Mar 31, 2018
Dear Shareholders,
The Directors have pleasure in presenting the 28th Annual Report and Audited Accounts of the Company for the year ended 31st March, 2018.
FINANCIAL RESULTS
The highlights of the performance of your Company during the fiscal are given hereunder;
For the Financial year ended |
31.03.2018 |
31.03.2017 |
Total Revenue |
9462.99 |
8376.08 |
Gross Profit before interest, depreciation, exceptional, extraordinary items and income tax |
1273.18 |
1466.55 |
Interest |
31.56 |
54.23 |
Depreciation |
454.08 |
521.35 |
Profit before Exceptional & Extra- ordinary items |
787.54 |
890.97 |
Exceptional Items(lncome) |
- |
11.64 |
Profit before tax |
787.54 |
902.61 |
Provision for Income tax |
158.61 |
213.04 |
for Deferred tax |
(57.25) |
(42.14) |
Profit for the period |
686.18 |
731.71 |
TRANSITION TO INDIAN ACCOUNTING STANDARDS (IND AS)
The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated February 16, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of Companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For the Company, Ind AS is applicable from April 1,2017, with atransition date of April 1,2016.
The following are the areas which had an impact on account of transition to Ind AS:
- Revenue recognition
- Employee costs pertaining to defined benefit obligations
- Recognition of dividend liability and related taxes
- Deferred taxes
- Classification of Fixed Assets
The reconciliations and descriptions of the effect of the transition from IGAAP to Ind AS have been provided in the notes to accounts in the financial statements.
FINANCIAL HIGHLIGHTS
The financial summary /highlights for the last five years is furnished vide Annexure A to this Report.
OPERATIONS
The total revenue of the Company has increased by about 13% from Rs. 8376.08 Lakhs to Rs. 9462.99 Lakhs. The local market was vibrant and the market pick up steadily increased. The Export market was however subdued and the demand in the overseas market was lacklustre.
Inspite of an increase in turnover, the margins were under severe pressure throughout the year because of sharp increase in the prices of all raw materials. This has resulted in a sharp decline in the Profit before TaxatRs.787.54 Lakhs as againstRs. 902.61 Lakhsanda Net Profit (afterTax) of Rs. 686.18 Lakhs as against Rs.731.71 Lakhs in the previous year.
The Wind Energy Division generated a revenue of Rs. 507.89 Lakhs as against Rs. 559.51 Lakhs, that is a decrease in 9%. This was mainly because of fact that one of the Wind Energy Generators was not in operation for about a month during the peak wind season due to maintenance work which had to be carried out. Hence the reason for short fall in Wind Generation. Apart from this, the wind velocity as well as evacuation byTANGEDCO was normal.
There has been no change in the nature of business of the Company.
OUTLOOK FOR CURRENT YEAR
We expect the market both domestic and the export market to grow during this financial year. We are hopeful of a good growth consequent upon the various initiatives taken by the Government. The role of the Indian Foundry industry is expected to be vital since the engineering and other sectors use metal castings in manufacture. The business sentiments have improved substantially during the last 3 months and if such growth momentum sustains, we should be in a position to post a decent growth rate in the current financial year.
NEW PROJECTS IMPLEMENTED DURING THE YEAR
The Core shop was upgraded during the year utilizing Industry 4.0 Techinques and enabled process. This will enable the Company to produce quality cores and effectively deploy the existing Personnel of the Core Shop in otherareas.
FUTURE EXPANSION PLANS
We are positive on the growth momentum during the current financial year. Consequent upon this we are evaluating the proposals for increasing the scope of the moulding line in order to augment the moulding capacity. This project however will be taken up depending on the capacity utilization and the market trends during the financial year.
QUALITY RECOGNITIONS
The Company received during the year the re-certification from the Performance Review Institute, USA, as an Accredited Manufacturer of Ductile and Gray Iron Castings which is mandatory for supply of castings for applications in locomotives, railway engines etc in the USA. The Company also received recertification for ISO/TS 16949:2009 standards, Pressure Equipment Directive standards and Marine Certificate under DNV GL Rules for Classification- Ships. Further the Company is in the process of obtaining new Certifications of ISO 9001:2015 & IATF 16949:2016.
FINANCE
The Company has repaid during the financial year all the Long Term Loans and as at the Balance Sheet date there is no Term Loan outstanding. We are pleased to inform the Members that the Company is debt free as atthe reporting date.
TRANSFER TO RESERVES
The Company has transferred Rs. 200 Lakhs to General Reserves during the year and an amount of Rs. 2605.90 lakhs is retained in the Statement of Profit & Loss.
DIVIDEND
Your Directors are pleased to recommend, subject to the approval ofthe shareholders, a dividend atthe rate of Rs.2.00 per share, i.e. at the rate of 20% for the year on the paid-up equity share capital of the Company, the same as in the immediate proceeding year. The dividend, if approved, will absorb an amount of Rs.110.48 Lakhs, inclusive of Corporate tax on Distribution of dividends.
SHARE CAPITAL
The paid-up capital of the Company as at 31.03.2018 stood at Rs.4,58,22,000/- divided into 45,82,200 equity shares of f 10/- each. During the year under review, the Company has not made any fresh issue of shares.
TRANSFER OF UNCLAIMED DIVIDENDTO INVESTOR EDUCATION AND PROTECTION FUND
In terms of Section 124 & 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the Financial Year 2010-11 is due for remittance on 23rd September, 2018 to the Investor Education and Protection Fund established by the Central Government.
Further, pursuant to Section 124(6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, 8624 equity shares of f 10/- each on which dividend had remained unclaimed for a period of 7 years have been transferred to the credit of demat Account identified by the IEPF Authority during the year under review.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is furnished in Annexure B and is attached to this report.
BOARD MEETINGS CONDUCTED DURING THE PERIOD UNDER REVIEW
The details of meetings of Board of Directors and Committees thereof and the attendance of the Directors in such meetings have been enumerated in the Corporate Governance Report.
STATEMENT ON COMPLIANCE WITH SECRETARIAL STANDARDS
The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.
DIRECTORSâRESPONSIBILITY STATEMENT
Pursuant to requirement of Section 134(3)(c) of the Companies Act 2013, with respect to Directorsâ Responsibility Statement, it is hereby confirmed that -
a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departure from those standards;
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 at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies 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 were operating effectively; and
f) The Directors had devised proper system to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively;
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit pursuantto Section 143(12) of the Companies Act, 2013.
DECLARATION OF INDEPENDENT DIRECTORS
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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
COMPANYâS POLICY RELATING TO DIRECTORS APPOINTMENT,PAYMENT OF REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Salient features of Remuneration policy of the Company is annexed herewith as Annexure C and the detailed Remuneration Policy can be accessed on the Companyâs website at the link http://www.magnacast.com/financial/229.pdf.
COMMENTS ON AUDITORSâ REPORT
There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. Srikishen & Co, Statutory Auditor and Mr.M.D.Selvaraj, proprietor of MDS & Associates, Secretarial Auditor in their respective reports.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provisions are not applicable.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered into with related parties as defined under the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 during the financial year 2017-18 were in the ordinary course of business and on an armâs length basis. Since there are no transactions which are noton armâs length basis and material in nature, Form AOC-2 is not being annexed.
The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the Companyâs website and may be accessed through the link at http:/www.magnacast.com/financial/224.pdf.
The Companyâs transaction with one of the related parties, M/s. Samrajyaa & Company during the financial year 2018-19 is likely to exceed the 10% of aggregate turnover of the Company as set out in the SEBI ( Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 188 of the Companies Act, 2013 and rules made thereunder, in view of the increased demand for Machined Castings from Customers. Necessary resolution is included in the Notice of AGM for the approval of Members to enter into transactions exceeding the limit set out in the SEBI(LODR) Regulations, 2015 and the Companies Act, 2013.
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 year ended 31s1 March, 2018 relate and the date of the report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO
The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under section 134(3)(m) ofthe Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure Dand is attached to this report.
RISK MANAGEMENT
The Company continues to focus on the Risks areas identified by the Company. These can be classified under (a) Economic risks (b) Marketing risks and (c) Financial risks. The Company continues to focus attention on the risk areas identified and in case of any adverse situation, suitable mitigation steps are taken. The Company also established risk management plan and assessment and the same has been reviewed by the Audit Committee and the Board on periodical basis.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Board had formed a Corporate Social Responsibility Committee comprising of Sri.C.R.Swaminathan, Dr.R.Nandini and Sri.N.Krishna Samaraj. The CSR policy ofthe Company deals with allocation of funds, activities, identification of programs, approval, implementation, monitoring and reporting mechanisms underthe policy.
