Mar 31, 2018
Directors'' Report
Your Directors present the 33rd Annual Report of the Company together with the Audited Accounts for the year ended Mar 31, 2018.
1. Financial Highlights/ Performance
The Operating results of your Company as per Ind AS Financial Statements for the year ended Mar 31, 2018 are given below
(Rs in Lakhs)
Particulars |
Year ended Mar 31, 2018 |
Year ended Mar 31, 2017 |
Sales |
41,66.31 |
35,53.22 |
Other Income |
2,33.70 |
2,82.07 |
PBIDT |
86.31 |
(22,98.94) |
Finance Cost |
2,89.16 |
2,15.67 |
Depreciation |
6,30.57 |
6,93.33 |
Profit /(Loss) before Taxation |
(8,33.42) |
(32,07.94) |
Tax Expense |
13.64 |
(1,47.54) |
Profit /(Loss) after Taxation |
(8,47.06) |
(30,60.40) |
Turnover of your Company got improved significantly during the year under review. However, your Company is yet to recover from the aftermath of the Employees unrest during FY 2015-16, the recovery was considerably low. Though H1 FY 2017-18 first quarter was good, Q3 FY 2016-17 was the worst in the year as we had several natural calamities with delayed material deliveries. Customer demands for the existing products & packages were volatile however have seen phased increased in order receipts. Your Company had maintained good relationship with all its Customers in US & Europe and have seen good improvement in capturing business from one of the big Customers in the US. It is expected to improve production orders in FY 2018-19. The outlook for FY 2018-19 is good and SPEL has plans to induct new Customers from Europe & US regions.
2. Dividend
Due to the loss for the year, dividend could not be paid during the year.
3. Reserves
The reserves of the Company has been reduced from Rs 49,01.97 lakhs to Rs 40,90.24 lakhs at the end of the year.
4. The Global Semiconductor Industry
According to Semiconductor Industry Association (SIA), representing U.S. leadership in Semiconductor manufacturing, design, and research, worldwide sales of Semiconductors reached $111.1 billion during the first quarter of 2018, an increase of 20 percent compared to the first quarter of 2017, but 2.5 percent less than the fourth quarter of 2017. Sales for the month of March 2018 came in at $37.0 billion, an increase of 20 percent com pared to the March 2017 total of $30.8 billion and 0.7 percent more than the February 2018 total of $36.8 billion.
Regionally, year-to-year sales increased in America (35.7 percent), Europe (20.6 percent), China (18.8 percent), Asia Pacific/All Other (13.3 percent), and Japan (12.4 percent). Month-to-month sales increased in Europe (3.9 percent), China (2.2 percent), Japan (0.5 percent), and Asia Pacific/All Other (0.2 percent), but decreased slightly in the Americas (-2.0 percent)
Forecast for FY 2018-19
Despite the upward revision for 2018, the quarterly growth profile for 2018 is expected to fall back to a more normal pattern with a mid-single-digit sequential decline in the first quarter of the year, followed by a recovery and buildup in both the second and third quarters of 2018, and a slight decline in the fourth quarter.
Worldwide Semiconductor revenue is forecast to total $451 billion in 2018, an increase of 7.5 percent from $419 billion in 2017, according to Gartner, Inc. This represents a near doubling of Gartner''s previous estimate of 4 percent growth for 2018 Market Drivers for future
It was a growth year for the Semiconductor industry in 2017. Semiconductor earnings were driven by increasing memory prices, a boost in crypto currency, increasing adoption of GPUs (Graphics Processing Units) by Data Centers and Cloud Companies for Al (Aartificial Intelligence) tasks, and the growing popularity of e-sports.
Although the Semiconductor industry may not be able to replicate the double-digit growth it saw in 2017, it could continue to grow in 2018. The US Congress passed its tax reform bill in December 2017, which could make US Companies more competitive with their overseas competitors.
Another major development could be the adoption of Al (Artificial Intelligence) Technology across various verticals. Handset makers Apple and Samsung have already brought Al functionality to smartphones. The drone market is growing, and 2018 may see the commercial rollout of Al-powered drones throughout the world, many industries, from construction to healthcare, could adopt Al technology to improve efficiency and reduce costs
Next major development could be the shift to a 10 nm (Nanometer) node by Intel, which could put it back in a technological advantage. Taiwan Semiconductor Manufacturing (TSM) and Samsung could also shift to a 7 nm node, but that would be equivalent to Intel''s 10 nm node. The move to a smaller node could bring significant cost savings and improve the performance of the chips.
The Semiconductor industry could also come closer to the deployment of 5G (fifth-generation) technology. Although that may not generate any revenues in 2018, it could create significant growth opportunities for the future. Even AR/VR (Augmented Reality/Virtual Reality) adoption could pick up in the industrial as well as gaming space as Companies such as Advanced Micro Devices (AMD) work to make wireless headsets more user-friendly.
Outsourced Assembly and Test (OSAT) Industry
The Global Semiconductor assembly and testing services (SATS) market was valued at US$ 27,700 Mn in 2017 and is expected to register a CAGR of 4.7% from 2018 to 2027. Growing demand of consumer electronics, increasing integration of electronics and connectivity in automotive are major factors driving growth of the global Semiconductor Assembly and Testing Services (SATS) market.
On the basis of application, the global Semiconductor Assembly and Testing Services (SATS) market is segmented into communication, computing & networking, consumer electronics, industrial and automotive. The revenue contribution from the consumer electronics segment is anticipated to expand at a CAGR of 6.3% during the forecast period of 2018-2027.
Among the regions, Taiwan is projected to exhibit relatively high growth in the global market, registering a CAGR of 5.6% over the forecast period. Revenue from the Semiconductor Assembly and Testing Services (SATS) Market in North America and APAC (excluding Taiwan) is expected to collectively account for over 40% of the global Semiconductor Assembly and Testing Services (SATS) Market revenue in 2017.
Semiconductor Assembly and Testing Services providers can focus on expanding their footprints across several countries in APAC and Europe regions such as India and UK. The Indian Semiconductor Industry
India is strongly focusing on Semiconductor manufacturing, It is expected that the increased demand for modern chip designs and growing demand for electronics devices would drive the need of Semiconductor IP designing. The Indian Semiconductor component market is expected to be worth USD 32.35 billion by 2025, growing at a CAGR of 10.1% between 2018 and 2025.
The Indian Semiconductor ecosystem is quite robust, with most of the major global Semiconductor players having their R&D centers in India. In addition to global R&D centers, the past decade has seen quite a few Indian entrepreneurs starting their own fabless IP or SoC design houses. India is a highly attractive destination for global R&D centers owing to the availability of talent, as well as lower cost (compared with the US and Western Europe).
"India''s ESDM (Electronics System, Design & Manufacturing) sector is poised to reach $228 billion by 2020 from $100 billion in 2016-17, growing at 16-23 per cent annually," said a joint report of the India Electronics and Semiconductor Association (IESA) and global services firm Ernst & Young (EY) at a summit.
5. Company Performance
The performance of your Company had improved significantly as compared to previous Financial Year and plans are in place to further improve significantly during the years to come. This is evident from the business with most of the Important / Growing / Emerging Customers is on the rise during Q1 FY 2018-19. There have been improved orders, new product introductions & Customer additions during this year. This was made possible due to the Engineering, Application support from SPEL apart from the QCDS factors (Quality, Cost, Delivery, and Service).
Withdrawal of Buyer''s Credit facility by RBI from middle of Mar 2018 is another policy change which has resulted strain on already tight cash flow. Earlier implementation of GST from July 2017 onwards had placed additional strain as we had to pay GST on all our imported materials including on wafers and later on claim refund. We had paid GST till middle of Oct and applied for refund and there had been delay in obtaining refund. Above policy changes by Government has affected our operations to a very major extent. SPEL was able to strengthen relationship with its one of the biggest European Customers and the volumes are growing. The outlook for FY2018-19 is good and other strategic partnership for new projects in the field of Aero Space & Medical.The demand for the packages supported by SPEL is steady for leaded packages and growing for QFNs and contribution is expected to increase in future years.
a. Leaded Packages - SPEL in able to find opportunities for increased loading from existing Customers to utilize the available capacity. No new capacity additions have been planned.
b. QFN Packages - Demand is growing. Flip Chip QFN is witnessing more growth than normal QFN and SPEL is planning to have this capability in the next Financial Year.
Human Resources Development
Your Company has enthroned the attributes listed below as its Core Values. The Management will assiduously practice and enthuse its Employees to imbibe these virtues. Towards this end training is imparted every month, every Employee goes throughout the drill at least once in six months :
a. Business Ethics |
: defines us as a Company |
b. Professionalism |
: defines us as Individuals |
c. Citizenship |
: defines our contribution to Society |
SPEL''s medium for Corporate Social Responsibility (CSR) is through Socio-Economic Contribution (S-E-C) and SPEL Employees Social Service Organization (SESSO). For most people, the idea of Social Service is donating money to a social organization - perhaps an old-age home or an orphanage or similar. This however is the easy part. The difficult part is volunteering one''s time to improve society.
When can we make a contribution to Society?
During Phase 1 of our lifetime, perhaps up to the age of 35, we are so focused on building our careers, starting our families & establishing a name for ourselves
During Phase 2 perhaps from age of 35 thru 65, we are the most active in our work, working as a team, being able to significantly contribute to Economic Development
During Phase 3 perhaps from age 65 onwards, we are most able to contribute our time on an increased basis to social causes S-E-C at SPEL is all about how we can contribute socially during Phase 2 itself while also handling Economic Development. Towards this, there are 3 areas that each of us can assist by making these a part of our day to day approach :
1. Following discipline in any and everything we do.
2. Providing a helping hand to people around us in any way we possibly can.
3. Showing the right path forward to people around us.
S-E-C in SPEL is primarily done by One-to-One mentoring as each person encourages & motivates the other, towards a more purposeful & effective lifestyle.
As part of the Core Values, following activities were undertaken through SESSO :
i) Educational assistance to the needy people in and around Factory.
ii) Voluntary Blood Donation camp.
iii) Assistance to orphanage and old age home located near Factory.
7. Material changes affecting the financial position of the Company which have occurred between the end of Financial Year and the date of the report.
Nil
8. Details of significant and material orders
passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future. Nil
9. Adequacy of internal financial controls
The Company''s internal financial controls systems are commensurate with the nature of the business and the size and complexity of its operations. These are routinely tested buy the Internal Auditors and cover all key business areas.
10. Subsidiary/Joint Ventures/Associate Companies
Your Company had incorporated a Wholly Owned Subsidiary Company during the Financial Year with the due approval of the Shareholders, in the name and style of SPEL Semiconductor Packaging Limited. This Company is yet to commence production. It is envisaged to commence production after getting due statutory approvals from the authorities.
11. Deposits
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.
12. Statutory Auditors
The term of office of your Company''s Auditors M. S. Krishnaswami & Rajan, Chartered Accountants, is geting completed at the conslusion of this AGM. They do not offer themselves for appointment as Statutory Auditors of the Company at the forthcoming Annual General Meeting for a further period. The Company has received notice from a Member recommending the appointment of Mr. K. Nandhiswaran, Chartered Accountant, Chennai, as Statutory Auditors in the place of M. S. Krishnaswami & Rajan.
Mr. K. Nandhiswaran, Chartered Accountant, has expressed his consent for the appointment as Statutory Auditors for the Financial Year 2018-19 and has confirmed that the appointment, if made, will be in accordance with the limits specified under Section 139 of the Companies Act, 2013.
13. Share Capital
There has been no change in the share capital of the Company during the year.
14. Extract of the Annual Return
As provided under Section 92 (3) of the Act, the extract of Annual Return is given in annexure in the prescribed Form MGT9, which forms part of this report.
15. Conservation of energy, technology absorption and foreign exchange earnings and outgo :
The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows :
Conservation of Energy
The Company has in place an Energy Committee which meets once a month. This Committee consists of Cross-functional Executives. It assesses the potential areas, develops means to save energy and
implements the plan with the approval of the Management.
Measures were taken during the year to conserve water and electricity resorting to reuse of Dicing process water, rain water harvesting, power factor improvement and investment on air cooled chillers and air compressors.
Savings in Electricity (Units) |
43.229 Units |
Savings in Water Consumption |
531 KL |
Technology Absorption
The particulars regarding Technology Absorption are not applicable to your Company.
