DIRECTORS' REPORT TO THE MEMBERS The Directors hereby present the Twenty Sixth Annual Report of your Company, together with the Audited Accounts for the year ended31st March, 2015. 2. Dividend Board of Directors were pleased to recommend 1st interim dividend of Rs. 21- at the meeting held on 13.11.2014 and 2nd interim dividend of Re. 1/- per equity share of face value Rs. 10/- each, at the meeting held on 10.02.2015. The Directors are pleased to recommend further final dividend at Rs. 2.50 (25%), total Dividend recommended is Rs. 5.50 (55%) per Equity share of face value Rs. 10/- each subject to the approval of the Members at the ensuing General Meeting fortheyear2014-15. 3. Operations Our Production during the year was almost at previous year's level. Despite the competition and sluggish market conditions, we have been able to maintain the production level. The overall economic and industrial climate continued to remain sluggish. Electrical Equipments manufacturing sector and Capital Goods Sector continued to feel the effects of low demand. Increase in imports of electrical equipments from China affects the domestic industry. Cost pressures due to high rate of inflation continued to affect the industry. The Government is trying to take effective steps to improve the overall fiscal, economic and industrial climate in the country. There is an improvement in the economic and industrial sentiment. It may however take more time for the reforms to reach the grass root level and activate industrial demand. Inherent distortions arising from rapidly increasing trade deficit were arrested due to price fall of imported hydrocarbons. The Companies Act, 2013 has become effective from 1st April, 2014. Therefore pursuant to relevant provisions of this said Act the useful life of the fixed assets has been revised according to Sch II thereof effective from April 1, 2014. Hence, the Depreciation and Amortization Expenses for the Year ended 31st March, 2015 is higher by Rs. 739 lacs due to change in the useful life of the fixed assets. Further based on transitional provisions vide note 7(b) of the Sch II of the said Act, an amount ofRs. 1863.50 on account of assets whose useful life has already been exhausted, on April 1,2014, (net of deferred tax) thereon have been adjusted to the opening balance of General Reserves. Provision of higher Depreciation as per the new provisions of the Companies Act, 2013, has impacted the Profits of the Company for the Year. However, PBDT, Post Tax Cash Flow (PAT + Depreciation), Current and Debt Equity Ratios have improved. International Rates of our primary Input, Copper, has gone down from third quarter of FY. 2014-15 onwards. In the second half of the fiscal, against USD, Rupee has depreciated. We continue to be optimistic for future growth of Electrical-Equipment-Manufacturing, Power and Infrastructure sectors who are principal consumers of products manufactured by us. Imports through FTA and PTA need to be looked into for protecting the manufacturing sectors in our Country. While the proposed GST is a good measure and we welcome the same. However, the 1% non-vatable inter- state tax proposed under clause 18 of the Draft Bill, will adversely affect all Industries, who have Pan-India marketing operations. We hope that the Government will find some effective solutions for this. Considering the prevailing adverse economical climate in the country during the year under Report, your Company has performed well. The PBDIT is 5058.98 (5858.24) Finance Charges 1421.89 (2371.16). Depreciation 1959.03 (1181.01), PBT 1678.06 (2306.26) Provision for Tax 667.67 (862.07). PAT 1010.39 (1444.19) lacs is lower than previous year mainly due to additional Depreciation of Rs. 739.10 Lacs as per the requirement of Companies Act, 2013. Our Reserves and Surplus (excluding Revaluation) are about Rs. 17528 (19154) at the end of March 2015. Since our Winding Wires are used in the manufacture of Electrical Equipment, Long term prospect for the Industry is bright. Manufacturing -Sectoralso is likely to be given priority as the same generates more employment. Growth in Infrastructure-Sector such as Air Ports, Metros, Highways, surface Transport etc. besides the Power-Sector, is likely to have catalytic impact on Capital-Goods-Sector. India, being a power-deficit country, the long term prospects of the Electrical Equipment Manufacturing Industry is good. Prevailing adverse economic climate in the country is bound to change for the better and your Company is hopeful for upturn in the Economy. Your Company has been performing consistently well, is continuously dividend-paying and is the market-leader. We have discharged all financial obligations in time, without delay ordefault 4. Extract of Annual Return: The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013, is to be included in this Report as Annexure-Aand forms an integral part of this Report. 5. Number of Board Meetings held: The Board of Directors duly met 5 (Five) times during the financial yearfrom 1st April, 2014 to 31st March, 2015. The dates on which the meetings were held are as follows: 28-05-2014, 07-08-2014, 13-11-2014, 06-01-2015 and 10-02-2015. 6. Directors 'Responsibility Statement: Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that: a) in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) they have 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 of the company for the same period; c) the directors have taken proper and sufficient care 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) they have prepared the annual accounts on a going concern basis; e) they have laid down internal financial controls in the company that are adequate and were operating effectively. f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively. 