As part of the initiatives under CSR for the year 2017-18, the Company has undertaken projects in the areas of Healthcare, Environment, Education and Women Welfare etc,. These projects are by and large in accordance with Schedule VII ofthe Companies Act, 2013.
The details of CSR activities for the year are furnished separately vide Annexure E to this Report. The policy relating to CSR has been displayed on the Companyâs website and can be accessed at http://www.magnacast.com/financial/223.pdf.
ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Companies Act, 2013, the Board of Directors evaluated the annual performance of the members of the Board and its Committees vis a vis the nature of business of the Company, its performance during the year and the contribution of each of the Directors based on the criteria laid down by the Nomination and Remuneration Committee.
The Independent Directors held a meeting during the year and inter-alia, reviewed the performance ofthe Non-Independent Directors and the Board as a whole and assessed the quality, quantity and timeliness of flow of information between the Company and the Board.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Sri.J.Vijayakumar, Director, retires by rotation at the Annual General Meeting and being eligible, offers himself for reappointment. Your Directors recommend his re-appointment.
Key Managerial Personnel of the Company as required pursuant to Section 2 (51) and 203 of the Companies Act, 2013 are Sri. N. Krishna Samaraj- Managing Director, Sri. R. Ravi- Chief Financial Officer and Smt. Sangeetha. C-Company Secretary.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiaries, Joint ventures or Associate Companies.
FIXED DEPOSITS
During the year, the Company did not accept or renew any fixed deposits and no fixed deposits remained unclaimed with the Company as on 31s1 March, 2018
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATION IN FUTURE
There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companyâs operation in future.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit Committee of the Board periodically reviews the Internal Financial Control Systems and their adequacy and recommends corrective action as and when necessary to ensure that an effective internal control mechanism is in place.
The directors confirm that the Internal Financial Control (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuantto Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Control is annexed with the Auditors Report.
AUDITORS STATUTORY AUDITORS
M/s. Srikishen & Co, Chartered Accountants, (FRN 004009S) Coimbatore were appointed as the Statutory Auditors of the company for a period of five years at the 26th Annual General Meeting of the company held on 15th September, 2016. Pursuant to the amendment of Section 139 of the Companies Act, 2013, the Company is no longer required to seek the ratification of the appointment of the Auditor at every Annual General Meeting.
The Company has received a certificate from the Statutory Auditors to the effect that their continued appointment as the Statutory Auditors of the Company, would be within the limits prescribed under section 139 of the Companies Act, 2013. Members are requested to grant their approval for the continuation of the appointment of the Auditors for a period up to the conclusion of the 31stAnnual General Meeting of the Company which ought to be held during the year 2021 without ratification at every Annual General Meeting.
SECRETARIAL AUDITORS
The Board has appointed Sri.M.D.Selvaraj of M/s. MDS & Associates, Company Secretaries in Practice, Coimbatore as the Secretarial Auditors of the Company for the year 2018-19 to carry out the Secretarial Audit, pursuant to the provisions of Section 204 of the Companies Act, 2013.
The report of the Auditors for the financial year 2017-18 is annexed as Annexure F to this Report.
COST AUDITORS
The Board of Directors on the recommendation of the Audit Committee, have appointed M/s.SBK & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2018-19. Pursuant to Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable for the year 2018-19 to the Cost Auditors of the Company is subject to ratification by the Shareholders at the ensuing Annual General Meeting. The Board recommends their remuneration.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company has been continuously focusing its attention on nurturing the talent of its employees by recognizing their performance and creating enough opportunities for their growth in the Company. This has ensured to retain talent within the organization.
The relationship between the management and the employees at all levels during the year under review has been cordial and productive.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements ofthe Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee or third parties during the Financial Year 2017-18.
PARTICULARS OF EMPLOYEES
Statement pursuant to Section 134 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975 and Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to Annexure G attached to this report.
CORPORATE GOVERNANCE
A report on Corporate Governance is annexed and forms part of this report. The Company has complied with the conditions relating to Corporate Governance as stipulated in Regulation 27 of SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors has been duly constituted in accordance with the provisions of Section 177 of the Companies Act, 2013. Details relating to the composition, meetings and functions ofthe Committee are set out in the Corporate Governance Report forming part of this Annual Report. The Board has accepted the Audit Committee recommendations during the year whenever required and hence no disclosure is required under Section 177(8) of the Companies Act, 2013 with respect to rejection of any recommendations of Audit Committee by the Board.
CEO/CFO CERTIFICATION
As required under Regulation 33 (2) (a) ofthe SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015, the Managing Director and the Chief Financial Officer ofthe Company have furnished necessary certificate to the Board on the Financial Statements presented.
VIGIL MECHANISM AND WHISTLE BLOWER POLICY
The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behavior or any violation of the Companyâs Code of Conduct. During the year under review, there were no complaints received under this mechanism. The policy can be accessed on the Companyâs website at http://www.magnacast.com/ financial/227.pdf
ACKNOWLEDGEMENT
Your Directors thank the shareholders, customers and suppliers for their continued support during the year. The Directors wish to place on record their appreciation of the support and co-operation extended by the Companyâs Bankers M/s. Corporation Bank and M/s. Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.
We pray for the grace of the Almighty for further growth of the Company.
By Order of the Board
For MAGNA ELECTRO CASTINGS LIMITED
C.R.Swaminathan N. Krishna Samaraj
Place: Coimbatore Director Managing Director
Date: 30th May, 22018 DIN: 00002169 DIN: 00048547
Mar 31, 2016
DIRECTORS'' REPORT
Dear Shareholders,
The Directors have pleasure in presenting the 26th Annual Report and Audited Accounts of the Company for the year ended 31st March 2016.
FINANCIAL RESULTS
The highlights of the performance of the company during the fiscal are given under:
(rs in jakhs)
For the financial year ended |
31-03-2016 |
31-03-2015 |
Total Revenue |
9433.61 |
10188.98 |
Gross Profit before interest, depreciation, and income tax |
1528.32 |
1510.33 |
Interest |
156.03 |
231.79 |
Depreciation |
462.57 |
441.58 |
Profit before tax |
909.72 |
836.96 |
Provision for Income tax |
210.00 |
225.00 |
for Deferred tax |
34.97 |
87.93 |
for Prior year tax |
-- |
(18.81) |
Profit for the period |
664.75 |
542.84 |
Proposed transfer to General Reserve |
200.00 |
200.00 |
Proposed dividend |
91.64 |
82.48 |
Provision for Corporate tax on Dividend |
18.65 |
16.78 |
Balance brought forward |
1017.98 |
774.40 |
Surplus carried over |
1372.43 |
1017.98 |
FINANCIAL HIGHLIGHTS
The financial summary /highlights for the last five years is furnished vide Annexure A to this Report OPERATIONS
The net turnover (exclusive of taxes and duties) has decreased by 8.07 % from Rs.10021.20 lakhs to Rs. 9212.59 lakhs. This was mainly because of the weak global and domestic markets which are still reeling under recessionary conditions. The demand for castings has therefore been subdued.
The Wind Energy Division of the Company recorded lower revenue again during the current financial year because of non evacuation of energy for administrative reasons as in the previous year coupled with low wind velocity during the peak wind season.
The various cost saving initiatives taken by the Company during the year and the sharp decline in material costs enabled the Company to post a Profit before Tax of Rs.909.72 lakhs which is an increase of 8.7% over the previous year''s profit of Rs.836.96 lakhs.
There has been no change in the nature of business of the Company.
OUTLOOK FOR CURRENT YEAR
The export as well as the domestic markets are yet to show signs of any recovery. It is hoped that the various initiatives being taken by the Central Government will be beneficial to the industry and thereby lead to revival of the markets.
PROJECTS IMPLEMENTED
The Company has installed during the year under review the Furan Thermal Reclamation Sand Plant at a cost of Rs.200 lakhs for reclamation of sand. Apart from meeting the Statutory requirements, this installation will enable the Company to reduce dependence on the availability of sand, which is a precious natural resource.
The Company also installed during the year the Furan No Bake Continuous Mixer for achieving consistency in casting dimension and 3D Printing Technology for shorter development time and reduction in sampling time. The Paint shop was modernized with the installation of a new high tech Painting booth to supply ready to assemble products to the customers.
All the above initiatives will go a long way in satisfying the customer needs and satisfaction.