Foreign Exchange Earnings and Outgo
Your Company is a 100% Export Oriented unit and is constantly striving to increase its exports.
Foreign Exchange used during the year : Rs 4,24.31 Lakhs.
Foreign Exchange Earned used during the year: Rs 26,59.98 Lakhs.
16. Research & Development (R&D)
The Company has carved out an ambitious plan of investment in R&D. This will include investment in Package Intellectual Property, thereby assisting Company''s revenue and profitability in the future years.
17. Directors and Key Managerial Personnel
There was no change in either the Board position or Key Management Persons during the year under review.
18. Number of meetings of the Board
Six Meetings of the Board were held during the year. For details of the meetings of the board, please refer to the Corporate Governance Report, which forms part of this report.
19. Audit Committee
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report
20. Vigil mechanism for Directors & Employees
The Company has a vigil mechanism by way of Whistle Blower Policy to provide a Vigil Mechanism for Employees and Directors to report genuine concerns. The provisions of this policy are in line with Section 177 (9) of the Act. A copy of the policy is uploaded in the website of the Company.
21. Nomination and Remuneration Committee
The details pertaining to Nomination and Remuneration Committee are included in the Corporate Governance Report, which forms part of this report.
22. Loans, Guarantees or Investments
Particulars of Loans, Guarantees and Investments have been disclosed in the financial statements.
23. Contracts or arrangements with Related Parties
The particulars of every contract or arrangements entered into by the Company with Related Parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm''s length transactions under third proviso thereto have been disclosed in Form No. AOC -2.
24. Managerial Remuneration
Managerial Remuneration is given in annexure which forms part of this report.
25. Secretarial Audit Report
Secretarial Audit Report is given as annexure, which forms part of this report.
26. Formal Annual Evaluation of Board on its own performance, Committees of the Board and the individual Directors
The Board of Directors has carried out an annual evaluation of its own performance, Committees of the Board and the individual Directors pursuant to the provisions of the Act and Corporate Governance as prescribed under Regulation 17(10) of SEBI (LODR) Regulation 2015.
In a separate meeting of the independent Directors, performance of the Non-independent Director and performance of the Board as a whole was evaluated.
27.Familiarization Programme for Independent Directors
The Company has prepared and presented a power point presentation for Independent Directors in order to enable them to familiarize with the Company''s policies and practices.
28. Risk Management
A Risk Management Committee to identify and monitor the risks has been formed with a responsibility to review the risks and evlove mitigation plan required. Periodical action is taken to address the major risks identified.
29. Corporate Governance Certificate
The Corporate Governance Certificate from the Auditors regarding compliance of conditions of Corporate Governance as stipulated in Regulation 23(4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed with this report.
30. Reply to Statutory Auditor''s Comments in their Report
The Statutory Auditors have commented in their report regarding "Going Concern" assumption adopted in preparation of Financial Statements. The Management''s response is given in the Note 3.16 of the Financial Statements, which is self-explanatory.
The Statutory Auditors comment on Internal Financial controls relating to revenue recognition and inventory are being addressed to strengthern the internal control systems.
31. Reply to comments by Secretarial Auditor in his report
Regarding the comment that the Company is not regular in depositing undisputed PF, ESI, GST, Service tax and Income-tax (TDS), Property dues and Listing fee the Management is confident that the situation will improve, based on the austerity steps and proactive measures taken during the year. This in-turn will improve the liquidity and ensure that the statutory dues will be paid regularly in the future.
32. Directors'' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(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 loss of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) 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 operating effectively and
(f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by the management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2017-18.
33. Acknowledgements
Your Directors place on record their gratitude especially to the Promoters, who had assisted significantly towards the recovery bath. Directors also placed on record their gratitude to the Government of India, the Government of Tamil Nadu, Financial Institutions, Bankers, Insurance Companies, Customs & Excise authorities, valued overseas Customers & Vendors and the Promoters for the continued assistance and support extended to the Company.
Yours Directors wish to place on record, their appreciation of the efficient and loyal services rendered by the supportive Employees at all levels of the Company.Yours Directors wish to thank the Shareholders who constitute the mainstay of the Company for their unstinted support, forbearance confidence reposed on the Management.
By order of the Board |
|
for SPEL Semiconductor Limited |
|
K. Ravikumar |
N. Suryanarayanan |
Director |
Director |
DIN: 00119753 |
DIN: 02282919 |
M. Jayasankar |
D. Balakrishnan |
Director |
Whole Time Director & CEO |
DIN : 00048351 |
|
DIN: 02131242 |
|
Dr. Enakshi Bhattacharya |
|
Director |
|
DIN : 05277571 |
|
Chennai |
|
May 29, 2018 |
Form NO.AOC -2
(Pursuant to Clause (h) of sub-section 134 of the Act and Rule 8(2) of the Companies Accounts) Rules, 2014)
Form for disclosure of particulars of contracts / arrangements entered into by the Company with Related Parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 including certain arm''s length transaction under third proviso thereto :
1. Details of contracts or arrangements or transactions not at arm''s length basis : Nil
2. Details of materials contracts or arrangements or transactions at arm''s length basis : Nil
By order of the Board |
|
for SPEL Semiconductor Limited |
|
D. Balakrishnan |
|
Chennai |
Whole Time Director & CEO |
May 29, 2018 |
DIN: 02131242 |
S.I. No. |
Particulars |
Ratio Explanation |
to median emn. |
1. |
The ratio of remuneration of each director to the median remuneration of the employee of the Company of the financial year |
Mr. D. Balakrishnan, Director & CEO |
9.16 |
2. |
The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year |
NIL |
|
3. |
The percentage increase in the median remuneration of employees in the financial year. |
0.66% |
|
4. |
The number of permanent employee on the rolls of the company. |
325 Employees |
|
5. |
The explanation on the relationship between average increase in remuneration and company performance |
Increase in the remuneartion of employees is in line with industry standards |
|
6. |
Comparison of the remuneration of the Key Managerial Personnel against the performance of the company. |
The remuneration of the KMP''s are in the with the remuneration policy of the company where there remuneration is determined based on their performance which is co related to the performance of the Company. |
|
7. |
Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies the variations in the net worth of the company as at the close of the current financial year and previous financial year. |
Particulars Mar 31, 2018 |
% Change |
Market captialization 52,75,83,548 |
-33.74 % |
||
Price Earnings Ratio -6.22 |
22.73% |
||
8. |
Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. |
There was no increase in the managerial remuneration |
9. |
Comparison of the each remuneration of the Key Managerial Personnel against the performance of the Company |
Comparision of the remuneration of the key managerial personnel against the performance of the company aggreate remuneration of key managerial personnel (KMP) in 2018. |
Revenue in ( Lakhs) 41,66.31 |
||
Remuneration of KMPs (as % of revenue) 1.63% |
||
Profit before tax (PBT) (Lakhs) (8,33.42) |
||
Remuneration of KMPs (as % of PBT) -8.02% |
||
10. |
The key parameters of any variable component of remuneration availed by the directors |
Not Applicable |
11. |
The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year |
Not Applicable |
12. |
Affirmation that the remuneration is as per the remuneration policy of the company |
The remuneration of Directors, Senior Management and Employees is as per the Remuneration Policy of the Company. |
Mar 31, 2016
Directorsâ Report
The Directors present the 31st Annual Report of the Company together with the Audited Accounts for the year ended Mar 31, 2016.
1. Financial Highlights / Performance
The Operating results of your Company for the year ended Mar 31, 2016 are given below
(Rs, in Lakhs)
Particulars |
Year ended |
Year ended |
Mar 31, 2016 |
Mar 31, 2015 |
|
Sales |
25,85.04 |
47,19.37 |
Other Income |
81.74 |
1,37.81 |
PBIDT |
(9,39.79) |
13,70.71 |
Interest |
3,04.40 |
4,06.71 |
Depreciation |
10,71.32 |
10,12.40 |
Profit / (Loss) before} Exceptional item |
(22,47.94) |
(48.40) |
Exceptional item |
(1,14.39) |
- |
Profit/ (Loss) before Taxation |
(23,62.33) |
(48.40) |
Tax / Deferred Tax |
(3,83.33) |
(13.18) |
Profit / (Loss) after Taxation |
(19,79.00) |
(35.22) |
During the year combined outcome of Labour unrest, tight cash flow situation, devastating floods and reduction in Customer demand due to traditional year-end holidays, resulted in the above loss.
The above loss was taken after including Rs, 3,98 lakhs from write-off the carrying value of the certain items of plant and machinery and impairment loss of certain other items of plant and machinery.
However, the Forecast from top Customers for FYQ4 2016-17 is positive which will result in reducing losses during FY 2016-17.
2. Dividend
Due to the loss for the year, dividend could not be paid for the year.
3. Reserves
The reserves of the Company have been reduced from Rs, 40,85.75 Lakhs to Rs, 21,06.75 Lakhs at the end of the year.
4. Semiconductor - Global & Indian scenario During FY 2015- 16
The Semiconductor industry witnessed slow growth in 2015 after enjoying strong growth in 2014. This was due to 3.9% YoY (Year-over-Year) growth in the Asia-Pacific region that was offset by a 10.3% fall in Japan and 8.2% fall in Europe. Moreover, the demand for Semiconductors was affected by the slowdown in PC (Personal Computer) shipments, a strengthening US dollar, economic contraction in Japan, the European crisis, and the crash of the Chinese Stock Market. China accounts for more than 50% of the global Semiconductor consumption.
In the India context, the Indian Semiconductor industry offers high growth potential areas as the industries which source Semiconductors as inputs are themselves witnessing high demand. The end-use industries such as mobile devices, telecommunication equipment, information technology, office automation (IT & OA), industrial machinery, automobiles and several other industries have applications for computing in some form or other and thereby necessarily have growing demand for Semiconductors. Now with the concept of Internet of Things (IoT) picking up momentum, the next generation of interconnected devices would further increase the demand for intelligent computing, thereby creating sustainable demand for Semiconductors.
Forecast for FY 2016-17
The Semiconductor market will pick up its pace over the coming years, with 1.4% growth in 2016 and 3.1% growth in 2017. However, the 9.9% growth witnessed in 2014, before the slowdown, is unlikely to repeat in the near term. The forecast is based on the assumption that the macro economy will revive during this period.
According to the 2016 forecast, the highest growth will come from the Americas region, followed by a revival in Japan and loss improvement in Europe. However, the Asia-Pacific regionâthe key Semiconductor market that has been driving growth in the industry so farâwill witness a slowdown, mainly due to Chinaâs weak economy, all regions are expected to post growth in 2017.
Looking from the product perspective, all Semiconductor products to report growth, except for memory in 2016 as the demand for PC and Smartphoneâs slows. However, growth is expected to gain momentum in 2017 over the anticipation of renewed demand for PCs.
5. Change in the Nature of Business, if any
Nil
6. Human Resources Development
Your Company has enthroned the attributes listed below as its Core Values. The Management will assiduously practice and enthuse its Employees to imbibe these virtues. Towards this end training is imparted every month, every Employee goes throughout the drill at least once in six months :
a. Business Ethics : defines us as a Company
b. Professionalism : defines us as Individuals
c. Citizenship : defines our contribution to Society
SPELâs medium for Corporate Social Responsibility (CSR) is through Socio-Economic Contribution (S-E-C) and SPEL Employees Social Service Organization (SESSO). For most people, the idea of Social Service is donating money to a social organization
- perhaps an old-age home or an orphanage or similar. This however is the easy part. The difficult part is volunteering oneâs time to improve society.
When can we make a contribution to Society?
During Phase 1 of our lifetime, perhaps up to the age of 35, we are so focused on building our careers, starting our families & establishing a name for ourselves
During Phase 2 perhaps from age of 35 thru 65, we are the most active in our work, working as a team, being able to significantly contribute to Economic Development
During Phase 3 perhaps from age 65 onwards, we are most able to contribute our time on an increased basis to social causes
S-E-C at SPEL is all about how we can contribute socially during Phase 2 itself while also handling Economic Development. Towards this, there are 3 areas that each of us can assist by making these a part of our day to day approach :
a. Following discipline in any and everything we do
b. Providing a helping hand to people around us in any way we possibly can
c. Showing the right path forward to people around us
S-E-C in SPEL is primarily done by One-to-One Mentoring as each person encourages & motivates the other, towards a more purposeful & effective lifestyle.
