DIRECTORS' REPORT Dear Shareholders, Your Directors have pleasure in presenting their twenty first Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31st 2015. COMPANY PERFORMANCE The Company achieved a total turnover of Rs. 133.72 Crores as against a turnover of Rs. 112.57 crores in the previous year. The Company's profit before tax is Rs. 5.97 crores during the year, as compared to Rs. 4.11 crores in the previous year, an increase of 45.25% over the last year. The Company earned a net profit of Rs. 5.15 crores, as against a net profit of Rs. 3.54 crores in the previous year. BRIEF DESCRIPTION OF THE COMPANY'S WORKING DURING THE YEAR / STATE OF COMPANY'S AFFAIRS The Company has been sanctioned a Term Loan of Rs. 3.91 Crores for modernization project at a project cost of Rs. 4.89 Crores and is in the process of implementation. The said project will improve the productivity and value addition. The Company is in the process of completion of construction of Commercial Complex with a rentable area of 28,000 sft. appx. The said Commercial Complex will be let out and the Company is in the process of finding suitable tenents and is expected to fetch rental income during second half of Financial Year 2015-16. RESERVES The Company proposes to transfer an amount of Rs. 12.90 Lakhs to the General Reserves. An amount of Rs. 418.07 Lakhs is proposed to be retained in the Statement of Profit and Loss DIVIDEND Your Directors are pleased to recommend a Dividend of Rs. 1.50 per equity share for the year 2014-15. The proposed dividend, subject to approval of Shareholders in the ensuing Annual General Meeting of the Company, would result in appropriation of Rs. 81.94 Lakhs (including Corporate Dividend Tax of Rs. 13.86 Lakhs) out of the profits thus giving 15.92% payout from the net profit of the Company. The dividend would be payable to all Shareholders whose names appear in the Register of Members as on the Book Closure Date. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND There is no amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made thereunder. SHARE CAPITAL The paid up equity capital as on March 31, 2015 was Rs. 4,53,88,000. During the year under review, the Company has made a preferential allotment of 1,59,000 equity shares of Rs. 10/-each for cash to promoters in accordance with the provisions of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2009 at Rs. 150/-aggregating to Rs. 2,38,50,000/-. The Company credited Rs. 2,22,60,000/- as premium on account of preferential allotment. EXTRACT OF ANNUAL RETURN The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure No.1 and is attached to this Report. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS During the year the Board of Directors met five times. The details of the Board Meetings are provided in the Corporate Governance Report DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed; (b) the directors had 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 that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) the internal financial controls to be followed by the company were laid down and such internal financial controls were adequate and were operating effectively. (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OF THE COMPANIES ACT, 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CETNRAL GOVERNMENT. There have been no frauds reported by the Auditors pursuant to Section 143(12) of the Companies Act, 2013. DECLARATION BY INDEPENDENT DIRECTORS All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. NOMINATION AND REMUNERATION POLICY OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES In adherence of section 178(1) of the Companies Act, 2013, the Board of Directors of the Company approved a policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3), based on the recommendations of the Nomination and Remuneration Committee. The Company's Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure No.2- and forms part of this Report. AUDITORS STATUTORY AUDITORS M/s. Mohan & Venkataraman (Firm Registration No. 007321S), Chartered Accountants have been appointed as statutory auditors of the company at the last Annual General Meeting held on 11.09.2014 for a period of three years subject to ratification by members at every subsequent Annual General Meeting. Therefore, ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. COST AUDITORS: Pursuant to the provisions of Section 141 read with Section 148 of the Companies Act, 2013 and Rules made thereunder and Cost Audit Order notified by the Ministry of Corporate Affairs dated 31st December, 2014, M/s. C.S. Hanumantha Rao & Co., Cost Accountants (Firm Regn. No. 000216) were appointed as the cost auditors of the Company for the year ending 31st March, 2016. Members are requested to consider the ratification of the remuneration payable to M/s. C.S.Hanumantha Rao & Co . SECRETARIAL AUDITORS Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed Mr.M.D.Selvaraj of MDS & Associates, Coimbatore to undertake the Secretarial Audit of the Company for the year ended 31 st March, 2015. The Secretarial Audit Report is annexed as Annexure 3. Regarding the abservation of the Secretarial Auditors on non-oppointment of Company Secretary, the Directors wish to state that the Company is in the process of appointing a qualified Company Secretary. The Auditors' Report for the financial year ended 31 st March, 2015 do not contain any qualification, reservation, adverse remark or disclaimer. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013: Particulars of the investments made by the Company as at 31 st March, 2015 are given in the Notes forming part of the Financial Statements. During the Financial Year under review, the Company made an investment of Rs. 15 lakhs in 1,50,000 equity shares of Kamachi Sponge & Power Corporation Limited in order to enable the Company to purchase electricity from them under group captive arrangement for the period from Dec' 2014 to May'2015. The Company has not given any loans or guarantees or provided any security to any person or other bodies corporate under section 186 of the Companies Act, 2013 PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: The particulars of every contract and arrangement entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 at arm's length transactions are disclosed in Form No. AOC -2 in Annexure - 4 and form part of this Report. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY: There have been no material changes and commitments, if any, 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. CONVERTION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure and is attached to this report. RISK MANAGEMENT POLICY The Company has a structured risk management policy. The Risk management process is designed to safeguard the organisation from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventorised and integrated with the management process such that they receive the necessary consideration during decision making. It is dealt with in greater details in the management discussion and analysis section. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES Pursuant to the provision of Section 135 of the Companies Act, 2013 ("the Act") read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a CSR Committee. Mr. R. Santossh is the Chairman of the Committee and Mrs. R. Vimala and Mr. M.S. Rajkumar are the other members of the Committee. The Board of Directors, based on the recommendations of the Committee, formulated a CSR Policy encompassing the Company's philosophy for describing its responsibility as a Corporate citizen, laying down the guidelines and mechanisms for undertaking socially relevant programmes for welfare and sustainable development of the community at large. CSR Policy is available on weblink The amount required to be spent on CSR activities during the year under report in accordance with the provisions of Section 135 of the Act is Rs. 7.61 lakhs and the Company has spent Rs. 10.54 lakhs during the current financial year. The requisite details on CSR activities pursuant to Section 135 of the Act and as per Annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 are annexed as Annexure 5 to this Report. ANNUAL PERFORMANCE EVALUATION In accordance with the criteria suggested by The Nomination and Remuneration Committee, the Board of Directors evaluated the performance of the Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of non-independent directors and the Board as a whole based on various criteria. The performance of each independent Director was evaluated by the entire board of directors on various parameters like engagement, leadership, analysis, decision making, communication, governance etc. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory. The performances of all the Committees were evaluated by the Board having regard to various criteria such as committee composition, committee, processes, committee dynamics etc. The Board was of the unanimous view that all the committees were performing their functions satisfactorily. CHANGE IN THE NATURE OF BUSINESS, IF ANY There was no change in the nature of business of the Company during the financial year ended 31 st March, 2015. DIRECTORS At the Annual General Meeting of the Company held on 11th September, 2014, the Members had approved the appointment of Mr. Vastupal Rajnikant Mehta, Mr. Deepak Padamshi Malani and Mr.M.S.Rajkumar as Independent Directors for a term of five years. Pursuant to the provisions of section 152 of the Companies Act, 2013, Mrs. Giulia Bosco (holding DIN 01898020) is due to retire by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. The Board of Directors has appointed Mr. Baba Chandrasekhar Ramakrishnan as an Additional Director with effect from 10th November 2014. He will hold Office up to the ensuing Annual General Meeting, of the Company and being eligible, offers himself for reappointment. Notice under Section 160 of the Act, has been received by the Company from a Member, signifying his intention to propose the candidature of Mr Baba Chandrasekhar Ramakrishnan as a Director of the Company. Accordingly necessary resolution proposing the appointment of Mr. Baba Chandrasekhar Ramakrishnan as Director of the Company has been included in the Agenda of the Notice convening the Annual General Meeting for the approval of the members. Mr.R.Santossh has been re-appointed as Managing Director by the Shareholders of the Company in the Annual General Meeting held on 11th September 2014 for a period of five years with effect from 26th September 2014. The shareholders at the annual general meeting held on 11th September, 2014 appointed Mrs.R.Vimala as whole time director for a period of five years with effect from 1st October 2014. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company does not have any Subsidiary, Joint venture or Associate Company. FIXED DEPOSITS The Company has neither accepted nor renewed any deposits during the year under review. During the year, your Company repaid all the outstanding fixed deposits from public aggregating to Rs. 195 Lakhs. As at 31st March, 2015, there was no deposit remaining unpaid or unclaimed as at the end of the year. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE There is no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY In the opinion of the Board, the existing internal control framework is adequate and commensurate to the size and nature of the business of the Company. PARTICULARS OF EMPLOYEES AND REMUNERATION The requisite details relating to ratio of remuneration, percentage increase in remuneration etc. as stipulated under Section 197(12) and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure 6 to this Report. The disclosure referred to the Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 does not apply to the Company as there were no employees who are in receipt of remuneration in the aggregate at the rate of not less than Rs. 60,00,000/- if employed throughout the year or Rs. 5,00,000/- per month if employed for part of the year AUDIT COMMITTEE The Audit Committee of the Board of Directors of the Company, comprises three Members, namely Mr.Deepak Padamshi Malani, Mr.Vastupal Rajinikant Mehta and Mr. M S Rajkumar, all of them being Independent Directors. Mr. Deepak Padamshi Malani, an Independent Director, is the Chairperson of the Audit Committee. The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year. VIGIL MECHANISM/ WHISTLE BLOWER POLICY The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. The Company has been employing women employees in various cadres within the factory premises. The Company has in place an Anti - harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee has been setup to redress complaints received regularly. There was no compliant received from any employee during the financial year 2014-15 and hence no complaint is outstanding as on 31.03.2015 for redressal. MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE The Management Discussion and Analysis Report and the Report on Corporate Governance, as required under Clause 49 of the Listing Agreement, forms part of the Annual Report. LISTING OF SHARES During the year under review, the Company has listed its shares on the National Stock Exchange of India Limited (NSE). NSE has been defined as the Designated Stock Exchange of the Company. ACKNOWLEDGEMENTS: The Board of Directors express their appreciation for the contribution made by the employees, customers and bankers for the support extended by them during the year under review. For and on behalf of the Board MEENAKSHI SUNDARAM RAJKUMAR CHAIRMAN (DIN : 06935422) Date : 20.07.2015 Place : Coimbatore |