FUTURE EXPANSION PLANS
The Company has been constantly upgrading its production capabilities to be in line with the latest in the Industry. Keeping this in mind , the Company is planning to upgrade its Core shop activities and installation of a Heat Treatment Furnace during the current year . The total outlay for this being very minimal, the same will be funded from out of internal sources
QUALITY RECOGNITIONS
The Company received during the year the re-certification from the Performance Review Institute, USA, as an Accredited Manufacturer of Ductile and Gray Iron Castings which is mandatory for supply of castings for applications in locomotives, railway engines etc in the USA. The Company also received re-certification for ISO/TS 16949 standards and Pressure Equipment Directive standards.
FINANCE
The Company''s long term debt stands at Rs.459.47 lakhs . The debt-equity ratio continues to remain at a healthy level of 0.10.
TRANSFER TO RESERVES
An amount of Rs.200 lakhs has been transferred to General Reserves and an amount of Rs.1372.43 lakhs is retained in the statement of profit & loss.
DIVIDEND
Your Directors are pleased to recommend, subject to the approval of the shareholders, a dividend at the rate of Rs.2.00 per share, i.e. at the rate of 20 % for the year on the paid-up equity share capital of the Company as against Rs.1.80 per share (18%) paid last year. The dividend, if approved, will absorb an amount of Rs. 110.29 lakhs, inclusive of Corporate tax on Distribution of dividends.
SHARE CAPITAL
The paid-up capital of the Company as at 31.03.2016 stood at Rs.4,58,22,000. During the year under review the Company has not made any fresh issue of shares.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is furnished in Annexure B and is attached to this report.
BOARD MEETINGS AND ITS COMMITTEES CONDUCTED DURING THE PERIOD UNDER REVIEW
The Company had conducted (5) Board meetings, (5) Audit Committee meetings, (2) Nomination and Remuneration committee meetings, (4) Stakeholders Relationship committee meetings, (1) Corporate Social Responsibility Committee Meeting and (1) Independent Directors meetings during the period under review. Further details of the same have been enumerated in the Corporate Governance Report annexed herewith.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act 2013, with respect to Directors'' Responsibility Statement, the Directors confirm that -
a) In the preparation of the annual accounts, the applicable accounting standards have been followed;
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 that period;
c) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act 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 to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) they had devised proper system to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively;
DECLARATION OF INDEPENDENT DIRECTORS
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 SEBI (Listing obligations and disclosure Requirements) Regulations, 2015.
COMPANY''S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The Remuneration policy of the Company is annexed herewith as Annexure C and can also be accessed on the Company''s website at the link http://www.magnacast.com/financial/229.pdf
COMMENTS ON AUDITORS'' REPORT
There are no qualifications, reservations or adverse remarks or disclaimers made by M/s.S.Krishnamoorthy & Co, Statutory Auditors and Mr.M.D.Selvaraj, Secretarial Auditor in their respective reports.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provisions are not applicable.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the financial year 2015-16 were on an arms'' length basis and in the ordinary course of business. The requirement of furnishing the particulars of contracts or arrangements entered into by the Company with related parties in Form AOC-2 does not arise.
The policy with regard to Related Party transactions can be accessed on the Company''s website at http:/www.magnacast.com/financial/224.pdf
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.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO
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 D and is attached to this report.
RISK MANAGEMENT
The Company continues to focus on the Risks areas identified by the Company. These can be classified under (a) Economic risks (b) Marketing risks and (c) Financial risks. The Company continues to focus attention on the risk areas identified and in case of any adverse situation, suitable mitigation steps are taken. The Company also established risk management plan and assessment and the same has been reviewed by the Audit committee and the Board on quarterly basis.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
During the year under review, the Company has incurred an expenditure of Rs.15.80 lakhs towards CSR activities. The details of CSR activities are furnished separately vide Annexure E to this Report. The policy relating to CSR has been displayed on the Company''s website and can be accessed at http://www.magnacast.com/financial/223.pdf
ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Companies Act, 2013, the Board of Directors evaluated the annual performance of the members of the Board and its Committees vis a vis the nature of business of the Company, its performance during the year and the contribution of each of the Directors based on the criteria laid down by the Nomination and Remuneration Committee.
The Independent Directors held a meeting during the year and inter-alia, reviewed the performance of the non-independent Directors and the Board as a whole and assessed the quality, quantity and timeliness of flow of information between the Company and the Board.
DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year under review, Sri.V.Rajendran, Director, who has been associated with the Company right from its inception, resigned from the Board due to ill- health. Sri.V.Rajendran, with his wide experience in the Foundry industry, had always been a source of inspiration to the Company with his valuable guidance and wise counsel. The Directors place on record their appreciation of the services rendered by Sri.V.Rajendran to the Company, especially during its initial stages of formation.
As per the provisions of the Companies Act, 2013, Sri.J.Vijayakumar, Director, retires at this Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiaries, Joint ventures or Associate Companies.
FIXED DEPOSITS
The Company has not accepted any fixed deposits and hence there are no unclaimed deposits as on 31st March 2016.
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 were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operation in future.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit Committee of the Board periodically reviews the internal financial control systems and their adequacy and recommends corrective action as and when necessary to ensure that an effective internal control mechanism is in place.
The directors confirm that the Internal Financial Control (IFC) are adequate with respect to the operations of the company. A report of Auditors pursuant to Section 143(3)(i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Control is annexed with the Auditors Report.
AUDITORS
STATUTORY AUDITORS
M/s. S. Krishnamoorthy & Co, Chartered Accountants, Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Certificate required under Section 139 read with Section 141 of the Companies Act, 2013 informing their eligibility to act as the Statutory Auditors of the Company has been furnished by them. The re-appointment proposed is within the time frame for transition under Section 139 of the Companies Act, 2013.
The tenure of office of M/s. S. Krishnamoorthy & Co as Statutory Auditors of the Company will expire with the conclusion of the 26th Annual General meeting of the Company.
The Directors, based on the recommendation of the Audit -committee and subject to the approval of the members at the ensuring Annual General Meeting, have approved the appointment of M/s. Srikishen & Co, Chartered Accounts (Firm Regn. No. 004009 S) as the Statutory Auditors for a period of 5 years from the conclusion of the 26th Annual General Meeting till the conclusion of the 31st Annual General Meeting of the Company. Necessary certificate of eligibility under Section 139 of the Companies Act, 2013 has been received from M/s. Srikishen & Co.
SECRETARIAL AUDITORS
The Board has appointed Mr.M.D.Selvaraj, FCS of M/s.MDS & Associates, Coimbatore, based on the recommendation of the Audit Committee, as the Secretarial Auditors of the Company for the year 2016-17 to carry out the Secretarial Audit, pursuant to the provisions of Section 204 of the Companies Act, 2013. The report of the Auditors for the financial year 2015-16 is annexed as Annexure F to this Report.
COST AUDITORS
Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and audits) Rules, 2014, the products manufactured by the Company, viz., Iron Castings falling under the specified Central Excise Tariff heading are covered under the mandatory cost audit from the financial year commencing from 1st April, 2015. The Board, based on the recommendations of the Audit Committee has appointed M/s. SBK & Associates, Chennai as the Cost Auditors for the financial year 2016-17. Necessary consent has been received from M/s. SBK & Associates for their appointment. Pursuant to Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable to the Cost Auditors of the Company is subject to the approval of the shareholders at the Annual General Meeting. The Board recommends their remuneration.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company has been continuously focusing its attention on nurturing the talent of its employees by recognizing their performance and creating enough opportunities for their growth in the Company. This has ensured to retain talent within the organization.
The relationship between the management and the employees at all levels during the year under review has been cordial and productive.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee during the financial year 2015-16.
PARTICULARS OF EMPLOYEES
Statement pursuant to Section 134 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975 and Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to Annexure G attached to this report.
CORPORATE GOVERNANCE
The report on Management Discussion and Analysis, Corporate Governance as well as Auditor''s Certificate regarding compliance of conditions of Corporate Governance forms part of this Annual Report.
CEO/CFO CERTIFICATION
As required under Regulation 33 (2) (a) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations,2015, the Managing Director and the Chief Financial Officer have furnished necessary certificate to the Board on the financial statements presented.