7. Nomination and Remuneration Policy: The Board of Directors follows the policy as per the Act regarding appointment and remuneration etc. of the Executive Directors of the Company. No remuneration was paid to Independent Directors during the Year except sitting feeforattending the Meetings of the Board/Committees. The Managing Directors appoint and fix from time to time the remuneration and perks of the Key Managerial Personnel of the Company. The Company has three Executive Directors on the Board and Six Non-Executive - Independent Directors, including a Woman Director 10. Particulars of Loans, Guarantees or Investments: The Company has not given any Loans, except to the employees and has not provided, to any individual / body corporate, any Guarantees/Loan. 11. Related Party Transactions: All transactions entered with Related Parties, during the financial yearwere in the ordinary course of business and on an arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. Thus disclosure in form AOC-2 is not required. There were no materially significant related parties transactions during the financial year with Promoters, Directors and Key Managerial Personnel which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. The Board has approved a policy for interested related party transactions which has been uploaded on the Company's website. None of the Directors has any pecuniary relationship or transaction vis-a-vis the Company. The Company has frame work for the purpose of identification and monitoring of related party transactions. All related Party transactions are placed before the Audit Committee as also to the Board of Director's for approval. Omnibus approval was obtained on a quarterly basis for transactions which are of repetitive nature. Transactions entered into pursuant to omnibus approval are placed before the Audit Committee and Board for review and approval on quarterly basis. 12. There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report; 13. Conservation of energy, technology absorption, foreign exchange earnings and outgo: Information required under section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in the Annexure-B to this report. 14. Development and Implementation of a Risk Management Policy: The Company has been addressing various risks impacting the Company. Some of the risks that the Company is exposed to are: Financial Risks The Company's policy is to actively manage its foreign exchange risk. Commodity Price Risks The Company is exposed to the risk of price fluctuation of raw materials and foreign exchange. Generally, so far it is practicable the Company purchases Copper back-to-back after the receipt of the order / Consumer - opted - Copper bookings so as to minimize the above risk. This also helps to a large extent inventory management. Regulatory Risks We end eavourt of urnish and submit / file our data with all concerned Authorities, so as to comply, in time, with the various Rules and Regulations. Wherever, certain Regulations, we are unable to understand / grasp, we take assistance of Qualified and experienced consultants. The Company is also mitigating these risks with the help of regular external compliance audits. 15. Corporate Social Responsibility (CSR): In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of the Company has constituted a CSR Committee. The Committee comprises of One Independent Director and Two Executive Directors. Additionally, the CSR Committee has developed a CSR Policy. The CSR Policy has been uploaded on the website of the Company. As required, in the Accounts and Annual Audited Report for FY 2014-15, we have made provision for the CSR-Amount of Rs. 44.50 lacs (rounded off). A statement as required under the Companies Act, 2013 is enclosed as part of this report as Annexure C. Donations already made under Section 80 G of the Income Tax Act, have not been reduced from the CSR amount for the year provided for in Audited Accounts.. 16. Corporate Governance: Please refer to the Annexure D to the Directors Report in the Audited Annual Report for the Accounting Year 2014-15. The Company has framed a Code of Conduct for all its Board Members and Senior Management Personnel of the Company, who have affirmed compliance thereto. The said Code of Conduct has been posted on the Company's website. The Declaration to this effect signed by the CEO is made a part of the Annual Report. 17. Performance Evaluation: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board who were evaluated on parameters such as level of engagement and contribution and independence of judgment thereby safeguarding the interest of the Company. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. The board also carried out annual performance evaluation of the working of its Audit, Nomination and Remuneration as well as stakeholder relationship committee. The Directors expressed their satisfaction with the evaluation process. 18. Deposits: The Company has not accepted any deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. 19. There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future. 20. PARTICULARS OF EMPLOYEES under Section 197(12) and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014: The information required pursuant to Section 197 read with rule, 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. None of the employee hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company. 