Boards’Report Dear Members, The Directors are pleased to present the 20th Annual Report and the Company's Audited Financial Statement for the financial year ended March 31, 2015. Financial performance During the year, your Company has registered sales and other income of Rs.30,997.50 lacs as compared to Rs.30,674.17 lacs of previous year showing an increase of 1.05%, despite a decrease of 24.62% export turnover. Export sales have decreased by Rs.5,108.05 lacs (Rs.15,643.40 lacs during 2014-15 and 20,751.45 lacs in 2014-15) due to geo-political issues. However, the Company registered a domestic sales growth of 57.43% i.e. Rs.5,396.28 lacs and could achieve an over all sales growth of 1.05%. The Company earned profit before depreciation, interest and tax of Rs.5,801.40 lacs as against Rs.5,505.20 lacs in the previous year, showing a growth of 5.38% over previous year. Dividend The Board has paid a dividend at the stipulated rate of Rs.15 per share on the 15% compulsory convertible Preference Shares of Rs.100/- each of the Company for the year ended March 31, 2015. Considering the Company's performance and financial position for the year under review, the Board has also recommended a dividend of Rs.2/- (20%) per fully paid-up Equity Share of Rs.10/- each of the Company, for the year ended March 31, 2015, subject to the approval of the Members at the ensuing Annual General meeting. Together with Corporate tax on dividend, total outflow, on account of equity dividend, will be Rs.419.33 lacs, vis-a-vis Rs.304.87 lacs paid for F.Y. 2013-14. Listing information During the year under review the equity shares of the Company are listed with the BSE Limited and also at National Stock Exchange of India Limited (NSE) where the shares were admitted to dealing and trading on with effect from 29th January, 2015. Share capital The authorized share capital of the Company as on 31st March, 2015 is Rs.40.00 crores. During the year under review the Company has increased the authorized share capital from Rs.25.00 crores to Rs.40.00 crores (Rupees Forty Crores only) divided into 2,50,00,000 (Two Crores Fifty Lacs) equity shares of Rs.10 (Rs. Ten only) each, 15,00,000 (Fifteen Lacs) 15% compulsory convertible Preference Shares of Rs.100/- each. The paid up share capital of the Company as on 31st March, 2015 is Rs.31,74,37,930/-. During the year under review the Company has issued 15,00,000 15% compulsory convertible Preference Shares of Rs.100/- each at the rate of 300 per share (including premium of Rs.200 per share) on private placement basis to AF Holdings. Susbsidiaries, Joint Ventures and Associates Companies As on March 31, 2015 your Company is having following Subsidiaries : 1. Shakti Pumps USA LLC, USA 2. Shakti Pumps FZE, UAE 3. Shakti Pumps PTY LTD Australia There has been no material change in the nature of the business of the Company and it's Subsidiary. The Consolidated Financial Statement of the Company prepared as per the Accounting standards AS-21, AS-23, & AS-27, Consolidated the Company's account with its Subsidiaries have also been included as part of this Annual Report. Directors Responsibility Statement Your Directors state that: a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; b) the Directors 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 as at March 31, 2015 and of the profit of the Company for the year ended on that date; c) 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; d) the Directors have prepared the annual accounts on a 'going concern' basis; e) 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; and f) 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. Management Discussion and Analysis Report The Management Discussion and Analysis forms an integral part of this Report and gives detail of the overall industry structure, developments, performance and state of affairs of the Company's various businesses, international operations, internal controls and their adequacy, risk management systems and other material developments during the financial year. Corporate Governance Corporate Governance is an ethically driven business process that is committed to values aimed at enhancing an organizations brand and reputation. The new Companies Act, 2013 and amended Listing Agreement have strengthened the governance regime in the country. The Company is in compliance with the governance requirements provided under the new law and had proactively adopted many provisions of the new law, ahead of time. The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. A separate report on Corporate Governance is provided together with a Certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Equity Listing Agreement with the Stock Exchange(s). A Certificate of the MD and CFO of the Company in terms of sub-clause IX of Clause 49 of Equity Listing Agreement, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed. Fixed deposits During the financial year 2014-15, the Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014. Contracts and Arrangements with Related Parties During the financial year 2014-15, the Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary course of business and on arms' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued there under and Clause 49 of the Listing Agreement. During the financial year 2014-15, there were no transactions with related parties which qualify as material transactions under the Listing Agreement. In line with the requirements of the Companies Act, 2013 and Equity Listing Agreement, the Company has formulated a Policy on Related Party Transactions which is also available on Company's website at www.shaktipumps.com / investorrelations/ Policies. The Policy intends to ensure that proper reporting; approval and disclosure processes are in place for all transactions between the Company and Related Parties. Therefore the Company is not required to furnish any particulars in the Form AOC-2. Corporate Social Responsibilty As part of its initiatives under Corporate Social Responsibility (CSR) the Company has undertaken projects which are largely in accordance with Schedule VII of the Companies Act, 2013. The details of the same are attached as Annexure I in the report. Risk Management The Company has properly analyzed and identified the key business risk area and a Risk Mitigation process. The Company had extensively exercised at regular intervals to identify, evaluate, manage and monitor all business Risk. Company has also framed an elaborate Risk Management policy. Internal Financial Control According to Section 134(5)(e) of the Companies Act, 2013 the term Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Company