BOARDS' REPORT Dear Shareholder, Your Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2016. Review of Operations The year 2015-16 was a year of moderate growth for the company whereas most of the industrial sectors have shown moderate to low growth for the year. Company could reap benefits of its initiatives pursued during the previous year. Active lead measures are taken up to ensure a sustainable profitable future. Your company continues to build references and credentials by supplying custom built large sized gearboxes to several key customers. The previous year saw your Company make a breakthrough in the defense sector and continue to consolidate the strong position in railway and metro segment. Focus on order execution ensured increase in production by 14% and decrease in cost of Operations. This in turn helped in providing better service to our customers. The revenue during the year was at Rs. 162.42 Crores against Rs. 152.00 Crores in the previous year with 7% growth. The Company grew its order booking also by 11% in difficult market situation. This growth in orders booked came largely from the initiatives mentioned above as well as the measures taken last year to expand our presence in the market. The Profit before Tax for the current year amounts to Rs. 23.46 Crores as compared to Rs. 13.11 Crores last year. The profit for the year improved due to better execution, pricing and control on costs. Management Discussion and Analysis The Management Discussion and Analysis, which forms part of this report, sets out an analysis of the business, the industrial scenario and the performance of the Company. Dividend The Company declared an interim dividend of Rs. 0.50/- per equity share of Face Value Rs. 1/- in January, 2016. (PY Rs. 0.50/- per share). The same has been treated as final dividend. Directors Mr V Venkiteswaran was appointed as an Independent Director. He holds office up to the date of the ensuing Annual General Meeting. The Board recommends his re-appointment as an Independent Director under section 149 of the Companies Act, 2013 for a term of one year viz., from the date of 43rd Annual General Meeting (2016) till the date of the 44th Annual General Meeting (2017). Notice along with the deposit in terms of Section 160 of the Companies Act, 2013 has been received from a Member proposing the candidature of Mr. V Venkiteswaran for appointment as an Independent Director of the Company. Mr. M M Murugappan will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act, 2013 and being eligible, he offers himself for re-appointment. The Board takes pleasure in recommending the appointment of Mr. M M Murugappan as Director and Mr. V Venkiteswaran as an Independent Director of the Company at the forthcoming Annual General Meeting. Key Managerial Personnel Mr. Krishna Ramnath, resigned as Chief Financial Officer with effect from 30 May 2015 as he wishes to pursue other interests. The Board wishes to place on record valuable contribution made by Mr. Krishna Ramnath during his tenure with the Company. During the year, Mr. Rajiv Narayanamoorthy was appointed as Chief Executive Officer and Mr. Saurabh Jain was appointed as Chief Financial Officer of the Company. Mr. Rajiv Narayanamoorty, Chief Executive Officer, Mr. Saurabh Jain, Chief Financial Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013. Internal Control System and their Adequacy The Company has an Internal Control System, commensurate with its size, scale and complexity of its operations. Audit Committee reviews internal audit reports and oversees the internal control system of the Company. Corporate Governance Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report. Human Resources The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial. The Company had 555 permanent employees on its rolls, as on 31 March 2016. Corporate Social Responsibility (CSR) As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program the company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure A. Annual Return The Details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure C. Meetings A Calendar of Meetings is prepared and circulated in advance to the Directors. During the Financial Year 2015-16 Six Board Meetings and Five Audit Committee Meetings were held. The details of which are given in the Corporate Governance Report. Directors Responsibility Statement Directors Responsibility Statement is annexed herewith as Annexure D. Remuneration Policy The Board has on recommendation of Nomination & Remuneration Committee formed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is annexed herewith as Annexure E. Related Party Transactions All related party transactions that were entered during the year under review were on an arm's length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the company at large. Necessary disclosures as required under Accounting Standard (AS 18) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the company's website, <http://www.shanthigears.com/wp-content/> themes/shanthi/pdf/Policy-on-Related-Party-Transactions.pdf. None of the Directors had any pecuniary relationships or transactions visa-vis the Company. Board Evaluation The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Vigil Mechanism/ Whistle Blower Policy The details of vigil mechanism/Whistle Blower policy is given in the Corporate Governance Report. Particulars of Employees The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure B. The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard. Conservation of energy, Technology absorption and foreign exchange earnings and outgo Conservation of energy, Technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure F. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has in place an anti-sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The company has not received any compliant about sexual harassment during the year 2015-16. Auditors The Members appointed M/s Deloitte Haskins & Sells, the Statutory Auditors of the Company for a period of 4 years from the conclusion of 41st AGM (2014) till the conclusion of 45th AGM (2018). A resolution seeking ratification of the appointment of Statutory Auditors and remuneration payable to them for the financial year 2016-17 is included in the AGM Notice dated 27 April 2016. Mr. B. Venkateswar, was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2017. A resolution seeking Members' ratification of the Remuneration payable to Cost Auditor is included in the AGM Notice dated 27 April 2016. The Cost Audit report will be filed within the stipulated period. Mr. M.R.L Narasimha, Practicing Company Secretary was appointed to undertake the Secretarial Audit of the Company. The Report of Secretarial Audit is annexed herewith as Annexure G. The Directors thank all Customers, Vendors, Banks, State Government and Investors for their continued support to your Company's performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year. On behalf of the Board M M Murugappan Chairman Date : 27 April 2016 Place : Coimbatore |