairman of the Audit Committee to maintain its objectivity and independence. E. Risk and Concerns: Since your Company is catering the needs of almost all sector of Industries, if there is recession in any one sector, the other sector industry will continue to generate the revenue for the Company. Apart from the normal risk, demand-supply conditions, raw material prices, changes in government regulations, tax regimes, economic developments within the country and globally, no major risks are foreseen. F. Human Resources: We are committed to providing our employees with a work environment that is based on fairness, openness and mutual respect. Our on-ground work force and our employees together are the key to successes of our Company. The Company emphasizes on the highest level of professional ethics, personal decorum, adherence to deadliness, compliance to standards and customer service. The Company continues with its dedicated efforts to identify talent and has been recognized for its exemplary people-related parties in the Industry. G. Health, Safety and environment measures: Company is committed to meet the highest international standards of health, safety and environmental performance. It continues to accord highest priority to conducting safe operations while being responsible towards the environment and ecology. The Company focused on safe operations in line with its commitments to improve its health, safety and environment performance. As a part of our drive to standardize our health, safety & environment management, company has certified under occupational health & safety management system (OHSAS 18001: 2007) for the manufacture of Fluid Couplings and Flexible Couplings and environment management system (ISO 14001 : 2004) by BSI. Internal and external safety audits and inspections were carried out regularly. Emergency management plans have been developed to deal with any emergency within the factory premises. H. Cautionary statement: Statement made in the management discussion and analysis report as regards the expectations or predictions are forward looking statements within the meaning of applicable laws and Regulations. Actual performance may deviate from the explicit or implicit expectations. INDUSTRIAL RELATIONS: Company's Industrial relations continued to be healthy, cordial and harmonious during the period under review. ACKNOWLEDGEMENTS: Your directors place on record their appreciation of the continued support extended during the year by the company's customers, business associates, suppliers, bankers, investors and government authorities. They also place on record their appreciation of the dedication and contributions made by all the employees for their commitment, hard work and support. Your directors would also like to thank all their shareholders for their continued faith in the company and its future. For and on behalf of the Board Ashok Jain Chairman & Managing Director DIN 00007813 Place : Indore Date: 14th August, 2015 |