21. Listing / Dematerialisation of the Company's Equity Shares: The Equity Shares of your Company continue to be listed at the Bombay Stock Exchange Ltd, (BSE) and National Stock Exchange of India Ltd (NSE) and the required Annual Listing Fees have been paid. The Equity Shares of the Company are compulsorily traded in dematerialized form as prescribed by SEBI. The same are registered with both National Securities Depository Ltd., Trade World, 4th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013, and Central Depository Services (India) Limited, Phiroze Jeejeebhoy Towers, 28th Floor, Dalai Street, Mumbai - 400 023, Under ISIN No. INE372C01011 common for both. 22. Auditors a) Statutory Auditors: The Auditors, M/s. S. R. Divatia & Company, Chartered Accountants, Mumbai, who have been Statutory Auditors of the Company, hold office until the ensuing Annual General Meeting. Subject to the approval of the Members, it is proposed to re-appoint them for the Financial Year 2015-16. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from M/s. S. R. Divatia & Company that their appointment, if made, would be in conformity with the limits specified in the said section. b) Cost Auditors: Based on the recommendation of the Audit Committee at its meeting held on 29th May, 2015, the Board has appointed M/s. Gangan & Co., CostAccountants as the Cost Auditors to audit the Cost accounts of the Company for the Financial Year 2015-16 at a remuneration of Rs. 3,00,000/- plus service tax as applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, a resolution seeking member's approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting. The Cost Accounting records maintained by the Company for Products covered under Central Excise Tariff Act, 1985 Chapter Heading 8544 (Winding Wires Made of Copper) are subject to yearly audit by qualified CostAuditors. The cost audit report for the financial year 2013-14 was filed with the Ministry of Company Affairs on 08th November, 2014. c) Secretarial Audit: 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 Messrs Ragini Chokshi & Company, a firm of Company Secretaries in Practice (CP Number 1436) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as "Annexure E" and forms integral part of this report. There is no secretarial audit qualification for the year under review. 23. Directors: a) The term of appointment of Shri Milan M. Mehta, as Vice Chairman & Managing Director, expires on 31st March, 2015. On the recommendation of Nomination and Remuneration Committee, the Board of Directors, at their meeting held on 10th May, 2015, re-appointed Shri Milan M. Mehta as Vice Chairman & Managing Director for a period of three years w.e.f. 1st April, 2015 subject to the approval of the members at ensuing AGM and other statutory approval required, if any. b) Pursuant to Section, 152 of the Companies Act, 2013, and the Articles of Association of the Company, Shri Milan M. Mehta, Director will retire by rotation at the end of ensuing Annual General Meeting, and being eligible, offer himself for re-appointment in accordance with the provisions of the Companies Act, 2013. c) Pursuant to the provisions of the section 161(1)of the Companies Act, 2013 read with the Articles of Association of the Company, Mrs. Swati Gokul Maheshwari, holding DIN 07091067 was appointed as Additional Director w.e.f. 10th February, 2015, in the category of Independent Directors and she shall hold office up to the date of the ensuing Annual General Meeting and being eligible offers herself for reappointment as Director in accordance with the provisions of the Companies Act, 2013, for a period of 5 years w.e.f. ensuing Annual General Meeting. The brief resume of the Directors being appointed/ reappointed, the nature of their expertise in specific functional areas, names of companies in which they have held directorships, committee memberships/ chairmanships, their shareholding etc., are furnished in the explanatory statement to the notice of the ensuing Annual General Meeting. Your Directors therefore, recommend their appointment / re-appointment at the ensuing Annual General Meeting. d) At the 25th Annual General Meeting of the company held on 29th September, 2014 the Company had appointed all the existing independent directors as independent directors under the Companies Act, 2013 for 5 consecutive years for a term upto the conclusion of Annual General Meeting of the Company to be held in thecalendaryear2019. e) All independent directors have given declaration that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and clause49of listing agreement. f) the details key managerial personnel who were appointed or have resigned during the year; None. 24. Internal Control Systems and their Adequacy: Your Company has an effective internal control and risk-mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted to Messrs Devdhar & Associates, reputed firm of Chartered Accountants . The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism. The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee. 25. Vigil Mechanism/Whistle Blower Policy: The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The Policy is posted on the website of the Company. 26. Acknowledgements The Directors wish to place on record their deep appreciation of the continued assistance and co-operation from Bank of Baroda, the Administration of Union Territory of Dadra and Nagar Haveli, Palej Gram Panchayat, Shareholders and all the Staff and employees of the Company For and on behalf of the Board, Mahendra R. Mehta, Chairman and Managing Director Place : Mumbai Dated 29th May, 2015 |