has a well placed, proper and adequate internal control system, which ensures, that the efficiency and profitability of operations, the reliability of information, adhering to rules regulations, that all assets are safeguarded and protected, and that the transactions are authorized, recorded and reported regularly and correctly. Directors As per the Companies Act, 2013, Mr. Sunil Patidar, will retire in the ensuing Annual General Meeting and being eligible, seek re-appointment. During the year under review the following persons were appointed as Additional Directors to hold office of Director up to the date of the forthcoming Annual General Meeting. The Company has received letters from shareholders recommending the appointment them as Directors. Further, in compliance with the provisions of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, they all were appointed as Non-Executive Directors of the Company. Mrs. Pooja Mahajan who was appointed as Nominee Director as IFCI Venture's nominee under Green India Venture Fund (GVIF) has resigned with effect from November 14, 2014. The Board places on record its appreciation for her valuable contribution during her association with the Company. Policy on Directors' appointment and Remuneration and other details The Remuneration Policy of the Company is designed to attract, motivate and retain manpower in a competitive and international market. The policy reflects the Company's objectives for good corporate governance as well as sustained long-term value creation for shareholders. The Remuneration Policy applies to the Company's senior management, including its Key Managerial Person and Board of Directors. The Nomination and Remuneration Policy for the members of Board and Executive Management is available on the Company's website, www.shaktipumps.com . Annual Evaluation of Board's Performance: In accordance with the provisions of Schedule IV of the Companies Act 2013, a separate meeting of the Independent Directors was held on March 28, 2015. Without the attendance of Non Independent Directors and Members of the Management. The Committee has reviewed the performance and effectiveness of the Board in this meeting as a whole for the Financial Year 2014-2015. Key Managerial Personnel The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows: Mr. Dinesh Patidar: Managing Director (DIN: 00549552) Mr. Sunil Manoharlal Patidar: Whole Time Director (DIN: 02561763) Mr. Ramesh Patidar : Whole Time Director (DIN: 00931437) Mr. Akhilesh Maru: Chief Financial Officer Mr. Manoj Maheshwari: Company Secretary & Compliance Officer (till 30/04/2015) Number of Meetings of the Board The details of the number of Board and Audit Committee meetings of the Company are set out in the Corporate Governance Report which forms part of this Report. Disclosure by Independent Directors All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Disclosure Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. In accordance with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules made there under, the Company formulated an internal policy on Sexual Harassment at workplace (Prevention, Prohibition and Redressal) during the year under review. The policy aims at educating employees on conduct that constitute sexual harassment, ways and means to prevent occurrence of any such incident, and the mechanism for dealing with such incident, and the mechanism for dealing with such incident in the unlikely event of its occurrence. The Company has zero tolerance on Sexual Harassment at workplace. During the year under review, no complaints were received against the sexual harassment at workplace. Auditors M/s Vinay Gandhi & Associates, Chartered Accountants, who are the statutory auditors of the Company, hold office till the conclusion of the forthcoming AGM and being eligible have consented and offered them-selves for re-appointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s Vinay Gandhi & Associates, Chartered Accountants as Statutory Auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the twenty-first AGM to be held in the year 2016, subject to ratification of their appointment at AGM. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. Secretarial Auditor Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Manish Maheshwari, Practicing Company Secretary to conduct the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith Annexure II to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Cost Auditor As per the requirement of Central Government and pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, the Company has been carrying out audit of Cost Records. The Board of Directors, on the recommendation of Audit Committee, has appointed M/s. Mihir Turkhia & Associates, Cost Accountant, as Cost Auditor to audit the cost accounts of the Company for the Financial Year 2015-16 at a remuneration of Rs.50000.00. As required under the Companies Act, 2013, a resolution seeking members' approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting. Extract of Annual Return In accordance with the provisions of Section 134 (3)(a) of the Companies Act, 2013, the extract of Annual Return as on March 31, 2015 in the prescribed Form No. MGT-9, pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies(Management and Administration) Rules, 2014 is attached herewith as NAnnexure IIP and forms part of this Report. Vigil Mechanism The Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. More details on the vigil mechanism and the Whistle Blower Policy of the Company have been outlined in the Corporate Governance Report which forms part of this report and also availabe at Company's website. Particulars of Loans Given, Investments made, Guarantees given and Securities Provided Pursuant to Section 134 (3)(g) of the Companies Act, 2013 particulars of loans, guarantees or investments provided by the Company under Section 186 of the Act as at end of the Financial Year 2014-15 are disclosed in the Note to the Financial Statement attached with the Board Report. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is set out herewith as "Annexure IV" to this Report. Significant and Material Orders Passed by the Regulators or Courts There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. Acknowledgement The Directors of the Company wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year. The Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, business associates, regulatory and government authorities for their continued support. For and on behalf of the Board of Directors Dinesh Patidar Managing Director DIN : 00549552 Place: Pithampur Dated: 08.08.2015 |