DIRECTORS' REPORT To the Members, The Directors are pleased to present the Twenty-Ninth Annual Report of the Company and the Audited Statement of Accounts for the year ended 31st March 2015. OPERATIONAL REVIEW During the year under review, your Company achieved Total Income of Rs. 3,061.16 Lakhs on a standalone basis as compared to Rs. 2,203.26 Lakhs during the previous Financial Year. After considering Interest, Depreciation, Foreign Exchange (Loss) / Gain and Tax, the Company has Net Profit of Rs.157.11 Lakhs for the current year as against Net Profit of Rs.138.14 Lakhs in the previous year. As can be seen, both your Company's turnover and net profit increased as compared to the previous year, despite a persisting weakness in the domestic macroeconomic environment during the last Financial Year. The continuation of your Company on a strong growth path was driven by the positive returns from a customer focused business development approach combined with the on-time execution of major orders. Like in previous years, the last Financial Year also saw balancing investments being made in building infrastructure, design software, information systems, and design and development activities for the future benefit of your Company. RECOGNITION As your Company continues to be involved in advanced research and development (R&D), your Directors are pleased to report that the Company has recently obtained approval as a recognised R&D Centre from the Department (DSIR) of Scientific and Industrial Research, Department of Science & Technology, Government of India. DIVIDEND The Directors of your Company recommend a dividend of 8% (Rs. 0.80 per share) subject to the approval of the Members. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 (the "Act") are given in the Financial Statements. TRANSFER TO GENERAL RESERVE No amount is proposed to be transferred to the general reserve. RISK MANAGEMENT The Company has a robust Risk Management frame work commensurate with the size and scale of its operations to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. INTERNALCONTROLSYSTEMSANDTHEIR ADEQUACY The details in respect of internal controls and their adequacy are included in the Management Discussion & Analysis, which forms part of this report. SUBSIDIARY COMPANIES As on the date of this report, the company has the following subsidiary companies: 1. Sikka N Sikka Engineers Private Limited 2. EMSAC Engineering Private Limited 3. Sika Tourism Private Limited The annual accounts of these subsidiary companies were consolidated with the accounts of the Company for 2014-15. The Annual Accounts of the subsidiary companies and other relevant information shall be made available for inspection at the Company's Registered Office. A statement containing the salient feature of the financial statements of Company's aforesaid subsidiaries is annexed in the prescribed Form AOC-1 to this report. Sterling Technologie Pte Ltd ceased to be a subsidiary of the Company during the period under review. FIXED DEPOSITS Your Company has not accepted any deposits from the 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. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreement, a Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate are appended to this report. DIRECTORS During the year, Dr. J.M. Deb Nath,(DIN: 00902929) Director, tendered his resignation due to personal commitment, which was accepted in the Board Meeting held on 30thMarch 2015.The Board places on record its appreciation of the valuable contributions and guidance provided by Dr. J.M. Deb Nath. Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, during the year, Mrs. Krishna Sikka was appointed as Additional Director on 30th March 2015, and she holds office only up to the date of forthcoming AGM of the Company. Her experience of over 40 years in management and administration will be of immense value to the Company. The Resolution seeking approval of the Members for her appointment have been incorporated in the Notice along with brief details. At the 28th Annual General Meeting of the company held on 25th September 2014, the company appointed Dr.C.G.Krishnadas Nair, Mr.R.N.Chawan and Mr.S.Santhanam as Independent Directors and they have all given declaration that, they meet the criteria of independence as laid down under section 149(6) of the Act and Clause 49 of the Listing Agreement. BOARD EVALUATION Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the individual directors as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management Personnel and their remuneration, which is stated in the Corporate Governance Report. MEETINGS During the year five Board Meetings were convened and held, the details of which are given more specifically in the Corporate Governance Report. COMMITTEES OF THE BOARD The details of all the Committees of the Board including the Audit Committee are provided in the Report on Corporate Governance which forms part of this Annual Report. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134(5) of the Act, the Directors' Responsibility Statement is given hereunder: i. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures if any; ii. The Directors have, in the selection of the accounting policies, consulted the statutory auditors and have 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 that period; iii. The Directors have taken proper and sufficient care, for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. The Directors have prepared the annual accounts on a going concern basis; v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; vi. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. KEY MANAGERIAL PERSONNEL The Company has complied with the requirement of having Key Managerial Personnel ("KMP") as per the provisions of Section 203 of the Act. AUDITORS a) StatutoryAuditors Shekar & Yathish, Chartered Accountants, Bangalore (ICAI Firm Registration No. 008964S) have resigned from the office of Statutory Auditors of the Company due to other engagements, resulting into a casual vacancy in the office of Statutory Auditors. Subsequently, the Audit Committee and Board in their respective meetings held on 8thAugust 2015 have recommended appointing B. N. Subramanya & Co, Chartered Accountants, Bangalore (ICAI Firm Registration No. 0041425), as Statutory Auditors of the Company to fill the casual vacancy. The Resolution seeking approval of the Members for their appointment has been incorporated in the Notice along with brief details. The Auditors' report on the Financial Statements of the Company for the financial year 2014-15 does not contain any qualifications, reservations or adverse remarks. b) Secretarial Auditors Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. N K Hebbar & Associates, Company Secretaries in practice, to undertake the Secretarial Audit of the Company. The report on the Secretarial Audit is annexed herewith. The Secretarial Audit Report confirms that the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines etc., subject to the observations listed therein, which arose due to there being differing interpretation of the provisions of the new Act during the transition period. Further to the same, the Directors' clarifications onthe same are as follows. Observation (a): As per clarification provided by the Ministry of Corporate Affairs vis-a-vis Section 185 of the Act vide General Circular No. 03/2014 dated 14/02/2014 loans made by a holding company to a subsidiary are permitted "in the ordinary course of business" and such clarification will "be applicable to cases where loans so obtained are exclusively utilized by the subsidiary for its principal business activities," which is this case here and hence these loans were in accordance with the said provisions of the Act. Observation (b): The complete information as required to be given were included in the Notice, Explanatory Statement, Board's Report or the accompanying Audited Financial Statements and hence the same was in accordance with the said provisions of the Act. Observation (c): The elaboration provided by Secretarial Auditors in their report is self- explanatory, i.e. "the Board of Directors have appointed the Company Secretary at their meeting held on 30.03.2015," and hence the same is in accordance with the Act. Observation (d): The required e-forms have subsequently been filed as advised and hence the same is in accordance with the Act RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, KMP 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 Audit Committee as also the Board for approval, wherever required. Prior omnibus approvals of the Audit Committee are obtained for the transactions of repetitive nature, as applicable. None of the Directors have any pecuniary relationships or transactions vis-a-vis the Company. The Form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in sub-section (1)of Section 188 of the Act in Form AOC-2 is annexed herewith. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith. PARTICULARS OF EMPLOYEES The information required pursuant to Section197(12) 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 on request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars mentioned in Rule 5 of the said Rule which is available for inspection by the members business hours on working days of the company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance. CONSERVATION OF ENERGY The operations of the Company are not energy intensive. However, adequate measures have been taken to conserve and reduce the energy consumption. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION Technology absorption and adaptation continues to be at core of the Company's objectives and associated strategy. During the year the Company has developed new designs to meet requirements of customers. The research and development efforts of the Company are customer need based and hence it is a continuous process. Because of its in-house R&D efforts the Company was able to deliver the best solutions to the customers in cost effective manner. FOREIGN EXCHANGE EARNING AND OUTGO Foreign Exchange Earnings and Outgo are reported in Notes to Accounts No.32 forming part of the Audited Financial Statements for the year ended 31stMarch, 2015. SIGNIFICANT AND MATERIAL ORDERS There were no significant and material orders passed by any Regulators or Courts or Tribunals during the year under review impacting the going concern status and company's operations in future. ACKNOWLEDGEMENTS Your Directors wish to place on record their appreciation of the support which the Company has received from its promoters, shareholders, customers, lenders, business associates, vendors, and the employees of the Company. On behalf of the Board of Directors Rajeev Sikka Chairman & Managing Director DIN : 00902887 Bangalore, 8th August 2015 |