As part of the Core Values, following activities were undertaken through SESSO :
a. Educational assistance to the needy people in and around Factory.
b. Voluntary Blood Donation camp.
c. Assistance to orphanage and old age home located near Factory.
7. Material changes affecting the financial position of the Company which have occurred between the end of Financial Year and the date of the Report
A section of the Workers of the Company has gone on strike since mid Apr 2015 raising a charter of demands.
This has affected the normal production and the execution of the orders from the Customers. The Companyâs Management has taken all possible steps and the normalcy has been restored as the strike has been called off on Jun 18, 2015.
8. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companyâs operations in future Nil
9. Adequacy of internal financial controls with reference to the Financial Statements
Adequate Internal Finance control manual was in place during the year.
10. Subsidiary/Joint Ventures / Associate Companies
The Wholly Owned Subsidiary Company SPEL America Inc., in California, USA has been rendering marketing services to your Company resulting in enhanced Customer base and satisfaction. There has been no material change in the nature of the business of the Subsidiary Company.
Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Companyâs subsidiary in Form AOC-1 is attached to the financial statements of the Company.
Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of the Subsidiary Company are available on the Website of the Company www.spel.com.
The annual accounts of the Subsidiary Company and related detailed information are kept in the Registered Office of the Holding Company and will be made available to the Shareholders during working hours.
11. Deposits
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
12. Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the rules framed there under, M/s. M.S. Krishnaswami & Rajan, Chartered Accounts, (Firm Registration No.01554S) were appointed as Statutory Auditors of the Company from the conclusion of the 30th Annual General Meeting (AGM) of the Company held on Sep 8, 2015 till the conclusion of the 33rd Annual General Meeting of the Company to be held in the year 2018, subject to ratification of their appointment at every AGM.
13. Reply to Auditorsâ Comments in their Report
The Auditors have commented in their report regarding the value of box stock (inventory) of Rs, 21,25.56 Lakhs and the related internal control system as at Mar 31, 2016. This includes non-moving / possibility of obsolescence in respect of certain items, the value of which needed to be reckoned in the Statement of Profit and Loss.
The production of the said items / products was on the basis of specific orders, utilizing raw materials supplied by the Customers. Hence, pending negotiations / acceptance by Customers and conclusion of discussions with them, the said stock is carried at cost.
14. Share Capital
There has been no change in the Share Capital of the Company during the year.
15. Extract of the Annual Return
As provided under Section 92 (3) of the Act, the extract of annual return is given in annexure in the prescribed Form MGT9, which forms part of this report.
16. Conservation of energy, technology absorption and foreign exchange earnings and outgo
The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows :
Conservation of Energy
The Company has in place an Energy Committee which meets once a month. This Committee consists of Cross-functional Executives. It assesses the potential areas, devises means to save energy and implements the plan with the approval of the Management.
Measures were taken during the year to conserve water and electricity resorting to reuse of Dicing process water, rain water harvesting, power factor improvement and modification of the condenser in the Air conditioner. The savings achieved were :
Technology Absorption
The particulars regarding Technology Absorption are not applicable to your Company.
Foreign Exchange Earnings and Outgo
Your Company is a 100% Export Oriented unit and is constantly striving to increase its exports.
Foreign Exchange used during the year : Rs, 13,48.03 Lakhs Foreign Exchange earned during the year : Rs, 27,78.39 Lakhs
17. Research & Development (R&D)
The Company has carved out an ambitious plan of investment in R&D. This will include investment in Package Intellectual Property, thereby assisting Companyâs revenue and profitability in the future years.
18. Directors and Key Managerial Personnel
Pursuant to the provisions of Section 149 of the Act, Mr. K. Ravikumar, Mr. M. Jayasankar, Dr. Enakshi Bhattacharya were appointed as Independent Director at the Board Meeting held on Sep 8, 2015. The terms and conditions of appointment of Independent Director are as per Schedule IV of the Act.
They have submitted a declaration that they meet the criteria of Independence as provided in Section 149 (6) of the Act and there has been no change in the circumstances which may affect their status as Independent Directors during the year.
Mr. S. S. Arunachalam was appointed as Company Secretary and Compliance Officer of the Company w.e.f. Nov 2, 2015. Mr. V. Srinivasan, was appointed as Chief Financial Officer of the Company in the place of Mr. R. Venkatesh Kumar, w.e.f. Apr 2, 2016, pursuant to the provisions of Section 203 of the Act.
19. Declaration by an Independent Director(s) & Re-appointment, if any
The Indecent 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 qualify them self to be appointed independent Directors under the provision of the the Companies Act, 2013 and the relevant rule.
20. Number of meetings of the Board
7 (Seven) Meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.
21. Audit Committee
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report
22. Vigil Mechanism for Director and Employees
The Company has a Vigil Mechanism by way of Whistle Blower Policy to provide a Vigil Mechanism for Employees and Directors to report genuine concerns. The provisions of this policy are in line with Section 177 (9) of the Act and Clause 34 (3) & Schedule V of SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015. A copy of the policy is uploaded in the website of the Company.
23. Nomination and Remuneration Committee
The details pertaining to Nomination and Remuneration Committee are included in the Corporate Governance Report, which forms part of this report
24. Loans, Guarantees or Investments
Particulars of loans, guarantees and investments have been disclosed in the financial statements
25. Contracts or Arrangements with Related Parties
The particulars of every contract or arrangements entered into by the Company with Related Parties referred to in Sub-section (1) of Section 188 of the Companies Act, 2013 including certain armâs length transactions under third proviso thereto have been disclosed in Form No. AOC -2.
26. Managerial Remuneration
Managerial Remuneration is given in annexure which forms part of this report.
27. Secretarial Audit Report
Secretarial Audit Report is given as annexure, which forms part of this report.
28. Formal Annual Evaluation of Board on its own performance, Committees of the Board and the Individual Directors
The Board of Directors has carried out an annual evaluation of its own performance, Committees of the Board and the Individual Directors pursuant to the provisions of the Act and Corporate Governance as prescribed under Section 134 of Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015.
In a separate meeting of the Independent Directors, performance of the Non-Independent Director and performance of the Board as a whole was evaluated.
29. Familiarization Programme for Independent Directors
The Company has prepared and presented a Power Point Presentation for Independent Directors in order to enable them to familiarize with the Companyâs Policies and Practices.
30. Risk Management
A Risk Management Committee to identify and monitor the risks has been formed with a responsibility to review the risks and evolve mitigation plan required. Periodical action is taken to address the major risks identified.
31. Corporate Governance Certificate
The Corporate Governance Certificate from the Auditors regarding compliance of conditions of Corporate Governance as stipulated in SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015.
32. Reply to comments by Secretarial Auditor in his report.
Regarding the comment that the Company is not regular in depositing undisputed PF, ESI, Income-tax (TDS) and Property dues, the Management is confident that the situation will improve, based on the austerity steps and proactive measures taken during the year. This in turn will improve the liquidity and ensure that the statutory dues will be paid regularly in the future.
In respect of non-filing of MR-1, Company will be filing the necessary forms. In respect of non-filing of form for the Company Secretary, Company will be filing necessary forms.
33. Directors Responsibility Statement
Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability confirm that : a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
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 loss of the company for that period;
c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. 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 operating effectively and
f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory & Secretarial Auditors and External Consultants and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companyâs internal financial controls were adequate and effective during the Financial Year 2015
16.
34. Acknowledgements
Your Directors place on record their gratitude to the Government of India, the Government of Tamil Nadu, Financial Institutions, Bankers, Insurance Companies, Customs & Excise authorities, valued overseas Customers & Vendors and the Promoters for the continued assistance and support extended to the Company.
Yours Directors wish to place on record, their appreciation of the efficient and loyal services rendered by the Employees at all levels to the Company. Yours Directors wish to thank the Shareholders who constitute the mainstay of the Company for their unstinted support, forbearance confidence reposed on the Management.
By order of the Board for
SPEL Semiconductor Limited
K. Ravikumar M. Jayasankar D. Balakrishnan
Director Director Whole Time Director
DIN: 00119753 DIN: 00048351 & CEO DIN: 02131242
Chennai
May 30, 2016
Mar 31, 2014
Dear Members,
The Directors present the 29thAnnual Report of the Company together
with the Audited Accounts for the year ended Mar 31,2014.
Financial Performance
The Operating results of your Company for the year ended Mar 31, 2014
are given below
(RSin Lakhs)
Particulars Year ended Year ended
Mar 31, 2014 Mar 31, 2013
Sales 63,38.89 80,76.92
Other Income 1,14.86 1,21.66
PBIDT 15,86.20 11,97.01
Finance Cost 4,70.37 5,84.01
Depreciation 10,96.13 11,85.06
Profit before Tax 19.70 (5,72.06)
Tax Expense (12.48) (1,17.03)
Profit after Tax 32.18 (4,55.03)
Though your Company''s production remained the same during both the
financial years, drop in of Average Selling Price has resulted in
depressed receipts. However, there were significant savings in power,
employee cost, depreciation and Interest pay out and it was possible to
post a marginal profit during the year. However all the package lines
of the Company are in good demand and contribution is expected to
increase in future years.
Emphasis on Value system
Your Company has enthroned the attributes listed below as its core
values. The Management will assiduously practice and enthuse its
Employees to imbibe these virtues. Towards this end training is
imparted every month, every Employee goes through out the drill at
least once in six months :
a. Business Ethics : defines us as a Company
b. Professionalism : defines us as Individuals
c. Citizenship : defines our contribution to Society
Dividend
Due to inadequate profits dividend could not be paid during the year.
SPEL performance during the year
SPEL Semiconductor Limited is India''s first & only Semiconductor IC
Assembly & Test Company with a successful track record. Established in
1988, the Company is a 100% Export Oriented Unit (EOU), diligently
serving Customers in the United States of America, Europe and the Asia
Pacific region. The existing capacity is 425 million units per annum.
SPEL is a reliable source to over 50 global Customers.
The financial year 2013-14 witnessed disquieting oscillations in demand
followed by a slowdown during the second and third quarters. However,
SPEL contracted new relationships and quelled the turbulence with
foresight and cost economy. This helped improve gains from existing
Customers and in fold new Clients in USA and Europe.
SPEL has presence in US among the Top 20 Semiconductor Companies. The
Company has made strategic moves in Europe into sectorial demands of
Industrial & Automotive components. Customized package solutions and
service will help expand its spread in this region.
The capacity utilization in the last fiscal quarter of 2013-14
improved. It is now proposed to invest on Equipment and Processes that
give an edge to technology and cost efficiency besides enhancing
capacity. SPEL has introduced the Ultra-Thin Quad Flat No-leads(QFN)
package during the current year leading upto a package thickness of
0. 4.m. The potential for increased earnings is high.
Natronix Semiconductor Technology Private Limited becomes the Holding
Company
During the year under review, Southern Petrochemical Industries
Corporation Limited (SPIC) which held 55.97 percent of the Company''s
Equity Share Capital, sold its entire Shareholding to Natronix
Semiconductor Technology Private Limited, Singapore (Natronix).
Natronix was granted exemption by Securities and Exchange Board of
India (SEBI) from the obligation of making an Open Offer under SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011
vide Order No. WTM/PS/42/CFD-DCR/ SEPT/2013 dated Sep 6, 2013. With
this acquisition of Equity Shares, Natronix became the Holding Company
of SPEL from Mar 24, 2014.
Next 3 Year Goals (FY 2014-15 to FY 2017-18)
Assiduous will be taken to strengthen operations investing to enhance
capacity, upgrade technology, seek new markets and achieve rigid cost
economy. The strategy ahead will be,
1. To work for a market distribution consisting of 50% in United
States, 30% in Europe & 20% in rest of the world.
2. To diversify application base bringing in Medical, Auto-Aero and
Industrial segments and expanding supplies.
3. To introduce new package variants every year.
4. Thrust on Research & Development for to attain technological
excellence and leadership.
