BOARD'S REPORT DEAR MEMBERS, Your Directors are pleased to present the 36th Annual Report on the business and operations of your Company and Audited Financial Statements for the financial year ended March 31, 2015 Company's performance The Company performed very well and demonstrated good performance during the Financial Year 2014-2015. The highlights of the Company's performance during the Financial Year 2014-15 are as under: • Revenue from operations increased by 13.73% to Rs. 34275.72 Lacs • Exports increased by 4.97% to Rs. 3630.87 Lacs. • PBDIT increased by 13.62% at Rs. 4732.51 Lacs. • Profit before Tax increased by 18.72% at Rs. 2873.94 Lacs. • Net Profit increased by 35.83% to Rs. 2122.16 Lacs Dividend Considering the financial performance of the Company and keeping in view Sterling' tradition of high regard for its shareholders, the Directors had, in their meeting held on 11th August, 2014, recommended 50% interim dividend for financial year 2014-2015 against the same rate of dividend i.e. 50% in previous financial year. This interim dividend has already been paid and taking note of this payout, the Directors have not recommended any final dividend for financial year 20142015 and the interim dividend already declared and paid be considered as final dividend for the financial year 2014-2015. The said dividend payout for the year under review has been formulated in accordance with shareholders' aspirations and the Company's policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals. Transfer to General Reserve Out of the profits of the Company, a sum of Rs. 212.00 Lacs has been transferred to General Reserves during the year and total General Reserves of the Company are Rs. 2111.46 Lacs as on 31st March, 2015. Deposits The Company has not accepted any deposits during the year which come under the purview of Section 73 of the Companies Act, 2013 and as such no amount on account of principal or interest was outstanding as on the date of Balance Sheet. Depository System As the members are aware, the Company' shares are compulsorily tradable in electronic form. As on March 31, 2015, 98.99% of the Company's total paid-up Capital representing 6775271 shares are in dematerialized form. In view of numerous advantages offered by the Depository System, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the Depositories. Capital Structure and Listing As on 31st March, 2015, the Company has Authorised Share Capital of Rs.10,00,00,000/-and Paid Up Share Capital of Rs. 6,84,46,000/-. The equity shares of the Company are listed with Bombay Stock Exchange Limited and National Stock Exchange of India Limited. There are no arrears on account of payment of listing fees to the said Stock Exchanges. The Promoters and Persons acting in concert with them hold 70.15% share Capital of the Company as on 31st March, 2015 as against 70.05% as on 31st March, 2014. Performance of Joint Venture Company Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a Statement containing the salient features of financial statements of Joint Venture Company named Sterling Fabory India Pvt. Ltd. In Annexure I by way of Form AOC 1 is attached to the Accounts. Number of meetings of the Board and attendance of the Directors 7 (seven) board meetings were conducted during the year in respect of which proper notices were given and the proceedings were properly recorded. For details of the meetings of the Board and attendance of the Directors, please refer Page No. 37 of Corporate Governance Report attached to this Annual Report. Extract of Annual Return As provided under section 134(3)(a) and Section 92(3) of the Companies Act, 2013, the extract of Annual Return in the prescribed form MGT-9 has been given by an Annexure-II attached to this Report. Declaration of Independence All independent Directors have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year. The details of training given to Independent Directors are provided separately in Corporate Governance Report. Policy on Directors' appointment and remuneration and other details The Company's policy on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided in Section 178(3) and Section 134(3) (e) of the Act has been disclosed in an Annexure-III attached to this Report. Policy on Board Diversity In accordance with the clause 49(IV) of the Listing Agreement, the Nomination and Remuneration Committee (NRC) has framed and adopted a formal policy on Board diversity which sets out a framework to promote diversity on Company's Board of Directors. The Company recognizes the importance and benefits of having the diverse Board to enhance quality of its performance. The policy inter-alia specifies optimum combination of Executive Directors, Non-Executive Directors and Independent Directors, the recommendatory requirement for each of the Directors to possess functional diversity and role of NRC to ensure that the same policy is considered while recommending the appointment of new Directors on the Board of company. Particulars of Loans, Guarantees or Investments under section 186 The Company has not provided any loans or Guarantees under Section 186 during the year. It has invested Rs.5,88,25,000/-(Rupees five Crore eighty eight lac twenty five thousand only) in Equity Share Capital of Sterling Fabory India Private Limited, a Joint venture Company till 31st March 2015. Transactions with Related Parties Information on transactions with Related Parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure-IV in Form AOC-2 and the same forms part of