DIRECTOR’S REPORT To, The Members Filtron Engineers Limited Your Directors have pleasure in presenting to you the 33rd Annual Report together with the Balance Sheet and Statement of Profit and Loss for the year ended 31st March, 2015. Review of Performance: During the financial year under this report, the Company has satisfactorily executed local and export order worth Rs.348.99 lakhs as against Rs.699.09 lakhs in previous year. Operational Highlights and Future Outlook: The Company is able to execute more export orders during the financial year under report. The Company expects to increase its share of export in the coming financial year. Transfer to Reserves: During the financial year, the Company did not transfer any amount to reserve. Dividend: Considering the fact, that the Company has suffered a loss, your Directors have decided not to recommend any dividend on the equity shares for the year ended March 31, 2015. Change in the nature of business: There was no change in the nature of business of the Company during the financial year. Public Deposits: During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014. Subsidiaries, Associate and Joint venture Companies: As on March 31, 2015, the Company does not have any Subsidiary Company, Associate Company and joint venture Company Major events during the year Change of Registered Office: During the Year the Company has Changed its Registered office from Filtorn House, 6 Sitabag Colonys, 124 3 Sinhagad Road, Pune - 411030 to Plot No.36, WMDC Industrial Area, Ambethan Road, Chakan, Pune -410 501 with effect from 8th February, 2015. Directors and Key Managerial Personnel: Pursuant to the provisions of the Companies Act, 2013 read with the rules made thereunder and Clause 49 of the Listing Agreement, Mr. Prabhakar Ganesh Hegde Mr. Padamakar Vidyadhar Kashyapi, the Independent Directors of the Company were re-appointed for a term up to 31st March, 2019 at the Annual General Meeting of the Company held on 27th September,2014. The appointment of Mr. Sadanand . Hegde, Managing Director, Mr. Ramesh Mrithyunjaya Hosmane, Chief Financial Officerwere formalized as the Key Managerial Personnel of the Company pursuant to the provisions of Section 203 of the Companies Act, 2013, which came in to effect from April 1, 2014. During the year under consideration, Mr. Yashwantrao Ramchandra Mali, Whole Time Director, has resigned from the Company. To comply with the provisions of Section 149 (1), Company had appointed Woman Director on 07th February, 2015. Mrs.Hemali Alandkar was appointed to take place of Woman Director in the Company. Also on 09th April, 2015 Mr. Sadanand Hegde resigned from the position of Managing Director of the Company. He was re-designated as Whole-time Director of the Company. Mr. M.V. Rao was inducted in the Board as Additional Director and was designated as Managing Director of the Company. In terms of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Venkat Giri (DIN: 06585289), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. He has confirmed that he is not disqualified from being appointed as Director in terms of Section 164 of the Companies Act, 2013. A brief resume of Mr. Venkat Giri, Mr. Sadanand Hegde, Mr. M.V. Rao and Ms. Hemali Alandkar nature of his expertise in specific functional areas and names of the Companies in which he holds directorship and / or membership / chairmanship of Committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange/s, is given in the Corporate Governance Report which may be taken as forming part of this Report. All Independent Directors have given declarations that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. None of the Non-Executive Directors had any pecuniary relationships or transactions with the Company which may have potential conflict with the interests of the Company at large. Declaration by Independent Directors. The Company has received necessary declaration from each independent director under Section 149 (7) of the Companies Act, 2013, stating that the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement has been met. Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future During the financial year, there were no such orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. Adequacy of Internal Financial Control The Board has adopted the policies and procedures for ensuing the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding the assets, the prevention and detention of frauds and errors, the accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosure. Committees of the Board: The Board of Directors of your Company has constituted the following committees in terms of the provisions of the ompanies Act, 2013 and the Listing Agreement: • Audit Committee • Stakeholders' Relationship Committee • Nomination and Remuneration Committee. The details regarding composition and meetings of these committees held during the year under review as also the meetings of the Board of Directors are given in the Corporate Governance Report which may be taken as forming part of this Report. Composition of Audit Committee The Audit Committee comprises of three Directors. Composition of the Audit Committee during the financial year 2014-2015 is as follows: But owing to the resignation of Mr. Yashwantrao Mali during the year, the composition of Audit Committee changed and Mr. Venkat Giri was appointed as the member of the Audit Committee. Consequently the composition of the Audit Committee stood as follow: Sr. No. Name of the Committee Members Designation 1 Padamakar Vidyadhar Kashyapi Chairman 2 Prabhakar Ganesh Hegde Member 3 Yashwantrao Mali Member (Resigned on 31.12.2014) Sr. No. Name of the Committee Members Designation 1 Padamakar Vidyadhar Kashyapi Chairman 2 Prabhakar Ganesh Hegde Member 3 Venkat Giri Member There were no matters during the financial year 2014-2015, wherein the Board did not accept recommendations given by the Audit Committee. Particulars of remuneration to employees Pursuant to the provisions of section 197 of the Companies Act, 2013, read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of employees are required to be provided in the Directors' Report. However, having regard to the provisions of section 136 of the Companies Act, 2013, the Annual Report, excluding the aforesaid particulars, is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining these particulars will be provided with the same upon receipt of a written request delivered at the Registered Office of the Company. Management Discussion and Analysis The Management Discussion and Analysis forms part of the Directors' Report is annexed herewith as 'Annexure A'. Corporate Governance Report As required by clause 49 of the Listing Agreement with the Stock Exchange (s), a report on Corporate Governance and a certificate confirming compliance with requirement of Corporate Governance forms part of this Annual Report. 'Annexure B' Auditors and their Reports a) Statutory Auditors M/s. A.A.Bhat Chartered Accountants (FRN: 101282W), were re-appointed as the Statutory Auditors of the Company in 32nd Annual general meeting to hold office till the conclusion of 33rd consecutive annual General Meeting. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company. b) Secretarial Auditor M/s. Arun M. Despande, Company Secretary in Practice was appointed to conduct the secretarial audit of the Company for the financial year 2014-2015, as required under Section 204 of the Companies Act, 2013 and Rules thereunder. The secretarial audit report for financial year 2014-2015 forms part of the Directors Report as 'Annexure C' to the Board's report. Explanations by the Board on qualification, reservation or adverse remark or disclaimer made by the • Statutory Auditors in their report Point (vii) (a) Annexure to Auditors Report: The Company is generally regular in depositing undisputed statutory dues including, Provident Fund, Employees' State Insurance, Income Tax, Value Added Tax, Customs Duty, Excise Duty, Cess, Service Tax, Wealth Tax and any other material statutory dues with the appropriate authorities during the year. According to the information and explanation given to us, there are no other arrears of Statutory Dues outstanding as on 31st March, 2015 for a period more than six months except Profession Tax of the Company amounting to Rs. 45,525/- from the date they became payable. Management Reply: During the financial year 2014-15, the Company could not pay its statutory dues with Profession Tax Department within time due to shortage of sufficient funds. However, the Company ensure to pay its statutory dues within the time provided by the statutory authorities in the ensuing financial year. Secretarial Auditor in his Report: The application for extension of period to RBI for recovery against the export bill raised wide export made to Nepal has not been made in time. Management Reply: The Company had anticipated that the amount shall be received well within the time but it was not. So the Company could not apply for extension. The Company ensures that no such lapses will take place in near future and all other provisions shall be complied with. Employees Stock Option Scheme (ESOS) Your Company has not issued any shares to the employees of the Company under the Employee Stock Option Scheme in the previous financial year. Extract of Annual Return In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual return in the prescribed format is annexed herewith as 'Annexure D 'to the Board's report. Number of Meetings of the Board During the financial year, 5 (Five) Board Meetings and 4 (Four) Audit Committee Meetings were held the details of which are given in the Corporate Governance Report forming part of the Annual Report. Directors' Responsibility Statement: Pursuant to the requirements under 134(3) (c) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed: a) that in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended as on that date; c) 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, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that the directors had prepared the annual accounts for the financial year ended 31st March, 2015, on a 'going concern' basis. e) that the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; f) that the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Policy on Nomination and Remuneration of Directors, KMPs and other employees: Policy for Selection and Appointment of Directors and their Remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters under Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, is annexed as 'Annexure E' to the Board's report. Particulars of loans, guarantees or investments under Section 186 During the financial year 2014-2015, there are no such transactions transacted by the Company and hence particulars of details of loans, guarantee, security or investments covered under Section 186 of the Companies Act, 2013 are not required to be furnished. Particulars of contracts or arrangements made with related parties During the Financial Year 2014-15, all Related Party Transactions entered in to with Related Parties were at arm's length and were in the ordinary course of the business. There were no materially significant related party transactions entered in to by the Company with any Related Parties which require shareholders approval. Hence, particulars of related party contracts or arrangements in form AOC - 2 is not applicable. The particulars of contracts or arrangement with Related Parties forms part of the notes to the Financial Statements. Corporate Social Responsibility: The Company is not falling in any criteria as mentioned in Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Act. Hence, provision of CSR is not applicable to the Company. Material changes and commitments affecting financial position between the end of the financial year and Date of Report The Company has approved re-issue of the forfeited shares to the Managing Director of the Company. Apart from no other material changes or commitments took place affecting the financial position of the Company. Vigil Mechanism: The Company has established a vigil mechanism to enable directors and employees to report genuine concerns and grievances about any incident of violation / potential violation of law or the Code of Conduct laid down by the Company. The mechanism lays down the overall framework and guidelines for reporting genuine concerns. The details of this mechanism are given in the Corporate Governance Report which may be taken as forming part of this Report. Risk Management: The details of the risk management framework adopted and implemented by the Company are given in the Corporate Governance Report which may be taken as forming part of this Report. Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo: (a) Conservation of Energy Technology Absorption: • The Company has successfully maintained energy efficient lighting has been at a lower level it also implemented the plan to utilize energy efficient welding sets in the factory. The Company is making all efforts for better utilization of energy wherever possible. (b) Technology Absorption: • Efforts made towards technology absorption, adaptation and innovation and Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution, etc The Company is in Process of Developing the ways for technology absorption, adaptation and innovation. • In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year) : N.A • Expenditure Incurred on Research and Development : N.A (c) Foreign Exchange Earnings and Outgo: Earnings in foreign exchange: Rs. 5,291,828/- Outgo in foreign exchange: Nil Risk Management Policy and Compliance Framework: Risk Management policy of the Company has been developed and implemented, recommended by the Audit Committee and approved by Board of Directors in their Meeting held on 07th February, 2015. In the opinion of the board the below given risks may threaten the existence of the Company: External Risk Factors: a) Economic Environment and Market conditions b) Political Environment c) Competition d) Technology Internal Risk Factors: a) Contractual Compliance b) Environmental Management c) Human Resource Management Board Evaluation: In accordance with the provisions of the Companies Act, 2013 read with the rules made there under and the Listing Agreement, the Board has carried out formal annual evaluation of its own performance, performance of its various Committees and individual directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report which may be taken as forming part of this Report. Acknowledgements: Your Directors take this opportunity to express their appreciation to the Investors, Banks, Financial Institutions, Clients, Vendors, Central and State Governments and other Regulatory Authorities for their assistance, continued support, cooperation and guidance. For Filtron Engineers Limited Sd/- SADANAND HEGDE Whole-time Director Place: Pune Date: 08th August 2015 Encl.: Annexure A to E |