5. To build up cash reserves equivalent to a year''s expenses.
6. Continued focus on Green Environment.
Your Company has responded to hard times and slackness in demand by
hacking costs, in folding new Customers, developing new products and
improving the qualifications. Besides, constraints were removed,
equipment was modernized to support new enhanced product mix and tasks
for the future were identified. SPEL will thus be able to stand its
ground and stride with confidence. Our approach including manpower
rationalization has been pro- active and has secured us from the
vicissitudes of Pricing and Recession.
Causes of concern
i. The shift in pattern to low pin count packages from high pin count
packages contracts optimum capacity utilization.
ii. There was an alteration to the package mix by Customers with
reference from what was to the disruption of Planning and Production.
iii. SPEL has to be ever alert to respond to its Customer''s emerging
requirements. This requires investments on critical Equipment like (a)
Die Attach Systems - to address increased loading in low pin counts,
(b) Wire bonders - to enable copper bonding and overcoming
obsolescence, (c) Handlers to handle QFN small package mix.
iv. Increasing resort to captive power generation in the wake of
mounting power shortage depressed the PAT.
How addressed : The Management met these challenges with fortitude as
has been explained in the notes above and chiefly with the grit of its
Employees, Suppliers & Customers notwithstanding the global melt down.
Investments were made in critical areas with assistance from Banks.
Alternate power solutions are being employed to combat Power Cost.
Subsidiary
The wholly owned Subsidiary Company SPEL America Inc., in California,
USA has been rendering marketing services to your Company resulting in
enhanced Customer base and satisfaction.
Pursuant to the Circular No. 2/2011 dated Feb 8, 2011 of Ministry of
Corporate Affairs, the Board at its meeting held on Apr 19, 2012
resolved not to enclose the Subsidiary Company''s accounts for the
year in the Annual Report.
The annual accounts of the Subsidiary Company and related detailed
information are kept in the Head Office of the Holding Company and will
be made available to the Shareholders, whenever, for inspection.
Fixed Deposits
The fixed deposits for the period were ''10.25 Crores.
Listing
Your Company is listed with Bombay Stock Exchange (BSE).There are no
arrears of payment of Listing Fee.
Directors
The Board at its meeting held on Apr 29, 2014 recommended Dr. T. S.
Vijayaraghavan and Mr. N. Ramakrishnan and in its meeting held on May
26, 2014 recommended Mr. K. Ravikumar as Independent Directors of the
Company, not liable to retire by rotation for a period of 5 years
subject to approval by the Members of the Company. These Directors have
given a Declaration to the Board that they meet the criteria for
Independence as provided in Section 149(6) of the Act and also
confirmed that they will abide by the provisions as mentioned in
Schedule VI of Companies Act, 2013.
The Board at its meeting held on Jun 19, 2014 recommended
Mr.D.Balakrishnan as Whole-Time Director liable to retire by rotation.
The Board recommends these resolutions for your approval.
Corporate Social Responsibility (CSR)
SPEL''s medium for CSR is through Socio-Economic Contribution (S-E-C)
and SPEL Employees Social Service Organization (SESSO).
S-E-C
For most people, the idea of Social Service is donating money to a
social organization - perhaps an old-age home or an orphanage or
similar. This however is the easy part. The difficult part is
volunteering one''s time to improve society.
When can we make a contribution to Society
- During Phase 1 of our lifetime, perhaps up to the age of 35, we are
so focused on building our careers, starting our families &
establishing a name for ourselves
- During Phase 2, perhaps from age of 35 thru 65, we are the most
active in our work, working as a team, being able to significantly
contribute to Economic Development
- During Phase 3 perhaps from age 65 onwards, we are most able to
contribute our time on an increased basis to social causes
S-E-C at SPEL is all about how we can contribute socially during Phase
2 itself while also handling Economic Development. Towards this, there
are 3 areas that each of us can assist by making these a part of our
day-to-day approach :
1. Following discipline in any and everything we do
2. Providing a helping hand to people around us in any way we possibly
can
3. Showing the right path forward to people around us
S-E-C in SPEL is primarily done by One-to-One Mentoring as each person
encourages & motivates the other, towards a more purposeful & effective
lifestyle.
SESSO
As part of the Core Values, following activities were undertaken
through SESSO during the previous year.
i) Provided educational assistance to the needy people in and around
the Factory.
ii) Conducted a voluntary Blood Donation Camp.
iii) Provided assistance to an orphanage and old age home located near
the Factory.
Corporate Governance
Your Company scrupulously strives to attain the highest standards of
Corporate Governance through well documented internal policies and
procedures that reach the Board and its Committees and most specific
regard to its Shareholders, Customers, Suppliers and Employees for the
common good of all.
Your Company has complied with the provisions of Clause 49 of the
Listing Agreement relating to Corporate Governance.
Reports on Corporate Governance and on Management Discussion and
Analysis have been attached as a part of the Annual Report.
A Certificate from the Auditors of your Company regarding the
compliance with conditions of Corporate Governance is annexed to this
report.
Environment and Safety Measures
Environment is the constant, continuous, joint concern of all and
which, with each passing day, calls for growing care and more intense
strategy. It is noteworthy that the Company generates no effluent. SPEL
with the assistance of its Employees strives to preserve the
environment and ecology through conservation of resources, minimizing
waste, adoption of scientific disposal of waste, pollution control and
tree planting.
The Environmental Management System established and maintained is
certified by Bureau Veritas Certification. The upgraded ISO 14001
Certificate 2004 version has helped install comprehensively safe
environment practices.
Information pursuant to Section 217 of the Companies Act, 1956
In terms of Section 217 (1) (e) of the Companies Act, 1956 and Report
of Directors Rules, 1988, the particulars relating to the conservation
of energy, technology absorption & foreign exchange earnings and outgo
are given below :
a. Conservation of Energy
The Company has in place an Energy Committee which meets once a month.
This Committee consists of Cross-functional Executives. It assesses the
potential areas, devises means to save energy and implements the plan
with the approval of the management.
Measures were taken during the year to conserve water and electricity
resorting to reuse of Dicing process water, rain water harvesting,
power factor improvement and modification of the condenser in the Air
conditioner. The savings achieved were :
Power Water
13,37,759 units 900 KL
b. Technology Absorption
The particulars regarding Technology Absorption are not applicable to
your Company.
c. Foreign Exchange Earnings and Outgo
Your Company is a 100% Export Oriented Unit and is constantly striving
to increase its exports.
Foreign Exchange used during the year : ''30,49.79 Lakhs Foreign
Exchange earned during the year : ''57,72.04 Lakhs
Research & Development (R&D)
The Company has carved out an R&D investment plan that
envisages investments in Package Intellectual Property.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the
Companies Act, 1956 with respect to Directors''
Responsibility Statement, it is confirmed:
1. That in the preparation of the annual accounts for the year ending
Mar 31, 2014 the applicable Accounting Standards had been followed
along with proper explanation relating to material departures
2. That the Directors had selected such accounting policies and applied
them consistently and made judgment and estimates that were reasonable
and prudent and gave a true and fair view of the state of affairs of
the Company and of the Profit or Loss of your Company for the year
under review
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities
4. That the Directors had prepared the accounts for the year ended Mar
31,2014 on a ''[going concern'' basis
Particulars of Employees
There are no such Employees drawing remuneration in excess of limits
mentioned as per the revised Notification dated Mar 31, 2011 of the
Ministry of Corporate Affairs as per Section 217 (2A) of the Companies
Act, 1956. Hence no disclosure is required as per the above
Notification.
Acknowledgements
Your Directors place on record their gratitude to the Government of
India, the Government of Tamil Nadu, Financial Institutions, Bankers,
Insurance Companies, Customs & Excise authorities, valued overseas
Customers & Vendors and the Promoters for the continued assistance and
support extended to the Company.
Yours Directors wish to place on record, their appreciation of the
efficient and loyal services rendered by the Employees at all levels to
the Company.
Yours Directors wish to thank the Shareholders who constitute the
mainstay of the Company for their unstinted support, forbearance,
confidence reposed on the Management.
For and on behalf of Board of Directors
Date : Apr 29, 2014 Dr.T.S.Vijayaraghavan
Place : Chennai Director
Mar 31, 2013
The Directors hereby present the 28th Annual Report of the Company
together with the Audited Accounts for the year ended Mar 31, 2013.
Semiconductor - Global & Indian scenario
Global Scenario : The Global Semiconductor sales for the year 2012 were
US$299.9 Billion, a decrease of 2.6% compared to 2011 according to
Gartner Inc. The normal drivers of Semiconductor industry growth Â
the computing, wireless, consumer electronics and automotive
electronics sectors  all suffered serious disruption in 2012. Even
the industrial / medical, wired communications and military/aerospace
sectors ordinarily less affected by changes in consumer sentiment
suffered severe declines in Semiconductor consumption. Excess inventory
levels also remained a growth inhibitor.
As per World Semiconductor Trade Statistics organization (WSTS),
highest growth of 10.5% achieved in America and 7.8% growth in APAC.
However Europe (-4.9%) & Japan (-12.3%) markets slowed down.
QFN is still widely used in applications across all segments. However,
there is excess capacity in the industry for the traditional QFN
packages that was built during the industry boom in 2010. Chip
designers are designing more products in the Fan-in and Flip Chip
categories. The next recovery cycle expected in 2013 will help to
utilize the capacity built at SPEL. The growth for leaded packages is
declining but SPEL is able to maintain similar performance as of FY
2011-12 due to Customer bases in niche packages and applications
Indian Scenario : Your Company adequately represented the Electronics
policy to the concerned Ministry through various industry associations.
The Ministry is planning to rollout new policy on the IT Hardware
during the current year. This will give an impetus to the Domestic
units as the Ministry is planning to procure their requirements to
various Government departments from these companies.
Your Company is making its presence felt in the IC requirements for the
Government organizations/Ministry of Defence and domestic Industries.
Your Company is looking for volume growth in commercially viable
projects with various Government Departments.
Forecast for 2013 by segment
Internet-capable converging technologies and mobile electronic systems
will keep demand for ICs strong through 2016.
The PC industry is struggling to identify innovations that
differentiate PCs from other products and inspire consumers to buy and
instead is meeting significant resistance to changes perceived as
cumbersome or costly. PC industry efforts to offer touch capabilities
and ultra slim systems have been hampered by traditional barriers of
price and component supply, as well as a weak reception for Windows 8.
- Tablet and Ultrabook PCs  Demand continues to surge for Table
PCs and anticipation is building for new Ultrabook PCs.
- Smartphones  Smartphones remain by far the fastest growing
segment of the cell phone market IC content represents about 31% of the
average selling price of a smartphone, whereas IC content in a basic
cell phone is 23%. The success of 3G/4G smartphones is set to continue
having a big impact on the future analog, DSP, logic, and NAND flash
memory IC markets.
- Smart TVs  Internet capability has replaced 3D as the must have
technology in 2013. Despite "upgrade fatigue, consumers are drawn
to Internet-connected Smart TVs, a favourite trend for suppliers of LED
drivers, power management ICs, and MCUs/MPUs, which are expected to be
big winners in this market segment.
- Smart Grids and Advanced Metering Infrastructure (AMI) Â Home
appliances and other residential electrical systems are being designed
to interact and communicate with power-utility companies and Customers
via the Internet. Global investment in smart grid technology is
forecast to grow 19% annually through 2016.
SPEL performance during the year
SPEL got into supply chain of a consumer electronic major in Q1 and
registered impressive volumes in Q2. However, these volumes dropped to
Zero due to the cold response for their latest products. Also, the
volumes for TDFN''s/ UDFN''s fell sharply amongst two of the major
Customers from Q3 due to the falling demand for feature cell-phones &
end Customer preference to other packaging options like WLCSP
Migration to Cu wire happened briskly in the second half and currently
15% of volumes processed in Cu wire that had a revenue impact in terms
of ASP. Continued slowdown in PC market has affected business for SPEL
as they are the major consumers of Semiconductors. Some of our
Customer''s business are affected due to decrease in product life cycle
because of frequent design changes / uncertainty in demand.
SPEL has focused on markets in Taiwan / Europe, have made progress and
qualified new Customers. It expects to see revenues coming in from FY
2013-14. Your Company has formalized aggressive marketing strategies
across the globe to tap the potential market.
Cause of concern
PC market continued its downward trend for the most part of 2012
falling further sharply in 1Q13. Industry observers are surprised at
the steep fall of 13.9% during 1Q13 which is more than their estimated
7.7% decline.