this report. Risk Management During the year, your Company has constituted a Risk Management Committee on 13th February, 2015 to frame, implement and monitor the risk management plan for the Company. The Company has adopted a Risk Management Policy describing the risk management methodology, structure and system employed across the Sterling in its Board meeting held on 13th February, 2015 effective from 01st October, 2014. Details of said Committee have been disclosed at Page No. 46 of Corporate Governance Report attached to this report. Audit Committee, Meetings of the Committee & Attendance of Members: The Committee's composition meets with requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Members of the Audit Committee possess financial/ accounting expertise / exposure. The purpose of this Committee is to ensure the objectivity, credibility and correctness of the Company's financial reporting and disclosures process, internal controls, risk management policies and processes, tax policies, compliance and legal requirements and associated matters. At present, the Audit Committee comprises of following Directors as members having wide experience and knowledge of Corporate Affairs, Income Tax & Finance. • Shri. C. R. Sharma - Chairman(Non-Executive Independent Director) • Dr. T. N. Kapoor - Member(Non-Executive Independent Director) • Ms. Malini Sud - Member(Non-Executive Independent Director) • Shri Anil Aggarwal - Member(Managing Director) All the recommendations made by the Audit committee during the year had been accepted by the Board. Six meetings were conducted during the year in respect of which proper notices were given and the proceedings were properly recorded. For details of the meetings of the Audit Committee and attendance of the Members, please refer Page No. 42 of Corporate Governance Report attached to this Annual Report. Board Evaluation During the year, the Evaluation cycle was completed internally by the Nomination & Remuneration Committee of the Company on its meeting held on 30th March, 2015 which included the evaluation of all Directors. First of all, all Executive Directors were evaluated keeping in view their KRAs and performance of the Company. Thereafter, the performances of all Independent Directors were evaluated. The exercise was led by the Non-Executive Chairman, among the Independent Directors alongwith a Senior Independent Director of the Company. The performance evaluation of Independent Directors had been done by entire members of the Committee (excluding the Director being evaluated). Key changes: There was no change in the nature of business of the Company during the year under review. The details of changes in the Directorship & KMP are as follows: Ms. Malini Sud was appointed as an Additional Director in the capacity of an Independent Director on the Board of the Company with effect from 15th September, 2014 and is eligible to be appointed as an Independent Director in the forthcoming Annual General meeting for a term of five years upto 14th September, 2019. Shri Anil Aggarwal retires by rotation and being eligible offer himself for re-appointment. Shri Atul Aggarwal, the Whole Time Director of the Company was appointed as Chief Financial Officer of the Company by the Board of Directors in their meeting held on 13th February, 2015 Mr. K.R. Gupta resigned from the Board of the Company with effect from 22nd May, 2014. The Company has not received any show cause notices/orders from any Regulatory Bodies during the year under review. During the year under review, Your Company does not have any Associate or Subsidiary Company. Credit Rating The Company continues to enjoy the domestic credit rating of (A-) from CRISIL which reflects the Company's financial discipline and prudence. Corporate Social Responsibility Composition of the Corporate Social Responsibility Committee has been disclosed in the Corporate Governance Report, attached to this report. The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure - V of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy on CSR is available on the website of the Company. Particulars of Employees The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been given by way of Annexure- VI to this Report. Capital Expenditure As on March 31, 2015, the Gross Fixed Assets (including Capital WIP) stood at Rs. 21427.46 Lacs and Net Fixed Assets stood at Rs. 13053.10 Lacs. Additions during the year amounted to Rs. 5843.47 Lacs. Conservation of energy, technology absorption and foreign exchange earnings and outgo Information pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption & foreign exchange earnings and outgo are given by way of Annexure-VII to this Report. Transfer of Amounts to Investor Education and Protection Fund Pursuant to the provisions of Section 205A of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 2nd September, 2014 (date of last Annual General Meeting) on the Ministry of Corporate Affairs' website. Corporate Governance The Company is committed to maintain the highest standards of Corporate Governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to the Report on Corporate Governance. . Your Company has made all the information, required by Investors, available on the Company's Corporate Website www.stlfasteners.com Management discussion & Analysis Management Discussion and Analysis Report covering issues relating to Industry structure & developments, Opportunities & Threats, Segment-wise or product wise performance, Outlook, Risks & Concerns, Internal