VIGIL MECHANISM AND WHISTLE BLOWER POLICY
The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behavior or any violation of the Company''s code of conduct. The policy can be accessed on the Company''s website at http://www.magnacast.com/financial/227.pdf
DETAILS IN RESPECT OF FRAUDS REPORT BY THE AUDITORS UNDER SECTON 143(12) OF THE COMPANIES ACT 2013 OTHER THAN THOSE WHICH ARE RESPONSIBLE TO THE CENTRAL GOVERNMENT:
There were no instances of frauds identified or reported by the statutory auditors during the course of their audit pursuant to section 143(12) of the companies Act, 2013.
ACKNOWLEDGEMENT
Your Directors thank the shareholders, customers and suppliers for their continued support during the year. The Directors wish to place on record their appreciation of the support and co-operation extended by the Company''s Bankers M/s. Corporation Bank and M/s. Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.
We pray for the grace of the Almighty for further growth of the Company.
By order of the Board
For MAGNA ELECTRO CASTINGS LIMITED
C.R. Swaminathan N. Krishna Samaraj
Coimbatore Director Managing Director
28th May 2016 DIN : 00002169 DIN : 00048547
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the 25th Annual Report and
Audited Accounts of the Company for the year ended 31st March 2015.
FINANCIAL RESULTS (Rs. in lakhs)
For the financial year ended 31-03- 2015 31-03-2014
Total Revenue 10,188.98 7,605.18
Gross Profit before interest, 1,510.34 1,524.62
depreciation, and income tax
Interest 231.79 258.01
Depreciation 441.58 695.55
Profit before tax 836.96 571.06
Provision for Income tax 225.00 200.00
for Deferred tax 87.93 (91.11)
for Prior year tax (18.81) -
Profit for the period 542.84 462.18
Proposed transfer to General Reserve 200.00 200.00
Proposed dividend 82.48 73.31
Provision for Corporate tax on Dividend 16.79 12.45
Balance brought forward 774.40 597.99
Surplus carried over 1,017.98 774.40
FINANCIAL HIGHLIGHTS
The financial summary /highlights for the last five years is furnished
vide Annexure A to this Report
OPERATIONS
The net turnover (exclusive of taxes and duties) increased by 34.63 %
from Rs.7,443.56 lakhs to Rs.10,021.20 lakhs. This is the first time in
the history of the Company, the turnover has crossed the Rs. 100 Crores
mark. The export turnover increased by 44.65 % from Rs.4,461.05 lakhs
to Rs. 6,453.21 lakhs, and the domestic turnover increased by 19.64 %
from Rs.2,982.50 lakhs to Rs. 3,568.25 lakhs. The Company was able to
achieve this turnover in spite of subdued market conditions, especially
in the domestic market.
The Wind Energy Division of the Company recorded lower revenue again
during the current financial year because of non evacuation of energy
for administrative reasons, as in the previous year.
The Profit before tax at Rs. 836.96 lakhs shows an increase of 46.56 %
over the previous year's profit of Rs.571.06 lakhs. The Company has
provided depreciation on fixed assets based on the useful lives in
accordance with the Companies Act, 2013. Consequently the depreciation
charge is lower by Rs.253.97 lakhs when compared to the amount arrived
at in the previous year.
There has been no change in the nature of business of the Company.
OUTLOOK FOR CURRENT YEAR
There seems to be a marginal improvement in business volumes during the
financial year 2015-2016 when compared with the previous year, as the
market sentiments improved and it is hoped that the market will pick up
momentum gradually during the course of the year.
PROJECTS IMPLEMENTED
The Company has installed during the year under review a new Energy
efficient Melting Induction Furnace, replacing the old and worn out
furnaces. Apart from substantial savings in the power costs, this
installation with the latest technology, will improve the overall
productivity and efficiency at the shop level.
FUTURE EXPANSION PLANS
The Company will be installing during the financial year 2015-16 the
Thermal Reclamation and Green Sand Reclamation Plants. Apart from
meeting the requirements of the pollution norms, these installations
will enable the Company to use the reclaimed sand, thereby conserving
precious natural resources.
QUALITY RECOGNITIONS:
The Company continues to be recognized for its sustained quality and
technological innovations, meeting the customers' requirements to their
satisfaction. During the year, the Company received "Best in Continuous
Improvement" Award for technical involvement in new product processes
to meet customer specific requirements and "Best Supplier Award for
Commitment and Dedication to Excellence" from two of its customers.
FINANCE
The Company's long term debt stands at Rs. 565 lakhs out of which Rs.85
lakhs pertains to the Wind Energy Division and the balance Rs.480 lakhs
pertains to the Foundry Division. The debt-equity ratio remains at a
healthy level of 0.20.
TRANSFER TO RESERVES
An amount of Rs.200 lakhs has been transferred to General Reserve and
an amount of Rs.1017.98 lakhs is retained in the Statement of Profit &
Loss
DIVIDEND
The Directors, after taking into consideration the results for the year
ended under review, have recommended a dividend of Rs.1.80 per share
(i.e. @18%) as against Rs.1.60 per share (16%) paid last year. The
dividend, if approved, will absorb an amount of Rs.99.26 lakhs,
inclusive of Corporate tax on Distribution of dividends.
SHARE CAPITAL
The paid-up capital of the Company as at 31.03.2015 stood at
Rs.4,58,22,000. During the year under review the Company has not made
any fresh issue of shares.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92
of the Companies Act, 2013 read with Rule 12 of the Companies
(Management and Administration) Rules, 2014, in Form MGT-9 is furnished
in Annexure B and is attached to this report.
BOARD MEETINGS CONDUCTED DURING THE PERIOD UNDER REVIEW
The Company had conducted Four (4) Board meetings during the period
under review. Further details of the same have been enumerated in the
Corporate Governance Report annexed herewith.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act
2013, with respect to Directors' Responsibility Statement, the
Directors confirm that
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed;
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 that period;
c) they have taken Proper and sufficient care has been taken for
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act 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 to be followed by
the Company and that such internal financial controls are adequate and
were operating effectively; and
f) they had devised proper system to ensure compliance with the
provisions of all the applicable laws and such systems were adequate
and operating effectively;
DECLARATION OF INDEPENDENT DIRECTORS
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 and Clause 49 of the Listing Agreement
entered with the Stock Exchanges.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF
REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE
COMPANIES ACT, 2013
The Board has, on the recommendation of the Nomination and Remuneration
Committee, framed a policy for fixing and revising remuneration of
Directors, Key Managerial Personnel, Senior Management Personnel and
employees of the Company. The Remuneration policy of the Company is
annexed herewith as Annexure C and can also be accessed on the
Company's website at the link
http://www.magnacast.com/financial/229.pdf
COMMENTS ON AUDITORS' REPORT:
There are no qualifications, reservations or adverse remarks or
disclaimers made by M/s.S.Krishnamoorthy & Co, Statutory Auditors and
Sri. M.D. Selvaraj, Secretarial Auditor in their respective reports.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186
OF THE COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company
under Section 186 of the Companies Act, 2013 during the year under
review and hence the said provisions are not applicable.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the
financial year 2014-15 were on an arms' length basis and in the ordinary
course of business. Earlier, the approval of the Regional Director,
Chennai had been obtained for such transactions entered into with the
companies falling within the purview of Section 297 of the Companies
Act, 1956. The policy with regard to Related Party transactions can be
accessed on the Company's website at
http://www.magnacast.com/financial/224.pdf
The particulars of contracts or arrangements entered into by the
Company with related parties are furnished in Form AOC-2, (Annexure D)
forming 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.
CONSERVATION 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 E and is
attached to this report.
STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT
POLICY OF THE COMPANY
The Company identifies and evaluates business risks and opportunities
at periodic intervals. The Company is aware that these risks need to be
managed and mitigated to protect the interest of various stakeholders
in order to achieve the business objects and goals. The risk management
framework provides not only identify the business risks but also
provides effective control measures.
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Board has constituted a Corporate Social Responsibility Committee
comprising of the following directors as its Members:
1. Sri.C.R.Swaminathan (Chairman)
2. Smt.R.Nandini (Member)
3. Sri.N.Krishna Samaraj (Member)
The Committee met on 30th October 2014 and laid out the policy for
undertaking CSR activities by the Company. As per the policy, the
Committee laid emphasis for undertaking activities in healthcare and
medical facilities, promoting education and undertaking activities for
improvement of schools, especially government run primary schools,
ensuring environmental sustainability and ecological balance. During
the year under review, the Company has incurred an expenditure of
Rs.12.56 lakhs towards CSR activities covering the above areas. The
details of CSR activities are furnished separately vide Annexure F to
this Report. The policy relating to CSR has been displayed on the
Company's website and can be accessed at
http://www.magnacast.com/financial/223.pdf
ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE
INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing agreement, the Board of Directors evaluated the annual
performance of the members of the Board and its Committees vis a vis
the nature of business of the Company, its performance during the year
and the contribution of each of the Directors based on the criteria
laid down by the Nomination and Remuneration Committee.