Despite some mild improvement in the economic environment and some new
PC models offering Windows 8, PC shipments were down significantly
across all regions
compared to a year ago. Fading Mini Notebook shipments have taken a big
chunk out of the low-end market while tablets and smartphones continue
to divert consumer spending.
Continued power crisis and its consequent increase in power cost
because of DG usage, and substantial outflow of interest payment, has
strained the operating cost.
How addressed
The Management with its strong commitment and extensive support from
its Employees, Suppliers & Customers, maintained its position, despite
the Global Slowdown and Economic Crisis in Europe. Investments were
made to address the vital requirements of operation with Bank''s
assistance. Your Company is also sourcing alternate power solutions to
combat ever increasing power cost.
Sales Network established to serve Asia Pacific / Europe regions.
Financial Performance
The Operating results of your Company for the year ended Mar 31, 2013
are given below :
(Rs.in Lakhs)
Particulars Year ended Year ended
Mar 31,2013 Mar 31, 2012
Sales 8076.92 7978.63
Other Income 122.75 86.38
PBIDT 1200.02 1338.53
Interest 584.01 325.11
Depreciation 1106.95 937.93
Exceptional Items 78.38
Profit before Taxation (569.32) 75.49
Tax / Deferred Tax (116.15) 21.20
Profit after Taxation (453.17) 54.29
Due significant reduction (20%) in Average Selling Price, sales revenue
of your Company for current year has decreased by 13% over the previous
year even though volume grew by 10%. Due to this increased expenditure
on manpower, power, marketing expenses, other overheads, which were
necessitated due to operational growth, had an impact on contribution.
All the package lines of your Company are in good demand and are
expected to increase the contribution in future years.
Emphasis on Values
Your Company has adopted the following as its Values. The Management
is highly committed to put these in practice such that all Employees
understand. Training sessions are conducted every month such that all
Employees attend this program at least once in 6 months :
a. Business Ethics : defines us as a Company
b. Professionalism : defines us as individuals
c. Citizenship : defines our contribution to society
Corporate Social Responsibility (CSR)
SPEL encourages its Employees to participate actively in CSR through
SPEL Employees Social Service Organization (SESSO). Following
activities were undertaken though SESSO during the previous year.
a. Provided educational assistance to the needy people in and around
Factory.
b. Conducted a voluntary Blood Donation camp.
c. Provided assistance to an orphanage and old age home located near
Factory.
Dividend
Due to loss dividend cannot be paid during the year. Fixed Deposits
The fixed deposits for the period were Rs. 2.00 Crores. Research &
Development (R&D)
The Company has carved out an ambitious plan for investment in R&D.
This will include investment in developing Semiconductor electronic
designs for our Customers, offering verification services for
Semiconductors designs and developing package designs which are cost
effective and application friendly. This will assist Company''s revenue
and profitability in the future years.
Dematerialization of Shares
As the Members are aware, the Company''s shares are in the compulsory
demat mode, facilitated through arrangement with M/s. National
Securities Depository Limited (NSDL) and M/s. Central Depository
Services (India) Limited (CDSL). Going by the percentage of demat
Shareholders, it is found that as many as 26,38,097 shares (5.72% of
total shares issued), continued to be in physical mode. Your Directors
earnestly appeal to all of you to demat the shares and derive the
benefits of holding the shares in electronic form.
Subsidiary
The Wholly Owned Subsidiary Company SPEL America Inc, in California,
USA has been rendering the marketing services to your Company resulting
in enhanced Customer base and satisfaction.
Pursuant to the Circular No. 2/2011 dated Feb 8, 2011 of Ministry of
Corporate Affairs, the Board at its Meeting held on Apr 19, 2012
resolved not to enclose the Subsidiary Company''s accounts for the year
in the Annual Report. The Annual accounts of the Subsidiary Company
and related detailed information will be made available to the
Shareholders at any point of time. The annual accounts of the
Subsidiary Company will also be kept for inspection by any Shareholders
in the Head Office of the Holding Company.
Auditors
Your Company''s auditors, M/s. Natarajan & Co., Chartered Accountants,
has informed the Company that they do not propose to offer themselves
as Statutory Auditors of the
Company at the forthcoming Annual General Meeting since they are
discontinuing the Audit Practice. The Company has received notice from
a member recommending the appointment of M. S. Krishnaswami & Rajan,
Chennai as Statutory Auditors in the place of M/s. Natarajan & Co.
M/s. Krishnaswami & Rajan, Chennai have expressed their consent for the
appointment as Statutory Auditors for the Financial Year 2013-14 and
have confirmed that the appointment, if made, will be in accordance
with the limits specified under Sec 224 (1B) of the Companies Act,
1956.
Directors
Dr. A. Besant C. Raj and Mr. N. Sivashanmugam are the Directors
retiring at the ensuing Annual General Meeting. As both are being
eligible, offering themselves for reappointment. A brief profile of
both Directors is provided as follows :
Dr. A. Besant C. Raj
Dr. A. Besant C. Raj is an MBA from the Indian Institute of Management,
Ahmedabad (First Batch). He also holds a doctoral degree in Business
Administration from the Harvard Business School, Harvard University,
USA. He has a Master''s degree in Philosophy from Madras University
and a Master''s degree in Psychology from Banaras Hindu University.
Dr. Raj is the founder Chairman of the institute of Chartered Financial
Analysts of India (ICFAI), Hyderabad. He is closely associated with
development of several educational institutions. He has held various
senior positions in the Government of India. He is the Chairman of
SPEL Board''s Audit Committee and a Member of SPEL Board''s
Securities Transfer & Investors Grievances Committee (STIGC).
Mr. N. Sivashanmugam
Mr. N. Sivashanmugam is a Chartered Accountant with 35 years background
in Domestic and International Finance & Accounts. He has worked in
Indo-Jordan Chemicals Company Limited in Amman, Jordan as Asst.
Managing Director - Finance since May 2000. In his earlier tenure, he
had the experience of effectively handling large Company''s Treasury,
Banking, Insurance and Accounts. He also has good exposure in Project
Finance
Directors'' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors'' Responsibility Statement, it is
hereby confirmed :
1. That in the preparation of the annual accounts for the year ended
Mar 31, 2013 the applicable Accounting Standards had been followed
along with proper explanation relating to material departures
2. That the Directors had selected such accounting policies and
applied them consistently and made judgment 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 or loss of your Company for the year under review
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
4. That the Directors had prepared the accounts for the year ended Mar
31, 2013 on a ''going concern'' basis.
Corporate Governance
Your Company is committed to the standards of Corporate Governance and
in this direction has laid down well documented internal policies,
procedures including Board and Committee procedures and practices in
particular relation with Shareholders, Customers, Suppliers and
Employees in order to enhance the long-term Shareholder value and
maximize interest of all Stakeholders.
Your Company has complied with the provisions of Clause
49 of the Listing Agreement relating to Corporate Governance.
A detailed Report on Corporate Governance and a Management Discussion
and Analysis report have been attached to form part of the Annual
Report.
A Certificate from the Auditors of your Company regarding the
compliance of conditions of Corporate Governance has been annexed to
this report.
Information pursuant to Section 217 of the Companies Act, 1956
In terms of Section 217 (1) (e) of the Companies Act, 1956 and the
rules framed there under, the particulars relating to the conservation
of energy, technology absorption & foreign exchange earnings and outgo
are given below :
a. Conservation of Energy
The Company has in place an Energy Committee which meets once a month.
This Committee consists of Cross-functional Executives. This Committee
identifies the potential areas to conserve energy and implements novel
energy saving measures, apart from recommending investment proposals to
the Management.
Various measures to conserve water were undertaken, notable amongst
them being, reuse of Dicing process water & Rain Water Harvesting.
Following are the details of power & water consumed.
Power Water
7560889 Units 77725 K Lits
b. Technology Absorption
The particulars regarding Technology Absorption are not applicable to
your Company.
c. Foreign Exchange Earnings and Outgo
Your Company is a 100% Export Oriented Unit and is constantly striving
to increase its exports.
Foreign Exchange used during the year : Rs. 44,08.10 lakhs Foreign
Exchange earned during the year : Rs. 83,94.84 lakhs
Particulars of Employees
There are no such Employees drawing remuneration in excess of limits
mentioned as per the revised Notification dated Mar 31, 2011 of the
Ministry of Corporate Affairs as per Section 217 (2A) of the Companies
Act, 1956. Hence no disclosure is required as per the above
Notification.
Environment and Safety Measures
Your Company understands that every individual has a responsibility
towards our environment. Towards this, Your Company has been devising
measures and encouraging its Employees to care for the environment and
protect it through conservation of resources, waste minimization and
proper disposal, pollution prevention and planting of trees.
Further Your Company''s manufacturing activities do not result in any
significant release of effluent in the environment.
The Environmental Management System established and maintained by your
Company is certified by Bureau Veritas Certification (2004 Version).
Your Company considers environmental care to be a continuous effort and
are always on the look out for more avenues to nurture nature by
enhancing its environmental
performance and also keeping in view the global trends in procurement
of environment friendly products, Company has already introduced
Green-molding compounds that are environment friendly as demanded by
the Customers.
Acknowledgements
Your Directors wish to place on record their gratitude to the
Government of India, the Government of Tamil Nadu, Financial
Institutions, Bankers, Insurance Companies, Customs & Excise
authorities, valued overseas Customers & Vendors and the Promoters for
their continued assistance and support extended to the Company.
Yours Directors wish to place on record, their appreciation of the
efficient and loyal services rendered by the Employees at all levels to
the Company.
Yours Directors wish to thank the Shareholders for their continued
support, forbearance and the confidence reposed on the Management.
For and on behalf of Board of Directors
Place : Chennai Dr. A. C. Muthiah
Date : Apr 23, 2013 Chairman
Mar 31, 2012
The Directors hereby present the 27th Annual Report of the Company
together with the Audited Accounts for the year ended Mar 31, 2012.
Semiconductor - Global & Indian scenario
Global Scenario: The Semiconductor industry grew by less than 1% in
2011 despite weak global economic scenario and natural disasters that
affected production in Asia. The Semiconductor Industry Association
(SIA) projected that the industry's worldwide sales will hit $301
billion in 2012
- a 0.4% increase over 2011 sales of $299.50 billion. Beyond 2012, the
industry is expected to grow at a significantly faster pace across all
regions, Prediction is for a 7.2% growth for 2013 ($322 billion in
total sales) and 4.4% growth for 2014 ($337 billion).
The PC shipments have crossed the 89 million mark globally in the Q1 CY
2012, showing a growth of a 1.9% over shipments 87 million in the same
quarter last year. As per Gartner, a research agency, these results
have exceeded their earlier projections of a 1.2% decline for the
quarter. Also the Mobile phone production is expected to grow 6.7% with
semiconductor revenue for mobile phones totaling $57.2 billion in 2012.
Indian Scenario: The national policy on Electronics will have an impact
across the board and present several new opportunities. The demand for
electronics goods in the country in 2011-12 stood at $69.6 billion,
with less than half of this sourced locally. With studies pegging the
demand at $400 billion and local production at $100 billion by 2020,
the country is expected to import goods and components worth $300
billion.
This year will be characterized by opportunities and challenges. The
policy if implemented has the potential to be a game changer with far
reaching consequences for all of us. This policy will address the huge
gap between locally produced electronics and the demand for it.
Notwithstanding a weak global economic environment the industry expects
boost in demand following the Government of India's decision to connect
2.5 lakh villages with broad band facilities during 2012. Roll out of
the National knowledge network project would also be crucial for the
industry. Consumer, Industrial and medical segment is also expected to
do significantly well during this year.
Forecast for 2012 by segment: The communication segment forecast calls
for the strongest semiconductor growth in 2012-13 as it will have 5.5%
growth followed by computing industry 4.2% growth.
From an application perspective, smart phones, mobile PCs and tablets
will fuel semiconductor growth through 2014. Total smartphone shipments
will reach 659.8 million units in 2012-13, up 33.5% from the 494.2
million units shipped in 2011. Gartner estimates that semiconductor
revenue from tablets will grow from $2.4 billion in 2010 to $17.8
billion in 2014. India and Brazil are estimated to be in the top five
countries in smart phone usage and sales.
