DIRECTOR’S REPORT TO THE MEMBERS 1. Your Directors are pleased to present the 42nd Annual Report and the Audited Financial Statement of the Company for the year ended December 31, 2015. 2. PERFORMANCE OVERVIEW Standalone Your Company has demonstrated excellent performance during the year and outshined all its previous records for revenue by recording standalone revenue from operat ions of Rs. 1,567.02 Million (Previous year Rs. 949.09 Million), a growth of about 65 % in comparison to prior year. The increase in revenue was contributed by growth in sales of all product lines and more particularly Rotary Screen Printing Machine and its Spare Parts, Nickel Perforated Rotary Screens and Sugar Screens and was driven by increased market presence. The Company has achieved standalone Profit before Tax of Rs. 310.66 Million (Previous year Rs. 165.15 Million), a remarkable growth of about 88 % in comparison to prior year. Consolidated The consolidated revenue from operations stood at Rs. 1621.98 Million (Previous year Rs. 1023.44 Million), an impressive increase of about 58 % in comparison to prior year. The Company’s consolidated Profit before Tax for the financial year 2015 stood at Rs. 331.79 Million (Previous year Rs. 172.52 Million). 3. RESERVES AND SURPLUS Out of the Net Profit of Rs. 205.39 Million for the year under report, an amount of Rs. 21 Million is transferred to the General Reserve. 4. DIVIDEND Considering the Company’s financial performance, the Board of Directors have recommended payment of Final Dividend of Rs. 29/- per equity share (290 %) for the financial year ended on December 31, 2015. This Final Dividend is subject to the approval of Members in the 42nd Annual General Meeting. 5. SUBSIDIARY COMPANY Atul Sugar Screens Private Limited (“ASSPL”) is a Wholly Owned Subsidiary of the Company. Your Company has obtained a certificate from the Statutory Auditors of the Company certifying that the Company is in compliance with the Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000 with respect to the downstream investments made in Atul Sugar Screens Private Limited. A Summary of Performance of ASSPL is provided below: The revenue from operations of ASSPL during the financial year 2015 stood at Rs. 154.88 Million [Previous year (For 9 months from April 1, 2014 to December 31, 2014) Rs.106.53 Million]. ASSPL recorded Profit before tax of Rs. 22.96 Million (Previous year Rs. 8.8 Million). Pursuant to the provisions of Section 129 (3) of the Companies Act, 2013 (“Act”), a statement containing the salient features of financial statements of ASSPL in the prescribed Form AOC-1 is provided in Annexure-I forming part of this report. The Audited Financial Statements of ASSPL are available on the Company’s website at www.stovec.com and the same are also available for inspection at the registered office of the Company as per the details mentioned in the Notice of 42nd Annual General Meeting. Your Company will also make available these documents upon written request by any Member of the Company interested in obtaining the same. The Annual Audited Consolidated Financial Statements together with the Report of Auditor’s thereon forms part of this Annual Report. 6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information as required to be given under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure II forming part of this Report. 7. FINANCIAL YEAR The application made by the Company and its Indian wholly owned subsidiary M/s Atul Sugar Screens Pvt. Ltd., to the Company Law Board, seeking approval for continue to follow calendar year as financial year was approved and accordingly the Company and its Indian wholly owned subsidiary would follow the calendar year (i.e. January 1 to December 31) as financial year. 8. FIXED DEPOSITS For the year ending December 31, 2015, the Company has not accepted any deposits falling within the purview of Section 73 of the Act and rules made there under. 9. CORPORATE GOVERNANCE A separate report on Corporate Governance Compliance and a Management Discussion and Analysis Report as stipulated in Regulation 34 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) forms part of the Director’s Report as Annexure-III and IV respectively along with the required Certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance. 10. AUDIT COMMITTEE The Company has in place an Audit Committee in terms of requirements of the Act read with rules framed thereunder and Listing Regulations. The details relating to the Audit Committee are given in the Corporate Governance Report forming part of this report. The recommendations of Audit Committee were duly accepted by the Board of Directors. 11. DIRECTORS AND KEY MANAGERIAL PERSONNEL The Board of Directors (“Board”) in its meet ing held on February 16, 2016 has appointed Mr. Eiko Ris, as an Additional Director on the Board of the Company w.e.f. February 16, 2016, who holds office up to the date of the for thcoming Annual General Meeting and is eligible for appointment as a Director of the Company. The Board welcomed Mr. Eiko Ris on the Board of Directors of the Company. Mr. Aschwin Nicolai Hollander, due to his other pre-occupations has resigned from the Board of the Company w.e.f. February 16, 2016. The Board placed on record its appreciation for the outstanding contribution made by him in the growth of the Company. At the 42nd Annual General Meeting, Mrs. Everdina Herma Slijkhuis retires by rotation and being eligible, offers herself for re-appointment. The Members at the 41st Annual General Meeting, appointed Mr. Khurshed. M. Thanawalla (DIN: 00201749) and Mr. Marco Wadia (DIN: 00244357) as an Independent Director of the Company for a consecutive term of five years as per requirement of the Act. The abovenamed Independent Directors have furnished declarations to the Company, confirming that they meet the criteria prescribed for Independent Directors under Section 149 (6) of the Act and Regulation 16(1)(b) of the Listing Regulations. The tenure of Mr. Shailesh Chandrakrishna Wani, as a Managing Director of the Company expires on September 30, 2016. The Board of Directors in its meeting held on February 16, 2016, noted that Company has grown under his leadership and it will be in the interest of the Company to re-appoint him. The Board has re-appointed Mr. Shailesh Chandrakrishna Wani, as a Managing Director of the Company for a further period of three years w.e.f. October 1, 2016, subject to the approval of Members of the Company and of the Central Government, if required. Mr. Girish Deshpande, Chief Financial Officer retired from the Company w.e.f. July 1, 2015 and Mr. Paras Mehta was appointed as the Chief Financial Officer of the Company w.e.f July 1, 015. The Board placed on record its appreciation for the contribution made by Mr. Girish Deshpande in his role as a Chief Financial Officer of the Company. 12. BOARD MEETING During the financial year ended December 31, 2015, five meetings of the Board of Directors were held. The details of the attendance of Directors at the Board Meeting are mentioned in the Corporate Governance Report annexed hereto. 13. PERFORMANCE EVALUATION The details of Annual Performance Evaluation of Individual Directors including Chairperson, Board of Directors and Committees of Board of Directors are mentioned in the Corporate Governance Report. 14. CORPORATE SOCIAL RESPONSIBILITY In accordance with Section 135 of the Act and Rules framed thereunder, the Company has constituted a Corporate Social Responsibility (“CSR”) Committee of Directors. The details of composition of CSR Committee are given in the Corporate Governance Report. The details of CSR policy and CSR spending by the Company have been provided as Annexure-V to this report, as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014. 15. REMUNERATION POLICY The details of the Remuneration Policy are mentioned in the Corporate Governance Report. A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided as Annexure VI forming part of this Report. 16. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope of Internal Audit is well defined in the organization. The Internal Audit report regularly placed before the Audit Committee of the Board. The Management monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies. Based on the report of Internal Auditors, process owners undertake corrective action in their respective areas and thereby strengthening the controls continuously. Significant audit observations, if any, and corrective actions suggested and taken are presented to the Audit Committee of the Board. 17. EXTRACTS OF ANNUAL RETURN The extracts of Annual Return in Form MGT-9 as required under Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, forms part of this Report as Annexure VII. 18. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES During the year under review, all the Related Party Transactions were entered into by the Company in the ordinary course of business and on arm’s length basis. Hence reporting in Form AOC-2 is not applicable to the Company. 19. PARTICULARS OF LOANS, GUARANTEE OR INVESTMENTS A statement providing particulars of Loans, Guarantees or Investments under Section 186 of the Act is provided as Annexure VIII forming part of this Report. 20. VIGIL MECHANISM As per the provisions of Section 177(9) of the Act, the Company is required to establish an Vigil Mechanism for Directors and Employees to report genuine concerns. The Company has a Whistle Blower Policy (also known as Vigil Mechanism) in place and the details of the Whistle Blower Policy are provided in the Report on Corporate Governance forming part of this Report. The Company has disclosed information about the establishment of the Whistleblower Policy on its website at www.stovec.com at http://www.spgprints.com/include/files/About_us/Stovec/Policies/ Whistle_Blower_Policy.pdf. 21. RISK MANAGEMENT The Company has formulated Risk Management Policy in order to monitor the risks and to address/ mitigate those risks associated with the Company. The Board of Directors do not foresee any elements of risk, which in its opinion, may threaten the existence of the Company. 22. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134 (3)(c) and 134 (5) of the Act, your directors confirm, to the best of their knowledge and belief that: a) in the preparation of the annual financial statements for the year ended December 31, 2015, the applicable accounting standards have been followed and that no material departures have been made from the same; b) they have selected such accounting policies and applied 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 as at December 31, 2015 and of the profit of the Company for the year ended on that date; c) they have 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) they have prepared the annual financial statements for the year ended December 31, 2015, on a going concern basis; e) proper internal financial controls are in place in the Company and that such internal financial controls are adequate and are operating effectively; and f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. 23. POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE The Company has in place a Policy on Prevention of Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder and Internal Complaints Committee has also been set up to redress complaints regarding sexual harassment. During the year, no complaint with allegations of sexual harassment was received by the Company. 24. REPORTING OF FRAUDS There have been no instances of fraud reported by the Statutory Auditors under Section 143(12) of the Act and Rules framed thereunder, either to the Company or to the Central Government. 25. STATUTORY AUDITORS Pursuant to provisions of Sect ion 139 of the Act and rules framed thereunder, M/s. Price Waterhouse, Chartered Accountants, (Firm Registration No. 301112E) were re-appointed as Statutory Auditors of the Company for a term of five years to hold office from the conclusion of Forty first (41st ) Annual General Meeting until the conclusion of the Forty sixth (46th) Annual General Meeting of the Company to be held in the calendar year 2020, subject to ratification of their appointment by Members at every subsequent Annual General Meeting. A certificate from Statutory Auditors has been received to the effect that their appointment as Statutory Auditors of the Company, if ratified at the ensuing Annual General Meeting, would be according to the terms and conditions prescribed under Sections 139 and 141 of the Companies Act, 2013 and rules framed thereunder. The Board of Directors on recommendation of the Audit Committee recommends ratification of re-appointment of M/s. Price Waterhouse as the Statutory Auditors of the Company from the conclusion of 42nd Annual General Meeting until the conclusion of next Annual General Meeting. A resolution seeking ratification of their re-appointment, forms part of the Notice convening the 42nd Annual General Meeting and the same is recommended for consideration and approval of Members. 26. COST RECORDS AND COST AUDITORS In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors on the recommendation of the Audit Committee, have appointed M/s Dalwadi and Associates, Cost Accountants (Firm Registration No.000338) as its Cost Auditors to audit the cost records of the Company for the financial year 2016, for conducting the audit of the cost records maintained by the Company for the various Company’s products as mandated by the Central Government, pursuant to the Companies (Cost Records and Audit) Amendment Rules, 2014, and amendment thereof, at a remuneration as mentioned in the Notice convening the 42nd Annual General Meeting and subject to the approval of the Members on the remuneration to be paid to the Cost Auditor. A certificate has been received from the Cost Auditors to the effect that their appointment as Cost Auditors of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder. A resolution seeking Member’s approval for the remuneration payable to Cost Auditors forms part of the Notice of 42nd Annual General Meeting of the Company and the same is recommended for the consideration and approval of Members. The Company has filed the Cost Audit Report for financial year 2014 on June 26, 2015, which is within the time limit prescribed under The Companies (Cost Audit Report) Rules, 2011. 27. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Sandip Sheth & Associates, Practicing Company Secretaries (COP No. 4354), for conducting Secretarial Audit of the Company for the financial year ended on December 31, 2015. The Secretarial Audit Report is provided as Annexure-IX to this report. 28. AUDITORS REPORT There are no qualifications, reservations or adverse remarks made by M/s. Price Waterhouse, Chartered Accountants, Statutory Auditors, in their audit report and by M/s. Sandip Sheth &Associates, Practicing Company Secretaries, Secretarial Auditors in their secretarial audit report and therefore need not require any comments under section 134(3)(f) of the Act. 29. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING FINANCIAL POSITION OF THE COMPANY FROM THE END OF FINANCIAL YEAR AND TILL THE END OF THIS REPORT. There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of this Report. 30. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS As on date of this report, there are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and operations of the Company in future. 31. PARTICULARS OF EMPLOYEES Your Directors place on record their deep appreciation for the contribution made by the employees of the Company at all levels. The information on employees particulars as required under Section 197 (12) of the Act read with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. In terms of Section 136 of the Act, the Report and Financial Statements are being sent to the Members and others entitled thereto, excluding aforesaid Annexure. The said information is available for inspection by the Members at the Registered Office of the Company as per the details mentioned in the Notice of 42nd Annual General Meeting, on any working day (except Saturday, Sunday and Public Holidays) up to the date of the 42nd Annual General Meeting. Any Member interested in obtaining a copy of the same may write to the Company Secretary of the Company. 32. ACKNOWLEDGEMENT We wish to place on record our gratitude for the contributions, co-operation and confidence reposed in the Board of Directors by SPGPrints B.V. and other shareholders, our valued employees and customers, our bankers, suppliers and other stakeholders. For and on behalf of Board of Directors Sd/- K.M.Thanawalla Chairman DIN: 00201749 Place : Mumbai Date : February 16, 2016 |