The Independent Directors held a meeting during the year and
inter-alia, reviewed the performance of the non-independent Directors
and the Board as a whole and assessed the quality, quantity and
timeliness of flow of information between the Company and the Board.
DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year under review, the Members at their Meeting held on 25th
September 2014 have approved the appointment of Sri.C.R.Swaminathan,
Smt.R.Nandini, Dr.Jairam Varadaraj and Sri.K.Gnanasekaran as
Independent Directors of the Company for a period of five years.
As per the provisions of the Companies Act, 2013, Sri.V.Rajendran,
Director, retires at this Annual General Meeting and being eligible,
offers himself for reappointment. The Board recommends his
re-appointment.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiaries, Joint ventures or Associate
Companies.
FIXED DEPOSITS
The Company has not accepted any fixed deposits and hence there are no
unclaimed deposits as on 31st March 2015.
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 were no significant and material orders 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
The Company has an adequate Internal Control System, commensurate with
the size, scale and complexity of its operations. The Audit Committee
of the Board periodically reviews the internal financial control
systems and their adequacy and recommends corrective action as and when
necessary to ensure that an effective internal control mechanism is in
place.
AUDITORS
STATUTORY AUDITORS
M/s. S. Krishnamoorthy & Co, Chartered Accountants, Auditors, retire at
the ensuing Annual General Meeting and are eligible for re-appointment.
The Certificate required under Section 139 read with Section 141 of the
Companies Act, 2013 informing their eligibility to act as the Statutory
Auditors of the Company has been furnished by them. The re-appointment
proposed is within the time frame for transition under Section 139 of
the Companies Act, 2013.
SECRETARIAL AUDITORS
The Board has appointed Sri.M.D.Selvaraj, FCS of M/s.MDS & Associates,
Coimbatore, based on the recommendation of the Audit Committee, as the
Secretarial Auditors of the Company for the year 2014-15 to carry out
the Secretarial Audit, pursuant to the provisions of Section 204 of the
Companies Act, 2013. The report of the Auditors is annexed as Annexure
G to this Report.
COST AUDITORS
Pursuant to the provisions of Section 148 of the Companies Act, 2013
read with Companies (Cost Records and audits) Rules, 2014, the products
manufactured by the Company, viz., Iron Castings falling under the
specified Central Excise Tariff heading are covered under the mandatory
cost audit from the financial year commencing from 1st April, 2015. The
Board, based on the recommendations of the Audit Committee has
appointed M/s. SBK & Associates, Chennai as the Cost Auditors.
Necessary consent has been received from M/s. SBK & Associates for
their appointment. Pursuant to Rule 14 of the Companies (Accounts)
Rules, 2014, the remuneration payable to the cost Auditors of the
Company is subject to the approval of the shareholders at the Annual
General Meeting.
The Cost Audit Report for the year ended 31.03.2014 has been filed on
27.09.2014
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company has been continuously focusing its attention on nurturing
the talent of its employees by recognizing their performance and
creating enough opportunities for their growth in the Company. This has
ensured to retain talent within the organization.
The relationship between the management and the employees at all levels
during the year under review has been cordial and productive.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place a policy on Sexual Harassment of Women at
Workplace in line with the requirements of the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
All employees (permanent, contractual, temporary, trainees) are covered
under this policy. There were no complaints received from any employee
during the financial year 2014-15.
PARTICULARS OF EMPLOYEES
Statement pursuant to Section 134 of the Companies Act, 2013, read with
the Companies (Particulars of Employees) Rules, 1975 and Section
197(12) of the Companies Act, 2013 read with Rule 5 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, is
annexed to Annexure H attached to this report.
CORPORATE GOVERNANCE
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the report on Management Discussion and Analysis, Corporate
Governance as well as Auditor's Certificate regarding compliance of
conditions of Corporate Governance forms part of this Annual Report.
CEO/CFO CERTIFICATION
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the Managing Director and the Chief Financial Officer have
furnished necessary certificate to the Board on the financial
statements nresenterl
VIGIL MECHANISM AND WHISTLE BLOWER POLICY
The Company has provided for adequate safeguards to deal with instances
of fraud and mismanagement and to report concerns about unethical
behavior or any violation of the Company's code of conduct. The policy
can be accessed on the Company's website at
http://www.magnacast.com/financial/226.pdf
ACKNOWLEDGEMENT
Your Directors thank the shareholders, customers and suppliers for
their continued support during the year. The Directors wish to place on
record their appreciation of the support and co-operation extended by
the Company's Bankers M/s. Corporation Bank and M/s. Indian Bank, the
various Government Agencies and in particular the Tamil Nadu
Electricity Board and the employees of the Company at all levels.
We pray for the grace of the Almighty for further growth of the
Company.
By order of the Board
For MAGNA ELECTRO CASTINGS LIMITED
C.R. Swaminathan N. Krishna Samaraj
Coimbatore Chairman of the Meeting Managing Director
28th May 2015 DIN : 00002169 DIN : 00048547
Mar 31, 2014
Dear Shareholders,
The Directors have pleasure in presenting the 24th Annual Report and
Audited Accounts of the Company for the year ended 31st March 2014.
FINANCIAL RESULTS (Rs. in lakhs)
For the year ended 31st March 31-03- 2014 31-03-2013
Total Revenue 7605.18 8763.32
Gross Profit before interest,
depreciation, and income tax 1524.62 1457.49
Interest 258.01 237.39
Depreciation 695.55 616.30
Profit before tax 571.06 603.80
Provision for Income tax 200.00 125.00
for Deferred tax (91.11) (46.16)
Net Profit after tax adjustments 462.18 524.96
Proposed transfer to General Reserve 200.00 200.00
Proposed dividend 73.31 82.48
Provision for Corporate tax on Dividend 12.45 14.01
Balance brought forward 597.99 369.52
Surplus carried over 774.40 597.99
DIVIDEND
Your Directors are pleased to recommend, subject to the approval of the
shareholders, a dividend at the rate of Rs.1.60 per share, i.e. at the
rate of 16 % for the year on the paid-up equity share capital of the
Company . The Directors, after taking into consideration, the results
for the year ended under review, the prevailing subdued market
conditions and also in order to conserve funds to meet the increased
working capital requirements, have recommended a reduced dividend of
Rs.1/60 per share (i.e. @16%) as against Rs.1/80 per share paid last
year. The dividend, if approved, will absorb an amount of Rs.85.76
lakhs, inclusive of Corporate tax on Distribution of dividends.
OPERATIONS
The net turnover (exclusive of taxes and duties) decreased by 12.68%
from Rs.8524.33 lakhs to Rs.7443.56 lakhs. While the export turnover
decreased by 14.65 % from Rs.5226.47 lakhs to Rs. 4461.05 lakhs, the
domestic turnover decreased by 9.56 % from Rs.3297.85 lakhs to
Rs.2982.50 lakhs. The main reason for the decline in turnover was due
to the subdued global market conditions which prevailed for most part
of the financial year with many of the industries still under
recessionary trend.
The Wind Energy Division of the Company also recorded lower revenue
during the current financial year, mainly because of non evacuation of
energy generated. Consequently there was a decline of about 24% in
units generated by the Division when compared with the previous
financial year. This contributed to substantial decline in Net Profits
.
The Profit before tax at Rs.571.06 lakhs shows a decrease of 5.42 %
over the previous year''s profit of Rs.603.80 lakhs, mainly because of
increase in material cost, power cost and other overheads. However in
spite of decline in turnover and increase in input costs, there is a
slight improvement in margins during the current year due to better
utilization of available resources.
OUTLOOK FOR CURRENT YEAR
The general recessionary trend, both in the international as well as
the domestic markets, continued to affect most of the industries,
especially auto, pump and valves, who were the most affected . There
seems to be a marginal improvement during the last quarter of the
financial year and it is hoped that the market will pick up momentum
gradually during the current financial year.
PROJECTS IMPLEMENTED:
During the year under review, the Company commissioned the fully
automated Sand Plant in Green Sand Line. The plant, apart from ensuring
that the consistency of materials is maintained at a high quality
level, helps in improving the quality of casting surface finish. There
will also be a significant reduction in wastage, leading to improved
margins.