In the PC market, consumer PC purchases grown to 1.8% in 2011 as per
International Data Corporation and expected to grow 5% in 2012 and 9.5%
in 2013. However, some of this slowdown is being made up for by
stronger-than- expected sales of tablets. Revenue for other PC
semiconductor components, including CPUs, will increase.
The outlook for mobile phone production has improved. Overall
semiconductor revenue from mobile phones is on pace to total $51.85
billion in 2011. In 2012, worldwide semiconductor revenue from mobile
phones is projected to reach $57.31 billion, a 10.5% increase from
2011.
SPEL performance during the year
Your Company continues still to be 1st & only Semiconductor IC assembly
& Test production facility. It is continuously maintaining this
position despite the market fluctuations and other external factors.
SPEL continues to be a trusted & strategic contract manufacturing
partner for many of the world's leading Semiconductor companies.
Your Company faced various challenges during the current financial year
and it was addressed efficiently. In the process it also addressed (a)
Production bottlenecks to improve productivity (b) Modernization of
equipment for enhanced product mix and (c) equipping itself for future
expansions. This would enable SPEL to address increased outsourcing
from present & potential Customers in future. Due to these pro-active
approaches, SPEL had effectively handled the pricing pressures that
resulted from the recession and emerged with reduced impact.
Cause of concern
a. The change in Customer loading pattern, i.e. increase in low
pin-count packages volumes in place of higher pin-count packages has
affected optimum utilization of operating capacity.
b. Increased QFN / DFN packages loading at the expense of leaded
packages have resulted in skewed capacity utilization creating
bottlenecks in certain areas.
c. SPEL has to respond to critical Customer's requirement for future
growth. They are very high volumes and low Average Selling Price (ASP)
products. These requirements can be met only if continuous investments
are made in certain Assembly and Test Equipment
d. Imposed power restrictions resulted in increased diesel consumption
which contributed to reduction in PAT during the year.
How addressed: The Management with its strong commitment and extensive
support from its Employees, Suppliers & Customers, maintained its
position, despite the Global Slowdown and Economic Crisis in Europe.
Investments were made to address the vital requirements of operation
with Bank's assistance. Your Company is also sourcing alternate power
solutions to combat ever increasing power cost.
The Customer portfolio has widened with reduced dependency on single
Customer. Also, your company serves three of the top 20 Semiconductor
Companies in the world. Significant product wins achieved during last
quarter for very high volume requirements for hand held applications
where small device foot-print is needed.
Sales Network established to serve Asia Pacific / Europe regions.
Financial Performance
The Operating results of your Company for the year ended Mar 31, 2012
are given below
(Rs in Lakhs)
Particulars Year ended Year ended
Mar 31, 2012 Mar 31,2011
Sales 7978.63 9146.24
Other Income 86.38 160.51
PBIDT 1255.37 1830.52
Interest 239.69 173.25
Depreciation 937.93 883.67
Profit before Taxation 77.75 773.60
Tax / Deferred Tax 20.81 321.31
Profit after Taxation 56.94 452.29
Due significant reduction (20%) in Average Selling Price, sales revenue
of your Company for current year have decreased by 13% over the
previous year even though volume grew by 10%. Due to this and due to
increase in expenditure on manpower, power, marketing expenses, other
overheads, which were necessitated due to operational growth, had an
impact on contribution. All the package lines of your Company are in
good demand and are expected to increase the contribution in future
years.
Emphasis on Values
Your Company has adopted the following as its Values. The Management
is highly committed to put these in practice such that all Employees
understand. Training sessions are conducted every month such that all
Employees attend this program at least once in 6 months:
a. Business Ethics : defines us as a Company
b. Professionalism : defines us as individuals
c. Citizenship : defines our contribution to society
Corporate Social Responsibility (CSR)
SPEL encourages its Employees to participate actively in CSR through
SPEL Employees Social Service Organization (SESSO). Following
activities were undertaken though SESSO during the previous year.
a. Provided educational assistance to the needy people in and around
Factory.
b. Conducted a voluntary Blood Donation camp.
c. Provided assistance to an orphanage and old age home located near
Factory.
Dividend
It has not been possible for your Directors to recommend dividend for
this financial year due to continuous investment requirement faced
during the year.
Fixed Deposits
The fixed deposits for the period were Rs 2.45 Crores. Research &
Development (R&D)
The Company has carved out an ambitious plan of investment in R&D. This
will include investment in PIP and MODLIB. This will assist Company's
revenue and profitability in the future years.
Dematerialization of Shares
As the Members are aware, the Company's shares are in the compulsory
demat mode, facilitated through arrangement with M/s National
Securities Depository Ltd. (NSDL) and M/s Central Depository Services
(India) Ltd. (CDSL). Going by the percentage of demat shareholders, it
is found that as many as 26,65,596 shares (5.78% of total shares
issued), continued to be in physical mode. Your Directors earnestly
appeal to all of you to demat the shares and derive the benefits of
holding the shares in electronic form.
Subsidiary
The Wholly Owned Subsidiary Company SPEL America Inc, in California,
USA has been rendering the marketing services to your Company resulting
in enhanced Customer base and satisfaction.
Pursuant to the Circular No. 2/2011 dated Feb 8, 2011 of Ministry of
Corporate Affairs, the Board at its Meeting held on Apr 19, 2012
resolved not to enclose the Subsidiary Company's accounts for the year
in the Annual Report. The Annual accounts of the Subsidiary Company
and related detailed information will be made available to the
Shareholders at any point of time. The annual accounts of the
Subsidiary Company will also be kept for inspection by any Shareholders
in the Head Office of the Holding Company.
Auditors
Your Company's auditors, M/s. Natarajan & Co., Chartered Accountants,
retiring at the conclusion of the ensuing Annual General Meeting, are
eligible for re-appointment.
Directors
Mr. Ar Rm Arun and Dr. T.S. Vijayaraghavan are the directors retiring
at the ensuing annual general meeting. As both are being eligible,
offering themselves for reappointment. A brief profile of both
directors are provided as follows
Mr. Ar Rm Arun
Mr. Arun is an Entrepreneur with a mission of building businesses that
transcend time. This mission is made possible by perfecting & growing
global deliveries while promoting a Values' based society Mr. Arun
holds a Bachelor's degree in Electronics & Communication
Engineering from the Regional Engineering College, Trichy, India and a
Master's degree in Electrical Engineering from the State University of
New York, Stony Brook, USA. His specialization was in the field of VLSI
Design. Having initially been with Polaroid Corp located in Cambridge,
Massachusetts, he later worked for Intel Corp, Santa Clara, California
Mr. Arun is on the Executive Committee of the Federation of Indian
Chambers of Commerce & Industry (FICCI). He is also the Convener of the
IT & Communications Panel of FICCI's Tamil Nadu State Council.
Government of Tamilnadu, with a view to formulate the 12th Five year
Plan had appointed Mr. Ar Rm Arun, as a member on the State Planning
Commission's Steering Committee for Industries & Minerals. This
appointment is concentrated on improving Industries & Minerals
development within Tamil Nadu and is considering his knowledge of basic
issues within this sector.
Dr. T. S. Vijayaraghavan
Dr. Vijayaraghavan holds a Bachelors degree in Mechanical & Electrical
Engineering and Doctorate in Science. He is a retired Member of the
Indian Administrative Service from the Tamilnadu Cadre. He is currently
the Chairman, Committee on Industry, Ministry of Environment and
Forests. Member, Senate of the Sri Ramachandra Medical College &
Research Institute, Chennai. He is Chairman of SPEL Board's Securities
Transfer & Investors' Grievance Committee (STIGC) and a Member of SPEL
Board's Audit Committee and Remuneration and Compensation Committee
(RCC).
Directors' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors' Responsibility Statement, it is
hereby confirmed:
1. That in the preparation of the annual accounts for the year ended
Mar 31, 2012 the applicable Accounting Standards had been followed
along with proper explanation relating to material departures
2. That the Directors had selected such accounting policies and
applied them consistently and made judgment 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 or loss of your Company for the year under review
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
4. That the Directors had prepared the accounts for the year ended Mar
31, 2012 on a 'going concern' basis.
Corporate Governance
Your Company is committed to the standards of Corporate Governance and
in this direction has laid down well documented internal policies,
procedures including Board and Committee procedures and practices in
particular relation with Shareholders, Customers, Suppliers and
Employees in order to enhance the long-term Shareholder value and
maximize interest of all stakeholders.
Your Company has complied with the provisions of Clause 49 of the
Listing Agreement relating to Corporate Governance.
A detailed Report on Corporate Governance and a Management Discussion
and Analysis report have been attached to form part of the Annual
Report.
A Certificate from the Auditors of your Company regarding the
compliance of conditions of Corporate Governance has been annexed to
this report.
Information pursuant to Section 217 of the Companies Act, 1956
In terms of Section 217 (1) (e) of the Companies Act, 1956 and the
rules framed there under, the particulars relating to the conservation
of energy, technology absorption & foreign exchange earnings and outgo
are given below :
a. Conservation of Energy.
The Company has in place an Energy Committee which meets once a month.
This Committee consists of Cross-functional Executives. This Committee
identifies the potential areas to conserve energy and implements novel
energy saving measures, apart from recommending investment proposals to
the management.
Various measures to conserve water were undertaken, notable amongst
them being, reuse of Dicing process water & Rain Water Harvesting.
Following are the details of power & water consumed. 7350 KL of water
was saved during the year.
Power Water
8904922 units 77976 KLits
b. Technology Absorption.
The particulars regarding Technology Absorption are not applicable to
your Company.
c. Foreign Exchange Earnings and Outgo.
Your Company is a 100% export oriented unit and is constantly striving
to increase its exports.
Foreign Exchange used during the year : Rs4,129.19 lakhs Foreign
Exchange earned during the year: Rs7,966.91 lakhs Particulars of
Employees
There are no such Employees drawing remuneration in excess of limits
mentioned as per the revised Notification dated Mar 31, 2011 of the
Ministry of Corporate Affairs as per Section 217 (2A) of the Companies
Act, 1956. Hence no disclosure is required as per the above
Notification.
Environment and Safety Measures
Your Company understands that every individual has a responsibility
towards our environment. Towards this, Your Company has been devising
measures and encouraging its Employees to care for the environment and
protect it through conservation of resources, waste minimization and
proper disposal, pollution prevention and planting of trees.
Further Your Company's manufacturing activities do not result in any
significant release of effluent in the environment.
The Environmental Management System established and maintained by your
Company is certified by Bureau Veritas Certification (2004 Version).
Your Company considers environmental care to be a continuous effort and
are always on the look out for more avenues to nurture nature by
enhancing its environmental performance and also Keeping in view the
global trends in procurement of environment friendly products, Company
has already introduced Green-molding compounds that are environment
friendly as demanded by the Customers.
Acknowledgements
Your Directors wish to place on record their gratitude to the
Government of India, the Government of Tamil Nadu, Financial
Institutions, Bankers, Insurance Companies, Customs & Excise
authorities, valued overseas Customers & Vendors and the Promoters for
their continued assistance and support extended to the Company.
Yours Directors wish to place on record, their appreciation of the
efficient and loyal services rendered by the Employees at all levels to
the Company.
Yours Directors wish to thank the Shareholders for their continued
support, forbearance and the confidence reposed on the Management.
For and on behalf of Board of Directors
Place : Chennai Dr. A. C. Muthiah
Date : Apr 25, 2012 Chairman
Mar 31, 2011
The Directors have great pleasure in presenting the 26th Annual Report
of the Company together with the Audited Accounts for the year ended
Mar 31, 2011. Your Company completed its Silver Jubilee year with the
whole hearted support and contribution from all its Stakeholders.
Global and Indian Industry scenario
The global "Great Recession" during the year 2009 shook up the global
Semiconductor industry in a major way but the year 2010 has brought in
a lot of confdence to the Semiconductor industry and to the global
economy as a whole.
The Semiconductor industry has risen by 31.8% in the year 2010. The
outlook for the year 2011 looks promising with a 9% growth predicted;
global Semiconductor revenues are expected to reach US$ 325 Billion up
from US$ 298 Billion in 2010.
Of the total revenues forecasted for the year 2011, about 40 percent
can be attributed to the computing industry, which accounted for sales
of $113 Billion. The rapidly growing smart phone segment accounted for
about $80 Billion in sales in 2010 and is expected to grow although
there is pressure on price points to remain low.
