DIRECTORS' REPORT Dear Members, 1. The Directors are pleased to present their 35th Annual Report of the Company, together with the Audited Financial Statements for the year ended March 31, 2015. 2. Management Discussion & Analysis A detailed analysis on the performance of the industry, the company, internal control systems, risk management are enumerated in the Management Discussion and Analysis report forming part of this report and annexed as 'Annexure A'. 3. Dividend The Directors have recommended a dividend of Rs.2.70 per Equity share of Rs. 10/- each (27%) for the financial year ended March 31, 2015. Payment of Dividend is subject to the approval of shareholders at the ensuing Annual General Meeting. An amount of Rs.1,50,00,000/- (Rupees One Crore Fifty Lakhs Only) is being transferred to the General reserves of the Company. 4. Unclaimed Dividends There are no unclaimed dividends to be transferred to the credit of Investor Education and Protection Fund as on date. 5. Directors Mrs. Devaki Santhanam, Director, retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment. Mr. V. Upendran has been re-appointed as Managing Director for a further period of 3 years w.e.f. April 01, 2015 by the Board of Directors at its meeting held on 25th March 2015, subject to the approval of shareholders. The Board of Directors at its meeting held on 09th February, 2015 appointed Mr. R. Raghavan as an Additional Director and Independent Non-Executive Director of the Company with effect from 09th February, 2015, based on the recommendation of the Nomination and Remuneration Committee. We seek your confirmation for appointment of Mr. R. Raghavan as Independent Director for a term of five consecutive years commencing from August 19, 2015. The Independent Directors of the Company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in their status of Independence. 6. Auditors M/s. M. S. Krishnaswami & Rajan, Chartered Accountants, Chennai (FRN: 001554S), Statutory Auditors of the company, was appointed in the 34th Annual General Meeting of the Company held on 15.09.2014 for a term of three years from the conclusion of the said Annual General Meeting as per the provisions of Companies Act, 2013 subject to ratification by shareholders in the Annual General Meeting every year. The Board of Directors recommends the Shareholders for ratification of appointment of M/s. M. S. Krishnaswami & Rajan, Chartered Accountants as Statutory Auditors, to carry out the audit for the financial year 2015-2016. The Company has received confirmation regarding their consent and eligibility for appointment as the Auditors of the Company. As required under clause 41 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The necessary resolution is being placed before the shareholders for approval. Reply to point f (iii) of the Auditor's Report: The delay in remittance to IEPF in the financial year 2014-15 is due to inadvertence. The company will ensure timely remittance in future. 7. Corporate Governance As required by clause 49 of the Listing agreement entered into with the Stock exchanges, a detailed report on Corporate Governance is attached as 'Annexure B' to this Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors' Certificate of the Compliance with the Corporate Governance requirements by the Company is attached as 'Annexure C' to this Report. The Managing Director and Chief Financial Officer (CFO) certification as required under Clause 49 of the Listing Agreement is attached as 'Annexure D' to this Report. 8. Consolidated Financial Statements The Audited Consolidated Financial Statements provided in the Annual Report pursuant to Section 134 of the Companies Act, 2013 is in accordance with AS 21. 9. Subsidiaries, Associates and Joint Ventures Pursuant to Section 129(3) of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's Subsidiaries (in Form AOC-1) is attached as 'Annexure E' to this Report. 10. Extract of Annual Return An extract of Annual Return in Form MGT-9 as on March 31, 2015 is attached as 'Annexure F' to this Report. 11. Board Meetings held during the year During the year, 8 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached to this Report. 12. Directors' responsibility statement To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: a. in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable Accounting Standards had been followed along with proper explanation relating to material departures. b. for the financial year ended March 31, 2015, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit of the Company for the year ended March 31, 2015. c. that 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. that proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively. f. that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. 13. Remuneration Policy of the Company The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached to this Report. 14. Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013 Loans given Sanco Transport Limited (Wholly owned Subsidiary) - Rs. 600 Lakhs Investments made Sanco Transport Limited (Wholly owned Subsidiary) - Rs. 5 Lakhs Sanco Clearance Limited (Wholly owned Subsidiary) - Rs. 5 Lakhs Guarantees given Nil 15. Secretarial Audit Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, your Company engaged the services of M/s. A.K. Jain & Associates, Company Secretary in Practice, Chennai to conduct the Secretarial Audit of the Company for the financial year ended March 31, 2015. The Secretarial Audit Report (in Form MR-3) is attached as 'Annexure G' to this Report. Reply to point no. 1 and 2 in Para 7 of the Secretarial Audit Report: i. The Company has since appointed the Company Secretary. ii. The delay in remittance to IEPF in the financial year 2014-15 is due to inadvertence. The company will ensure timely remittance in future 16. Related Party Transactions All transactions entered by the company with Related Parties were in the ordinary course of business and at arm's length pricing basis. There were no materially significant transactions with Related Parties during the financial year 2014-15 which were in conflict with the interest of the Company. Suitable disclosures as required under AS-18 have been made in Note 3.13 of the Notes to the standalone financial statements. Details of the transactions are provided in Form AOC-2 which is attached as 'Annexure H' to this Report. The Board has approved policies on Related Party Transactions and Material Subsidiary and has posted in the website www.sancotrans.com . 17. Risk Management Policy The Company has a proper Risk Management policy towards operations and administrative affairs of the Company formulated by the Risk Management Committee consisting of following members: 1. Mr. S Sathyanarayanan - Chairman 2. Mr. U. Udayabhaskar Reddy - Member 3. Mr. S.R. Srinivasan - Member The Risk Management Committee reviews the Policy at regular intervals of time and ensures proper implementation of the policy formulated. 18. Corporate Social Responsibility (CSR) initiatives Pursuant to Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company at its Board Meeting held on November 13th, 2014 approved a Policy on CSR. A report on CSR activities including particulars of committee members is attached as 'Annexure I' to this Report. 19. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their meeting without the participation of the Non-independent Directors and Management, considered/evaluated the Boards' performance, performance of the Chairman and other Non-independent Directors. The Board subsequently evaluated its performance, the working of its Committees (Audit, Nomination & Remuneration and Stakeholders Relationship Committee) and the Independent Directors (without participation of the relevant Director). The criteria for performance evaluation have been detailed in the Corporate Governance Report which is attached to this Report 20. Vigil Mechanism/Whistle Blower Policy Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of Directors had approved the Whistle Blower Policy and has posted in the website www.sancotrans.com . This Policy inter-alia provides a direct access to the Chairman of the Audit Committee. Your Company hereby affirms that no Director/employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year. 21. Public Deposits During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. The Company has repaid all the deposits and outstanding as on March 31, 2015 is NIL. 22. Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2015 and July 03, 2015 (date of the Report) There were no material changes and commitments affecting the financial position of the company between the end of financial year (March 31, 2015) and the date of the Report (July 3, 2015). 23. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the Going Concern status of the Company There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company. 24. Conservation of energy, technology absorption and foreign exchange earnings and outgo Disclosure of information regarding conservation of energy and technology absorption is not applicable to the Company. During the year your company earned foreign exchange to an extent of Rs. 15.24 Lakhs (201314 Rs. 29.11 Lakhs) and expended foreign currency to an extent of Rs. 15.06 Lakhs (2013-14 Rs. 28.12 Lakhs). 25. Particulars regarding employees and related disclosures There are no employees whose details are required to be furnished in terms of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Having regard to the provisions of Section 136(1) read with its relevant proviso of the Companies Act, 2013, the disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, forming part of the Annual Report, is available for inspection at the registered office of the company during working hours. Any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost. 26. Industrial relations Industrial relations remained cordial and harmonious throughout the year. 27. Acknowledgements The Directors wish to thank all the employees, shareholders, bankers, customers, suppliers and Government Authorities for their continued co-operation throughout the year. For and on behalf of the Board of Directors V Upendran Chairman & Managing Director (DIN: 00557511) Place : Chennai Dated : July 03, 2015 |