The Company also installed the Adaptive Thermal Analysis System during
the year. This system helps in improving the quality of metal by
monitoring and controlling the metal treatment process. This will
ensure that the rejection rates are significantly reduced and the
customer is assured of defect free castings.
FUTURE EXPANSION PLANS:
The investments made during the last couple of years has resulted in
technology upgradation of the Machinery. The Company is also planning
to upgrade its existing Furnaces in the next couple of years to be in
line with the latest technology available in the market. This will
enable the Company to be more energy efficient and result in
conservation of power.
QUALITY RECOGNITIONS:
The Company was awarded Sustainability Award by one of its prestigious
overseas customer who conducted an audit on various focus areas and the
Company met most of the criteria stipulated by the customer. This
recognition will enable the Company to procure more export orders in
future not only from the customer from across all its business units
spread throughout the world but also from other overseas customers.
FINANCE
The Company''s long term debt stands at Rs.875 lakhs out of which Rs.212
lakhs pertains to the Wind Energy Division and the balance Rs.663 lakhs
pertains to the Foundry Division. The debt-equity ratio remains at a
healthy level of 0.24.
LABOUR
The relationship between the management and the employees during the
year under review has been cordial and productive.
DIRECTORS
Sri.J.Vijayakumar, Director, retires at this Annual General Meeting and
being eligible, offers himself for reappointment.
Sri.C.R.Swaminathan and Smt.R.Nandini, Directors, retire at the ensuing
Annual General Meeting . It is proposed to appoint them as Independent
Directors, pursuant to provisions of Sections 149,150 and 152 of the
Companies Act, 2013. Notice has been received from members proposing
the names of Sri.C.R.Swaminathan and Smt.R.Nandini as Directors.
It is also proposed to appoint Sri. K.Gnanasekaran and Dr. Jairam
Varadaraj, Directors as Independent Directors of the Company pursuant
to section 149 of the Companies Act 2013. Notices have been received
from members proposing their names for the office of Director of the
Company.
The Directors of the Company have furnished necessary declarations as
required and the same have been taken on record.
CORPORATE GOVERNANCE
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the report on Management Discussion and Analysis, Corporate
Governance as well as Auditor''s Certificate regarding compliance of
conditions of Corporate Governance forms part of this Annual Report.
INFORMATION PURSUANT TO SEC.134 OF THE COMPANIES ACT,2013
The information required under Sec.134 (3) (m) of the Companies
Act,2013 is appended hereto in Annexure I and forms part of this
Report.
PARTICULARS OF EMPLOYEES:
None of the employees of the Company was in receipt of remuneration in
excess of the limits prescribed under Section 217(2A) of the Companies
Act,1956.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act, 2013, the Directors
state that
i. In the preparation of the annual accounts, the applicable accounting
standards have been followed.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 year under review.
iii. The Directors have 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.
iv. The Directors have prepared the annual accounts on a going concern
basis.
v. The Directors have laid down internal financial controls and such
internal financial controls are adequate and operating effectively.
vi. The Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and such systems are adequate and
operating effectively.
CEO/CFO CERTIFICATION
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the Managing Director and the Head of Finance function have
furnished necessary certificate to the Board on the financial
statements presented.
AUDITORS
M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing
Annual General Meeting and are eligible for re-appointment. The
certificate required under Section 139 of the Companies Act, 2013 has
been furnished by them.
ACKNOWLEDGEMENT
The Directors wish to place on record their appreciation of the support
and co-operation extended by the Company''s Bankers M/s Corporation Bank
and Indian Bank, the various Government Agencies and in particular the
Tamil Nadu Electricity Board and the employees of the Company at all
levels.
We pray for the grace of the Almighty for further growth of the
Company.
By order of the Board
Coimbatore N.Krishna Samaraj
19th May 2014 Managing Director
Mar 31, 2013
Dear Shareholders,
The Directors have pleasure in presenting the 23rd Annual Report and
Audited Accounts of the Company for the year ended 31st March 2013.
FINANCIAL RESULS (Rs. in lakhs)
31-03-2013 31-03-2012
Total Revenue 8763.32 8558.96
Gross Profit before Interest,
Depreciation and Income Tax 1457.49 1402.70
Interest 237.39 232.84
Depreciation 616.30 549.47
Profit before tax 603.80 620.39
Provision for Income tax 125.00 275.00
for Deferred tax (46.16) (80.62)
for Prior Year Tax 8.02
Net Profit aftertax adjustments 524.96 417.99
Proposed transfer to General Reserve 200.00 200.00
Proposed dividend 82.48 91.64
Provision for Corporate tax on Dividend 14.01 14.87
Balance brought forward 369.52 258.04
Surplus carried over 597.99 369.52
DIVIDEND
Your Directors are pleased to recommend, subject to the approval of the
shareholders, a dividend at the rate of Rs 1.80 per share, i.e. at the
rate of 18 % for the year on the paid-up equity share capital of the
Company . The dividend is being reduced from 20% (Rs. 21- per share )
paid last year in view of the prevailing subdued market conditions and
the consequent drop in profits and also in order to conserve funds to
meet the increased working capital requirements. The dividend, if
approved, will absorb an amount of Rs.96.49 lakhs, inclusive of
Corporate tax on Distribution of dividends.
OPERATIONS
The net turnover (exclusive of taxes and duties) increased from
Rs.8321.74 lakhs to Rs.8524.33 lakhs, an increase of 2.44 %. The export
turnover increased from Rs.5059.55 lakhs to Rs.5226.47 lakhs, an
increase of 3.3%. The domestic turnover increased from Rs.3587.46 lakhs
to Rs.3678.87 lakhs, an increase of 2.5%.
The availability of power was a major issue during this financial year
also and the severe power cut imposed by the Tamil Nadu Generating and
Distribution Co. Ltd ( TANGEDCO) affected the operations of the Company
during the financial year under review. The Company had to resort to
usage of high cost power through Diesel Generators, especially during
the last quarter of the financial year, in order to meet the
requirements of the customers.
The Profit before tax at Rs.603.80 lakhs shows a decrease of 2.70 %
over the previous year''s profit of Rs.620.39 lakhs, mainly because of
increase in material cost, power cost and other overheads. The decrease
in volume of sales during the last quarter of the financial year also
forced the Company to manage its cash flows better through quicker
realization of receivables, decrease in inventory levels and current
liabilities and optimum utilization of its cash credit facilities.
OUTLOOK FOR CURRENT YEAR
The general recessionary trend, both in the international as well as
the domestic markets, had a severe impact on the operations of the
Company, especially during the last quarter of the financial year. The
rate of growth appears to be slow, both in the developed and developing
economies. Consequently the demand for castings has come down across
all industries. However we are confident that the markets will improve
by the third quarter of the financial year and that there will be no
adverse impact on the turnover and profitability during this financial
year.
PROJECTS IMPLEMENTED :
The Company commissioned the new Hunter Molding machine during the last
quarter of the financial year. The machine is a new generation series
machine with the latest advancements in Match Plate Molding technology.
This machine will enable in the production of high quality molds more
efficiently, with closer tolerances. With a high productivity ratio,
this machine will enable the Company to offer its customers better
quality castings.
During the year under review, the Company augmented its Diesel Power
Generating capacity, with the installation of two 1500 KVA generators.
Capable of parallel operation through an automatically computer
controlled synchronized panel, the sets can provide 3000 KVA power. The
total Diesel Power generating capacity now stands at 4400 KVA, which
will enable the Company to become self sufficient in power.
Consequently the Company will be in a position to become a reliable
supplier of castings, meeting the delivery schedules of the customers
without fail.
The Company is also modernizing its existing Sand Plant and the work is
under progress . The work is expected to be completed by the first
quarter of the current financial year 2013-14.
The Company has also acquired 1.5 acres of land, adjacent to its
existing facility. This will enable the Company to expand its
operations at a later date.
FUTURE EXPANSION PLANS
The investment made during the year under review in the new molding
machine and sand plant is for technology upgradation and capacity
enhancement to 1200MT per month. Consequent upon the upgradation of the
furnaces at an approximate cost of Rs.200 lakhs, the Company''s
installed capacity will go up from the existing 900 MT per month to
1200 MT per month. The installation of the new furnaces will be taken
up at an appropriate time.
QUALITY RECOGNITIONS
The products of the Company have been approved by Germanischer Lloyd
,one of the leading auditors for marine certification in the World, for
use in marine applications.