There are huge growth opportunities for the electronic industry in
India, but there have been some missed opportunities in the past
decade. So, while the future holds a lot of promise, we need to address
existing challenges in infrastructure, taxation, supply chain and
logistics, labour laws, R&D and funding.
SPEL performance during the year
Your Company still continues to be First & only Semiconductor IC
Assembly & Test production facility. It is continuously maintaining
this position despite the market fuctuations and other external
factors. SPEL continues to be a trusted & strategic contract
manufacturing partner for many of the worlds leading Semiconductor
companies.
Your Company had invested around Rs.6.00 Crores during the 1st Quarter,
to address (a) Production bottlenecks to improve productivity
(b) Modernization of equipment for enhanced product mix and
(c) equipping itself for future expansions. This would enable SPEL to
address increased outsourcing from present & potential Customers during
FY 2011-12.
Various cost & energy saving measures initiated during FY 2009-10 have
started producing positive results. Due to these proactive approaches
and manpower rationalization SPEL effectively handled the pricing
pressures that resulted from the recession and emerged with reduced
impact.
The Computing segment reported a sliding trend in the US & Europe
during Q2 FY 2010-11. However, SPEL was able to maintain revenues
during this quarter due to its balanced exposure across Communications,
Computing & Consumer Electronics. The impact on sales was mainly due to
the comparable impact on volatile foreign currency parity. It was also
due to change in pattern of raw material consumption of smaller pin
count packages, without corresponding price increase. The rising power
& diesel cost is a major cause for concern.
Rise of gold prices has propelled your Company towards investment in
copper-process tools. SPEL will place most of its above expansion on
leading-edge process and cooper-interconnect process capacities, both
of which are estimated to boost the Company`s revenue and earnings
during FY 2011-12.
Towards the beginning 2011 SPEL started investing Rs. 22 Croes in
production equipment which will increase its capacity. Funded by a term
loan from nationalized banks, this expansion is primarily on
leading-edge process & copper-interconnect capacities. The additional
capacity will be available from 1st quarter of FY 2011-12, fetching
increased sales and enabling SPEL to further diversify package & market
base.
The Management with its strong commitment and extensive support from
its Employees, Suppliers & Customers, has continued to maintain its
position as Proft Making Company, despite the Global Slowdown and
Economic Crisis.
Financial Performance
The Operating results of your Company for the year ended Mar 31, 2011
are given below
(Rs. In Lakhs)
Particulars Year ended Year ended
Mar 31, 2011 Mar 31, 2010
Sales 9133.01 8716.00
Other Income 173.74 149.17
PBIDT 1828.28 1962.55
Interest 173.25 214.57
Depreciation 881.34 818.45
Proft before Taxation 773.69 929.53
Tax / Deferred Tax 320.71 318.69
Proft after Taxation 452.98 610.84
Sales of your Company for current year have increased by 4.78% over the
previous year. Increased expenditure on manpower, power, marketing
expenses, other overheads, which were necessitated due to operational
growth, had an impact on contribution. All the package lines of your
Company are in good demand and are expected to increase the
contribution in future years.
Emphasis on Value system
Your Company has adopted the following as its Core Values. Management
is highly committed to put in practice all these to make sure that they
understand the values that we are into. Training sessions are conducted
every month to make all the Employees aware of the Core Values. All the
Employees attend this program at least once in six months and put it to
practice
a. Business Ethics : defnes us as a Company
b. Professionalism : defnes us as individuals
c. Citizenship : defnes our contribution to society
Socio Economic Concept (SEC)
Understanding human behavior and tuning it towards self-disciplined
citizen underlines the concept of the SEC being implemented in your
Company. Employees were given to apprehend their roles as an individual
and his/her responsibility to bring up fellow citizen so as to make the
Country proud. SPEL appreciates its Employees commitment and
complements them by assisting their growth to become future leaders. In
spite of all the recessionary trends Stakeholders may appreciate the
fact that SPEL stood up to the times and posted positive in PAT.
Dividend
Your Directors would like to place on record their appreciation for the
Shareholders patient waiting for these days.
SPEL believes in business sustenance. Sustainability is not about what
a Company does with its profts but how it makes profts. It is the
business process itself. Towards this Company had invested in the Capex
around Rs. 23 Crores, from the Allahabad Bank and through internal
generations. These investments had helped the Company in offsetting the
falling ASP, and had assisted to improve the PE ratio. Your Company is
keenly concentrating on creating cash reserves, as the need for this is
increasing, as Customers want to see this in place.
Your Companys above initiatives have assisted in maintaining PAT.
However, you would concur that your Company has consolidated itself for
achieving a strong fnancial position conducive for this.
Fixed Deposits
The fxed deposits for the period were Rs. 4.45 Crores.
Research & Development (R&D)
The Company has carved out an ambitious plan of investment in R&D. This
will include investment in PIP and MODLIB. This will assist Companys
revenue and proftability in the future years.
Dematerialization of Shares
As the Members are aware, the Companys shares are in the compulsory
demat mode, facilitated through arrangement with M/s. National
Securities Depository Ltd. (NSDL) and M/s. Central Depository Services
(India) Ltd. (CDSL). Going by the percentage of demat Shareholders, it
is found that as many as 27,06,573 shares (5.87% of total shares
issued), continued to be in physical mode. Your Directors earnestly
appeal to all of you to demat the shares and derive the benefts of
holding the shares in electronic form.
Subsidiary
The Wholly Owned Subsidiary Company, SPEL America Inc, in California,
USA has been rendering the marketing services to your Company resulting
in enhanced Customer base and satisfaction.
Pursuant to the Circular No.2/2011 dated Feb 8, 2011 of Ministry of
Corporate Affairs, the Board at its Meeting held on Apr 29, 2011
resolved not to enclose the Subsidiary Companys accounts for the year
in the Annual Report.
The Annual accounts of the Subsidiary Company and related detailed
information will be made available to the Shareholders at any point of
time. The annual accounts of the Subsidiary Company will also be kept
for inspection by any Shareholders in the Head Offce of the Holding
Company.
Auditors
Your Companys Auditors, M/s. Natarajan & Co., Chartered Accountants,
retiring at the conclusion of the ensuing Annual General Meeting, are
eligible for re-appointment.
Directors
Dr. A. Ramakrishna resigned from the Board and his resignation was
accepted at the Board Meeting held on Apr 29, 2011. The Board placed on
record its appreciation for the commendable services rendered by Dr. A.
Ramakrishna.
Mr. S. R. Vijayakar and Dr. A. Besant C. Raj are the directors retiring
at the ensuing Annual General Meeting. As both are being eligible,
offering themselves for reappointment. A brief profle of both directors
is provided as follows :
Mr. S. R. Vijayakar
Mr. S. R. Vijayakar holds an Honours Degree in Electrical and
Mechanical Engineering. After two years experience in the U.K. in the
power industry he worked with the Ahmedabad Electricity Co., till 1967.
Thereafter, he worked with the Electronics Corporation of India Ltd.
under the Department of Atomic Energy, culminating as its Chairman and
Managing Director till 1984. He was appointed as Secretary, Department
of Electronics, Government of India until he retired in 1986. Post
retirement he was Chairman of MELTRON, Government of Maharashtra and
was associated with several Companies. He is a member of SPEL Boards
Remuneration and Compensation Committee.
In addition, he holds Directorship in TVS Electronics Limited and
Surana Ventures Limited. He is the member of Audit Committee in TVS
Electronics Limited.
Dr. A. Besant C Raj
Dr. A. Besant C Raj is an MBA from the Indian Institute of Management,
Ahmedabad (First Batch). He also holds a Doctoral degree in Business
Administration from the Harvard Business School, Harvard University,
USA. He has a Masters degree in Philosophy from Madras University and
a Masters degree in Psychology from Banaras Hindu University. Dr. Raj
is the Founder Chairman of the Institute of Chartered Financial
Analysts of India (ICFAI), Hyderabad. He is closely associated with
development of several educational institutions. He has held various
senior positions in the Government of India. In addition, he is the
Chairman and Managing Director in Besant Raj International Limited and
Director in Henkel India Limited. He is Chairman of SPEL Boards Audit
Committee and a Member of SPEL Boards Securities Transfer & Investors
Grievance Committee (STIGC).
Directors Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confrmed :
1. That in the preparation of the annual accounts for the year ended
Mar 31, 2011 the applicable Accounting Standards had been followed
along with proper explanation relating to material departures
2. That the Directors had selected such accounting policies and
applied them consistently and made judgment 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
proft or loss of your Company for the year under review
3. That the Directors had taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities
4. That the Directors had prepared the accounts for the year ended Mar
31, 2011 on a Ãgoing concern basis.
Corporate Governance
Your Company is committed to the standards of Corporate Governance and
in this direction has laid down well documented internal policies,
procedures including Board and Committee
procedures and practices in particular relation with Shareholders,
Customers, Suppliers and Employees in order to enhance the long-term
Shareholder value and maximize interest of all Stakeholders.
Your Company has complied with the provisions of Clause 49 of the
Listing Agreement relating to Corporate Governance.
A detailed Report on Corporate Governance and a Management Discussion
and Analysis report have been attached to form part of the Annual
Report.
A Certifcate from the Auditors of your Company regarding the compliance
of conditions of Corporate Governance has been annexed to this report.
Information pursuant to Section 217 of the Companies Act, 1956
In terms of Section 217 (1) (e) of the Companies Act, 1956 and the
rules framed there under, the particulars relating to the conservation
of energy, technology absorption & foreign exchange earnings and outgo
are given below :
a. Conservation of Energy
The Company has in place an Energy Committee which meets once a month.
This Committee consists of Cross-functional Executives. This Committee
identifies the potential areas to conserve energy and implements novel
energy saving measures, apart from recommending investment proposals to
the management.
Various measures to conserve water and energy, notable amongst them
being, reuse of Dicing process water, Rain Water Harvesting, Power
factor improvement and extension of length of condenser in the A/c
system to improve effciency. Following savings were made during the
year :
Particulars Power Water
Consumed 83,46,655 units 79,193 Kilo litres
Saved 9,267.82 units 208.38 Kilo litres
b. Technology Absorption
The particulars regarding Technology Absorption are not applicable to
your Company.
Particulars of Employees
There are no such employees drawing remuneration in excess of limits
mentioned as per the revised Notifcation dated Mar 31, 2011 of the
Ministry of Corporate Affairs as per Section 217 (2A) of the Companies
Act, 1956. Hence no disclosure is required as per the above
Notifcation.
Corporate Social Responsibility (CSR)
SPELs answer towards CSR is through SPEL Employees Social Service
Organization (SESSO). As part of the Core Values, following activities
were undertaken though SESSO during the previous year.
a. Provided educational assistance to the needy people in and around
Factory.
b. Conducted a voluntary Blood Donation camp.
c. Provided assistance to an orphanage and old age home located near
Factory.
Environment and Safety Measures
Your Company understands that every individual has a responsibility
towards our environment. Towards this, Your Company has been devising
measures and encouraging its Employees to care for the environment and
protect it through conservation of resources, waste minimization and
proper disposal, pollution prevention and planting of trees.
Further Your Companys manufacturing activities do not result in any
signifcant release of effuent in the environment.
The Environmental Management System established and maintained by your
Company is certifed by Bureau Veritas Certifcation. The upgraded ISO
14001 Certifcate from 1996 version to 2004 version will comprehensively
take care of safe environment practices. It is hopeful that the Company
will be able to achieve this certifcation during the current year
Your Company considers environmental care to be a continuous effort and
are always on the look out for more avenues to nurture nature by
enhancing its environmental performance and also keeping in view the
global trends in procurement of environment friendly products, Company
is in the process of introducing Green-molding compounds that are
environment friendly as demanded by the Customers.
Acknowledgements
Your Directors wish to place on record their gratitude to the
Government of India, the Government of Tamil Nadu, Financial
Institutions, Bankers, Insurance Companies, Customs & Excise
authorities, valued overseas Customers & Vendors and the Promoters for
their continued assistance and support extended to the Company.
Yours Directors wish to place on record, their appreciation of the
effcient and loyal services rendered by the Employees at all levels to
the Company.
Yours Directors wish to thank the Shareholders for their continued
support and forbearance and the confidence reposed on the Management.