Control Systems & their adequacy, Discussion on financial performance and material developments in Human Resources etc. has been given separately and form part of this Annual Report. Director's Responsibility Statement Pursuant to the requirement under section 134(3) (c) of the Companies Act, 2013 with respect to Director's Responsibility Statement, it is hereby confirmed that: (i) in the preparation of the accounts for the Financial Year ended 31st March, 2015, the applicable accounting standards have been followed and there are no material departures; (ii) the Directors have selected accounting policies in consultation with Statutory Auditors 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 financial year under review; (iii) the Directors have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013. The Directors have confirmed that there are adequate control & systems for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) the Directors have prepared the accounts for the Financial Year ended 31st March, 2015 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 are 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 Industrial Relations During the year under review, harmonious industrial relations were maintained in your Company. Statutory Disclosures Your Directors have made necessary disclosures, as required under various provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Material Changes and Commitments There were no material changes and commitments, affecting the financial position of the Company that had occurred between the end of the financial year of the Company and the date of signing of this report. Statutory Auditors i) Appointment M/s. S. R. Dinodia & Co. LLP. the Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. M/s S. R. Dinodia & Co., have, under Section 141(3) (g) of Companies Act, 2013, furnished the certificate of their eligibility for reappointment. As recommended by the Audit Committee, your Directors propose that they may be reappointed as Auditors of the Company for a period of 2 years from the conclusion of this Annual General Meeting until the conclusion of the 38th Annual General Meeting of the Company. ii) Report The Auditors' Report and Notes on Accounts for the financial year 2014-2015 are self-explanatory and therefore do not call for any further comments. Secretarial Auditors' report M/s Santosh Kumar Pradhan, Company Secretaries was appointed as the Secretarial Auditor of the Company for the Financial Year 2014-15, who has conducted the Secretarial Audit of the Company for the year 2014-15. The said Secretarial Audit Report is annexed as Annexure VIII to this Report. As observed by the Secretarial Auditor, Mr. K.R. Gupta resigned on 22nd May, 2014 and the Company appointed Ms. Malini Sud as an Independent Director in his place on 15th September, 2014. Cost Auditors The Company appointed M/s G.T. & Co., the Cost Auditors to conduct the cost audit of the Company' cost records for financial year 2014-2015. Internal Financial Control Systems and their adequacy In order to ensure that the policies and procedures adopted by STL for conducting its business orderly and efficiently, STL is in process of aligning its internal financial control systems on lines of globally accepted risk based framework. STL's existing internal financial control systems are adequate for the nature of its business and the size of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statues, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. In the beginning of the year, the scope of audit exercise and the key business processes and selected risk areas to be audited are decided in consultation with the Audit Committee. The Internal Audit is carried out by a firm of external Chartered accountants and covers all departments. All significant audit observations and follow up actions thereon are reported to the Audit Committee. Safety, Health and Environment (SHE) Measures Protection of environment is the prime concern of your Company. Your Company complies with the relevant laws and regulations as well as take any additional measures considered necessary to Prevent pollution, maximize recycle, reduce waste, discharges and emissions. Company Conserve natural resources by their responsible and efficient use in all our operations and plant trees Quality Management System Sterling Tools Limited has three manufacturing Units, Wire Processing Unit and two fastener manufacturing plants. All the Units are certified to ISO 9001 standard. Both the Fastener manufacturing units are certified to the following standards: • TS16949 • ISO 14001 • OSHAS 18001 STL laboratory at DLF plant is certified to ISO 17025 for Chemical Testing, Mechanical Testing and Instrument Calibration. Cash Flow Analysis In compliance with the provisions of Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended 31-03-2015 is annexed hereto. Sexual Harassment The Company has Constituted an Internal Complaint Committee as required under Section-4 of the Sexual Harrasment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made thereunder. During the year under review, no complaints were reported. Acknowledgements Your Directors would like to express their appreciation for the assistance and co-operation received from the Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by all Company' personnel. Your Directors look forward to their continued support. For and on behalf of the Board M. L. Aggarwal Chairman DIN No. 00027380 Place: Faridabad Date: 4th August, 2015 |