Similarly the Company''s facilities have been approved by Performance
Review Institute, USA, one of the leading Third Party Auditors, as
Accredited Manufacturer of Ductile and Gray Iron Castings,
certification of which is mandatory for supply of castings for
applications in locomotives, railway engines, etc in the USA.
The above recognitions will enable the Company to procure more export
orders in future.
FINANCE
The Company has been sanctioned by Indian Bank a Term Loan of Rs.320
lakhs to part finance the capital expenditure program for purchase and
installation of Diesel Generators during the current financial year.
The Company''s long term debt stands at Rs. 1260 lakhs out of which
Rs.370 lakhs pertains to the Wind Energy Division and the balance
Rs.890 lakhs pertains to the Foundry Division.
LABOUR
The relationship between the management and the employees during the
year under review has been cordial and productive.
DIRECTORS
Sri.V.Rajendran and Sri.K.Gnanasekaran , Directors, retire by rotation
at the ensuing Annual General Meeting and being eligible, offer
themselves for re-election.
The Directors of the Company have furnished necessary declarations
required in terms of Section 274(1 )(g) of the Companies Act, 1956 and
the same have been taken on record.
CORPORATE GOVERNANCE
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the report on Management Discussion and Analysis, Corporate
Governance as well as Auditor''s Certificate regarding compliance of
conditions of Corporate Governance forms part of this Annual Report.
INFORMATION PURSUANT TO SEC.217(1)(e) OF THE COMPANIES ACT.1956
The information required under Sec.217(1)(e) of the Companies Act, 1956
is appended hereto in Annexure I and forms part of this Report.
INFORMATION PURSUANT TO SEC.217(2A) OF THE COMPANIES ACT, 1956
None of the employees were in receipt of remuneration in excess of the
limits prescribed in this regard. DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 217(2AA) of the Companies Act, 1956, the Directors
state that
i. In the preparation of the annual accounts, the applicable
accounting standards have been followed.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 year under review.
iii. The Directors have 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.
iv. The Directors have prepared the annual accounts on a going concern
basis.
CEO/CFO CERTIFICATION
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the Managing Director and the Head of Finance have furnished
necessary certificate to the Board on the financial statements
presented.
AUDITORS
M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing
Annual General Meeting and are eligible for re-appointment. The
certificate required under Section 224(1B) of the CompaniesAct, 1956
has been furnished by them.
COST AUDITORS:
The Company has appointed M/s. SBK Associates, Cost Accountants, as
Cost Auditors in terms of Section 233B(2) of the Companies Act, 1956 to
audit the cost records and submit their compliance report for the year
2012-13. The Cost Audit Report for the year 2011-12, which had to be
filed before 31st January 2013 was filed on 29th January 2013.
ACKNOWLEDGEMENT
The Directors wish to place on record their appreciation of the support
and co-operation extended by the Company''s Bankers M/s Corporation Bank
and Indian Bank, the various Government Agencies and in particular the
Tamil Nadu Electricity Board and the employees of the Company at all
levels.
We pray for the grace of the Almighty for further growth of the
Company.
On behalf of the Board of Directors
Place: Coimbatore V. Rajendran N.Krishna Samaraj
Date: 30th May, 2013 Director Managing Director
Mar 31, 2012
The Directors have pleasure in presenting the 22nd Annual Report and
Audited Accounts of the Company for the year ended 31st March 2012.
FINANCIAL RESULTS (Rs. in lakhs)
31-03-2012 31-03-2011
Total Revenue 8558.96 6275.54
Profit before Finance costs, Depreciation
and Income Tax 1402.70 1212.72
Finance costs 232.84 174.33
Depreciation & Amortisation 549.47 479.02
Profit before tax 620.39 559.37
Provision for Income tax 275.00 112.00
for Deferred tax (80.62) 97.68
for Prior Year Tax 8.02 9.92
MAT Credit Entitlement - (35.76)
Net Profit after tax 417.99 375.52
Proposed transfer to General Reserve 200.00 200.00
Proposed dividend 91.64 91.64
Provision for Corporate tax on Dividend 14.87 14.87
Balance brought forward 258.04 189.03
Surplus carried over 369.52 258.04
DIVIDEND
Your Directors are pleased to recommend, subject to the approval of the
shareholders, a dividend at the rate of Rs 2.00 per share, (20%) on the
paid-up Equity share capital. The dividend is being maintained at the
same rate as in the previous two years in order to conserve funds for
the proposed expansion/ modernisation plans and additional working
capital requirements. The dividend, if approved, will absorb an amount
of Rs 106.51lakhs, inclusive of Corporate tax on Distribution of
dividends.
OPERATIONS
The total turnover for the year increased by 37% over the previous
year. The demand for castings has increased consequent upon the
improvement in market conditions, both in the international and
domestic markets. The net turnover (exclusive of taxes and duties) has
increased from Rs. 6077.79 lakhs to Rs. 8321.74 lakhs. The export
turnover also showed a substantial improvement at Rs. 5059.55 lakhs
during the current year, an increase of 60% over the previous year.
This can be attributed to the all round improvement in global business
economies across all industries.
The availability of power was a major issue during the financial year
and the severe power cut imposed by the Tamil Nadu Electricity Board of
more than 70% affected the operations of the Company during the last
quarter of the financial year under review. In order to honour its
commitments to the customers, the Company resorted to purchase of third
party private power, use of extensive diesel based fuel and also had to
bear substantial air freight during the last quarter. In spite of the
severe controls in operations due to the power cut, the Company was
able to break even during the last quarter of the year under review.
The Profit before tax at Rs. 620.39 lakhs shows an increase of 11 %
over the previous year's profit of Rs.559.37 lakhs.
OUTLOOK FOR CURRENT YEAR
The general industrial climate in both international and domestic
markets looks very promising. Even though the rate of growth appears to
be slow, the volumes are picking up and this augurs well for the
industries. The demand for castings is also increasing across all
industries . Hence we are confident of posting a decent growth rate in
the current year 2012-13 and it is anticipated that the turnover will
cross Rs.100 crore mark for the first time since the inception of the
Company and commencement of commercial production in 1995, subject to
improved power position in the State.
PROJECTS IMPLEMENTED :
The Company installed/commissioned during the year the Automatic
Grinding cell which was imported from Italy for fettling operations.
This machine has been helpful in achieving a better quality finish for
the castings , apart from reducing the lead time in the operations and
inventory levels.
During the year under review, the Company also commissioned the
additional factory building measuring about 30,000 Sq.Ft. which will
accommodate the machining activities of the Company.
FUTURE EXPANSION PLANS:
The Company had originally planned to expand the capacity from 900 MT
per month to 1200 MT per month to be implemented with the financial
year 2011-12. Due to the emerging power scenario during the second half
of the FY 2012, the Company decided to push back this expansion to the
first half of the FY 2013. This is in conjunction with the improving
power scenario in Tamil Nadu. This expansion project will be
implemented at a cost of Rs 5 crores as against Rs.3 crores planned
earlier and which will be funded by a mix of debt and internal
generations.
FINANCE
The Company has been sanctioned by Indian Bank a Term Loan of Rs.425
lakhs to part finance its modernisation program for the current
financial year and additional working capital of Rs.500 lakhs.
The Company's long term debt stands at Rs.1030 lakhs out of which
Rs.519 lakhs pertains to the Wind Energy Division and the balance Rs.
511 lakhs pertains to the Foundry Division.
LABOUR
The relationship between the management and the employees during the
year under review has been cordial and productive.
DIRECTORS
Dr.Jairam Varadaraj and Sri. J.Vijayakumar, Directors, retire by
rotation at the ensuing Annual General Meeting and being eligible,
offer themselves for re-election.
Sri. C.R.Swaminathan was co-opted as an Additional Director by the
Board of Directors at its Meeting held on 25th January 2012. He holds
office until the date of the ensuing Annual General Meeting. Nomination
along with necessary deposit has been received from a shareholder
proposing the name of Sri. C.R.Swaminathan for appointment as a
Director of the Company.
The Directors of the Company have furnished necessary declarations
required in terms of Section 274(1)(g) of the Companies Act, 1956 and
the same have been taken on record.
CORPORATE GOVERNANCE
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the report on Management Discussion and Analysis, Corporate
Governance as well as Auditor's Certificate regarding compliance of
conditions of Corporate Governance forms part of this Annual Report.
INFORMATION PURSUANT TO SEC.217(1)(e) OF THE COMPANIES ACT,1956
The information required under Sec.217(1)(e) of the Companies Act,1956
is appended hereto in Annexure I and forms part of this Report.