For and on behalf of Board of Directors
Dr. A.C. Muthiah
Chairman
Chennai
Apr 29, 2011
Mar 31, 2010
The Directors have great pleasure in presenting the 25th Annua!
Report of the Company together with the Audited Accounts for the year
ended Mar 31, 2010. Your Company is celebrating its Silver Jubilee
during this year with the support & encouragement from all its
Stakeholders.
Global and Indian Industry scenario
While the worst is definitely over, 2009 will probably be known as one
of the steepest revenue declines in Semiconductor history due to a drop
in orders. The official Semiconductor recession however started with
the Q4 2008 financial reports, but could be seen even earlier in the
year with failing forecasts and bulging inventories. So realistically
it was the Semiconductor debacle of 2008-09. Early part of FY 2009 has
been very difficult to most of the Semiconductor companies; some of
them havent been able to handle the economics. Many others have
realigned their market strategies and entered into strategic mergers to
be able to weather the recession.
The global economic slowdown has severely impacted the Semiconductor
industry leading to piling up of inventories and reduced capital
expenditure. However in 2010 the Semiconductor market is expected to
grow by 20% as per latest estimations by Gartner. Compared to last
year, outlook for the Semiconductor industry appears to be healthier.
In fact, the confidence level of most companies is quite similar to the
level seen in 2007. Industry executives are very bullish on the future
growth prospects of energy efficient and renewable products. In
summary, while the Semiconductor industry is in a far better position
entering 2010 than it was a year ago; the trajectory of the recovery is
still unclear. In 2010 the Semiconductor industry will be back on track
with revenue and shipments substantially greater than 2009. The mobile
internet market will drive Semiconductors for the next decade with an
incredible integration of electronic devices targeting the
6,792,600,000 consumers.
The impact of the global "Great Recession" was less severe in India.
The country experienced a relatively muted and short-lived downturn.
The year 2010 has brought in a lot of confidence to the Semiconductor
industry and to the global economy as a whole. There are huge growth
opportunities for the electronic industry in India, but there have been
some missed opportunities in the past decade. So, while the future
holds a lot of promise, we need to address existing challenges in
infrastructure, taxation, supply chain and logistics, labour laws, R&D
and funding
SPEL performance during the year
Your Company continues to be First & only Semiconductor IC Assembly &
Test production facility. It is continuously maintaining this position
despite the market fluctuations and other external factors. SPEL
continues to be a trusted & strategic contract manufacturing partner
for many of the worlds leading Semiconductor companies.
The Management with its strong commitment and extensive support from
its Employees, Suppliers & Customers, has continued to maintain its
position as Profit Making Company, despite the Global Slowdown and
Economic Crisis.
Current years performance was largely affected by foreign exchange
fluctuation loss, lower pricing due to global recession. Management as
an austerity measure introduced various cost saving measures including,
Lean manufacturing, investments in Energy saving Equipments. SPEL
appreciates its Employees commitment and complements them by assisting
their growth to become future leaders. In spite of all the recessionary
trends Stakeholders may appreciate the fact that SPEL stood up to the
times and posted marginal increase in PAT.
Management is continuing its efforts to rope in more Customers this
year, from APAC and European countries also. Your Company had invested
in Capex to the tune of Rs.7.8 Crores during the year.
Financial Performance
The Operating results of your Company for the year ended Mar 31, 2010
are given below :
(Rs. In Lakhs)
Particulars Year ended Year ended
Mar 31, 2010 Mar 31, 2009
Sales 8,716.0 8,100.2
Other Income 149.1 222.2
PBIDT 1,962.5 2,115.3
Interest 214.5 323.9
Depreciation 818.4 830.5
Profit before Taxation 929.5 960.9
Tax / Deferred Tax 318.6 337.4
Profit after Taxation 610.8 623.5
Sales of your Company for current year have increased by 8% over the
previous year. Increased expenditure on manpower, power, marketing
expenses, other overheads, which were necessitated due to operational
growth, had an impact on contribution. All the package lines of your
Company are in good demand and are expected to increase the
contribution in future years.
Emphasis on Value System
Your Company has adopted the following as its core values and the
Management is highly committed to put in practice all these values.
Training sessions are conducted every month to make all the Employees
aware of the Core Values. All the Employees attend this program at
least once in six months and put it to practice.
a. Business Ethics : defines us as a Company
b. Professionalism defines us as individuals
c. Citizenship : defines our contribution to society
Dividend
Your Directors would like to place on record their appreciation for the
Shareholders patient waiting for these days.
As mentioned earlier the Company had invested in the Capex for Rs.7.8
Crores, from the internal generations. These investments had helped the
Company in offsetting the falling ASP, and had assisted to improve the
PE ratio. Your Company is keenly concentrating on creating cash
reserves, as the need for this is increasing, as Customers wants to see
this in place.
Your Companys above initiatives have assisted increasing PAT and
thereby increasing the Earning Per Share (EPS). However, you would
concur that your Company has consolidated itself for achieving a strong
financial position conducive for this.
Fixed Deposits
The fixed deposits for the period were Rs.4 Crores.
Research & Development (R&D)
The Company has carved out an ambitious plan of investment in R&D. This
will include investment in PIP and MODLIB. This will assist Companys
revenue and profitability in the future years.
Dematerialization of Shares
As the Members are aware, the Companys shares are in the compulsory
demat mode, facilitated through arrangement with M/s. National
Securities Depository Ltd. (NSDL) and M/s. Central Depository Services
(India) Ltd. (CDSL). Going by the percentage of demat Shareholders, it
is found that as many as 1,80,39,634 shares (39.12% of total shares
issued), continued to be in physical mode. Your Directors earnestly
appeal to all of you to demat the shares and derive the benefits of
holding the shares in electronic form.
Subsidiary
The Wholly Owned Subsidiary Company SPEL America Inc, in California,
USA has been rendering the marketing services to your Company resulting
in enhanced Customer base and satisfaction. The details required under
Section 212 of the Companies Act, 1956 has been enclosed herewith in
the report.
Auditors
Your Companys auditors, M/s. Natarajan & Co., Chartered Accountants,
retiring at the conclusion of the ensuing Annual General Meeting, are
eligible for re-appointment.
Directors
Mr. Ashwin C. Muthiah, Director and Mr. N. Sivashanmugam, Whole Time
Director are the directors retiring at the ensuing annual general
meeting. As both are being eligible, offering themselves for
re-appointment. A brief profile of both directors is provided as
follows:
Mr. Ashwin C. Muthiah
Mr. Ashwin C Muthiah holds a bachelor degree in Commerce from Madras
University and a post graduate degree in Business Administration from
Philadelphia University. He is an entrepreneur with business interests
in Logistics, Trading and Shipping. He is Consul General Ad Honorem of
the Republic of. Philippines at Chennai.
In addition, he is the Chairman in Manali Petrochemical Limited, SICAL
Distriparks Limited, SICAL Infra Assets Limited, SDB Certis CISCO India
Limited and SICAL Logistics Limited. He is the Vice Chairman in PSA
SICAL Terminals Limited, Southern Petrochemical Industries Corporation
Limited and Technip India Limited. He holds Directorship in ACM
Educational Foundation, ACM Medical Foundation, Indo-Jordan Chemicals
Company Limited, MAC Spin Foundation, Mitsuba Sical India Limited,
Tamilnadu Petroproducts Limited, Totalcomm Infra Services Private
Limited and Tuticorin Alkali Chemicals and Fertilizers Limited. He is
also the Chairman of Management Committee of Southern Petrochemical
Industries Corporation Limited and Member of Remuneration Committee and
Finance Committee of Southern Petrochemical Industries Corporation
Limited. He is Chairman of Management Committee of SICAL and Member of
Audit Committee of SICAL. He is the member of Share Transfer &
Investors Grievance Committee of Tamilnadu Petroproducts Limited.
Mr. N. Sivashanmugam
Mr. N. Sivashanmugam is a Chartered Accountant with 32 years background
in Domestic and International Finance & Accounts. He has worked in
Indo-Jordan Chemicals Company Ltd., in Amman,
Jordan as Asst. Managing Director - Finance since May 2000. In his
earlier tenure, he had the experience of effectively handling large
Companys Treasury, Banking, Insurance and Accounts. He also has good
exposure in Project Finance.
In addition, he holds Directorship in Accuspeed Engineering Design
Services Ltd. and a member of SPELs Management Committee.
Directors Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed :
1. That in the preparation of the annual accounts for the year ended
Mar 31, 2010 the applicable Accounting Standards had been followed
along with proper explanation relating to material departures.
2. That the Directors had selected such accounting policies and
applied them consistently and made judgment 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 or loss of your Company for the year under review.
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
4. That the Directors had prepared the accounts for the year ended Mar
31, 2010 on a going concern basis.
Corporate Governance
Your Company is committed to the standards of Corporate Governance and
in this direction has laid down well documented internal policies,
procedures including Board and Committee procedures and practices in
particular relation with Shareholders, Customers, Suppliers and
Employees in order to enhance the long-term Shareholder value and
maximize interest of all Stakeholders.
Your Company has complied with the provisions of Clause 49 of the
Listing Agreement relating to Corporate Governance.
A detailed Report on Corporate Governance and a Management Discussion
and Analysis Report have been attached to form part of the Annual
Report.
A Certificate from the Auditors of your Company regarding the
compliance of conditions of Corporate Governance has been annexed to
this report.
Information pursuant to Section 217 of the Companies Act, 1956
In terms of Section 217 (1) (e) of the Companies Act, 1956 and the
rules framed there under, the particulars relating to the conservation
of energy, technology absorption & foreign exchange earnings and outgo
are given below:
a. Conservation of Energy
The Company has in place an Energy Committee which meets once a month.
This Committee consists of Cross-functional Executives. This Committee
identifies the potential areas to conserve energy and implements novel
energy saving measures, apart from recommending investment proposals to
the management.
Various measures to conserve water and energy, notable amongst them
being, reuse of Dicing process water, Rain Water Harvesting, Power
factor improvement and extension of length of condenser in the A/c
system to improve efficiency. Following Savings were made during the
year.
b. Technology Absorption
The particulars regarding Technology Absorption are not applicable to
your Company.
c. Foreign Exchange Earnings and Outgo
Your Company is a 100% export oriented unit and is constantly striving
to increase its exports.
Foreign Exchange used during the year: Rs.5,099.49 lakhs
Foreign Exchange earned during the year: Rs.8,380.91 lakhs
Particulars of Employees
There are no such employees drawing remuneration in excess of limits
mentioned as per section 217(2A) and hence no disclosure is required as
per the said section.
Corporate Social Responsibility (CSR)
SPELs answer towards CSR is through SPEL Employees Social Service
Organization (SESSO). As part of the Core values, following activities
were undertaken though SESSO during the previous year.
a. Provided educational assistance to the needy people in and around
Factory.
b. Conducted a voluntary Blood Donation camp.
c. Provided assistance to an orphanage and old age home located near
Factory.
Environment and Safety Measures
Your Company understands that every individual has a responsibility
towards our environment. Towards this, Your Company has been devising
measures and encouraging its Employees to care for the environment and
protect it through conservation of resources, waste minimization and
proper disposal, pollution prevention and planting of trees.
Further Your Companys manufacturing activities do not result in any
significant release of effluent in the environment.
The Environmental Management System established and maintained by your
Company is certified by Bureau Veritas Certification. The upgraded ISO
14001 Certificate from 1996 version to 2004 version will
comprehensively take care of safe environment practices. It is hopeful
that the Company will be able to achieve this certification during the
current year
Your Company considers environmental care to be a continuous effort and
are always on the look out for more avenues to nurture nature by
enhancing its environmental performance.
Acknowledgements
Your Directors wish to place on record their gratitude to the
Government of India, the Government of Tamil Nadu, Financial
Institutions, Bankers, Insurance Companies, Customs & Excise
authorities, valued overseas Customers & Vendors and the Promoters for
their continued assistance and support extended to the Company.
Yours Directors wish to place on record, their appreciation of the
efficient and loyal services rendered by the employees at all levels to
the Company.
Yours Directors wish to thank the Shareholders for their continued
support and forbearance and the confidence reposed on the Management.
For and on behalf of Board of Directors
Chennai Dr. A. C. Muthiah
May 3, 2010 Chairman
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article