INFORMATION PURSUANT TO SEC.217(2A) OF THE COMPANIES ACT, 1956
None of the employees were in receipt of remuneration in excess of the
limits prescribed in this regard. DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 217(2AA) of the Companies Act, 1956, the Directors
state that
i. In the preparation of the annual accounts, the applicable
accounting standards have been followed.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 year under review.
iii. The Directors have 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.
iv. The Directors have prepared the annual accounts on a going concern
basis.
CEO/CFO CERTIFICATION
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the Managing Director and the Head of Finance function have
furnished necessary certificate to the Board on the financial
statements presented.
AUDITORS
M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing
Annual General Meeting and are eligible for re-appointment. The
certificate required under Section 224(1B) of the Companies Act, 1956
has been furnished by them.
COST AUDITOR:
The Company has appointed Sri.K.Suryanarayanan, Cost Accountant, as the
Cost Auditor in terms of Section 233B(2) of the Companies Act, 1956 to
audit the cost records and submit his compliance report for the year
under review to the Central Government.
ACKNOWLEDGEMENT
The Directors wish to place on record their appreciation of the support
and co-operation extended by the Company's Bankers M/s Corporation Bank
and Indian Bank, the various Government Agencies and in particular the
Tamil Nadu Electricity Board and the employees of the Company at all
levels.
We pray for the grace of the Almighty for further growth of the
Company.
On behalf of the Board of Directors
Place: Coimbatore R. Nandini N.Krishna Samaraj
Date : 21st May, 2012 Director Managing Director
Mar 31, 2010
The Directors have pleasure in presenting the 20th Annual Report and
Audited Accounts of the Company for the year ended 31st March 2010.
FINANCIAL RESULTS
For the year ended 31st March 2010 2009
(Rs. in lakhs) (Rs. in lakhs)
Total Revenue 4076.38 6405.29
Gross Profit before interest,
depreciation ,tax
and loss on Foreign currency fluctuations 1032.02 1324.15
Interest 134.00 200.59
Depreciation 413.67 390.69
Profit from Operations 484.35 732.87
Profit/(Loss) on Forex rate fluctuation 70.10 (365.21)
Profit before tax 554.45 367.66
Provision for Income tax 205.00 175.00
for Deferred tax 19.94 33.56
for Fringe Benefit Tax 0.00 4.00
Net Profit after tax 329.50 155.10
Proposed transfer to General Reserve 200.00 150.00
Proposed dividend 91.64 68.73
Provision for Corporate tax on Dividend 15.22 11.68
Prior Year Taxation & Expenses 18.88 34.55
Balance brought forward 185.27 295.13
Surplus carried over 189.03 185.27
DIVIDEND
Your Directors are pleased to recommend, subject to the approval of the
shareholders, a dividend at the rate of Rs 2.00 per share, i.e. at 20 %
for the year on the paid-up equity share capital of the Company as
against Rs.1.50 per share (15 % ) dividend paid last year. This will
absorb an amount of Rs 106.86 lakhs, inclusive of Corporate
Distribution tax on dividends.
OPERATIONS
The global recession had an impact on the turnover of the Company, with
sales declining by 37% as exports to USA and Europe were affected
considerably. However with suitable steps taken to tap the domestic
market and implementation of various cost reduction and control
measures, the Company was able to realize better margins . This is
evident from the fact that the Profit before tax has increased by 50%
to Rs.554.45 lakhs during the current financial year from Rs. 367.67
lakhs in the previous year.
Prices of crucial raw materials like Steel Scrap, Pig Iron, Ferro
Alloys and other consumables were stable for most part of the financial
year but increased sharply by 20% during the last quarter of the
financial year. The frequent disruptions in power affected the
production schedule during the financial year. Non- availability of
labour was another major issue during the year.
The performance of the Company when viewed against the above
background, is satisfactory, given the recessionary market conditions.
OUTLOOK FOR CURRENT YEAR
The outlook for the current year appears to be positive as the global
economy is just recovering after going through a severe recessionary
phase over the past year or so. It is heartening to note that the
consumer confidence and market sentiments have improved in the US. In
the European market, the Company has successfully gained customers and
is in the process of developing products, which will provide a
substantial percentage of revenue in the coming years.
The Company has also increased its business of value added castings in
the domestic market and expects in the following years an increase in
the percentage of domestic value added revenue.
The Company is confident that by the above actions, the Company is
diversifying its markets so that its dependence on any one geographical
market is reduced.
The following chart shows the market diversification achieved by the
Company:
PROJECTS IMPLEMENTED AND FUTURE PLANS :
During the year the Company commissioned the third Wind Energy
Generator of capacity 800 kw, thus taking the overall installed
capacity to 3.2 MW. With this installation, the Company will be in a
position to meet about 65% of its requirement at the current operating
capacity. The Directors are also examining the possibility of
installing another generator during the current fiscal 2010-11 so that
the entire power requirement at the current capacity levels is met from
the wind energy generation itself. This will to an extent insulate the
Companys production from the prevailing power situation.
FINANCE
The Company is repaying the Term loan instalments to the Banks and the
Interest -free Sales Tax Deferral loan to the Commercial Tax
Department, Govt. of Tamil Nadu as per schedule.
The Company has been sanctioned a fresh Term Loan of Rs.300 lakhs by
Corporation Bank for meeting its regular capex programme and another
Rs.320 lakhs by Indian Bank for funding the Wind Energy project.
The Company has availed a total of Rs.470 lakhs out of the sanctioned
amount.
The Companys long term debt for the Wind energy Division is Rs.437
lakhs and the balance Rs.343 lakhs pertains to the Foundry Division.
NEW PRODUCT LINES:
The Company has successfully developed the special Silicon Molybdenum
Alloy Castings . These castings are used in high temperature
applications in the Automotive and Power industries. The Company is one
of the very few in India with this capability. The market for this
segment is expected to grow substantially with the new environmental
regulations for the automotive and Power industries coming into place.
LABOUR
The relationship between the management and the employees during the
year under review has been cordial and productive.
DIRECTORS
The Directors record with profound sorrow the demise of Sri. L.G.
Varadarajulu, Past Chairman of the Board of Directors of the Company on
May 19, 2010. As one of the Founder - Directors and the First Chariman
of the Company, late Sri. L.G. Varadarajulu was instrumental in guiding
the Company during the formative years of the Company. The Directors
place on record the yeomen services rendered by late Sri. L.G.
Varadarajulu during his tenure as Chairman and Director of the Company.
Sri.J.Vijayakumar and Sri.K.Gnanasekaran, Directors, retire by rotation
at the ensuing Annual General Meeting and being eligible, offer
themselves for re-election.
The Directors of the Company have furnished necessary declarations
required in terms of Section 274(1)(g) of the Companies Act, 1956 and
the same have been taken on record.
CORPORATE GOVERNANCE
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the report on Management Discussion and Analysis, Corporate
Governance as well as Auditors Certificate regarding compliance of
conditions of Corporate Governance forms part of this Annual Report.
INFORMATION PURSUANT TO SEC.217(1)(e) OF THE COMPANIES ACT,1956
The information required under Sec.217(1)(e) of the Companies Act,1956
is appended hereto in Annexure I and forms part of this Report.
INFORMATION PURSUANT TO SEC.217(2A) OF THE COMPANIES ACT, 1956
None of the employees were in receipt of remuneration in excess of the
limits prescribed in this regard.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 217(2AA) of the Companies Act, 1956, the Directors
state that
i. In the preparation of the annual accounts, the applicable
accounting standards have been followed.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 year under review.
iii. The Directors have 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.
iv. The Directors have prepared the annual accounts on a going concern
basis.
CEO/CFO CERTIFICATION
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the Managing
Director and the Head of Finance function have furnished necessary
certificate to the Board on the financial statements presented.
AUDITORS
M/s S.Krishnamoorthy & Co, Chartered Accountants, retire at the ensuing
Annual General Meeting and are eligible for re-appointment. The
certificate required under Section 224(1B) of the Companies Act, 1956
has been furnished by them.
ACKNOWLEDGEMENT
The Directors wish to place on record their appreciation of the support
and co-operation extended by the Companys Bankers M/s Corporation Bank
and Indian Bank, the various Government Agencies and in particular the
Tamilnadu Electricity Board and the employees of the Company at all
levels.
We pray for the grace of the Almighty for further growth of the
Company.
On behalf of the Board of Directors
Place : Coimbatore N. KRISHNA SAMARAJ
Date : 27th May 2010 Managing Director
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