BOARD'S REPORT 1. Your Directors have pleasure in presenting the Twenty Ninth Annual Report on the business and operations of the Company and the Audited Accounts for the Financial Year ended 31st March 2015. 2. DIVIDEND: For the year under review, your Directors have recommended a dividend of Rs.1.50/- per share (i.e. 15%) on Company's paid up equity share capital comprising of 38,13,400 equity shares of Rs. 10/- each. Thus, the total dividend outgo for the current fiscal will amount to Rs.57,20,100/-plus dividend distribution tax of Rs.11,70,904/-. 3. OPERATIONAL HIGHLIGHTS AND PROSPECTS: The Company earned operational income of Rs. 10,587.20 lacs compared to Rs. Rs. 10043.41 lacs for the previous year, depicting a growth of 5.41%. The other income is Rs. 301.18 lacs compared to Rs. 227.17 lacs in the previous year. The total revenue for the year is Rs. 10,888.38 lacs against Rs. 10,302.47 lacs in the previous year. Profit after tax is Rs. 580.99 lacs as compared to previous year figure of Rs. 418.35 lacs, witness a spur of 38.87%. During the period under review, your company was able to export transformers valuing Rs.51.42 crores which is higher then previous years export sales of Rs.47.54 crores. The Company has concentrated on catering needs of renewable energy sector including solar and wind energy in local market wherein the Company has been enjoying commendable position being one of the top companies in India supplying transformers for renewable energy. PROSPECTS: With the restoration of tax benefits linked to the wind energy and subsidies provided to solar power generation, it is envisaged that this will boost Company's domestic sales in coming year. The Company also looks forward new business from local private sectors but it largely depends on how the new power projects will take place under the initiatives taken by the Central Government. 4. ACCREDITATION: Your Company has been authorized by the Bureau of Energy Efficiency (BEE) for using three (4) Star Rating labels on its Distribution Transformers with the capacity of 25KVA/63KVA/100KVA and 200KVA, respectively. The Company is also holding ISO 9001:2000 Certificate since September, 2004 for quality systems in relation to its factory located at village Bil, District Vadodara in the State of Gujarat. 5. CREDIT FACILITIES The Company has been optimally utilizing its fund based and non fund based working capital requirements as tied up with Bank of Baroda. During the year under review, the Company was comfortable in meeting its financial requirements. Effective financial measures have been continued to reduce cost of interest and bank charges. 6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year ended on 31/03/2008 is due for remittance on or before 30/09/2015 to the Investor Education and Protection Fund established by the Central Government. 7. SHARE CAPITAL The paid up Equity Share Capital as on March 31, 2015 was Rs. 3,81,34,000/-. During the year under review the Company has not issued any shares or any convertible instruments. 8. MATERIAL CHANGES No material changes and commitments affecting the financial position of the Company occurred between the ends of the financial year to which this financial statement relate on the date of this report. 9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure I and is attached to this report. 10. RISK MANAGEMENT The Company has framed a sound Risk Management Policy to identify and evaluate business risks and opportunities and the same has become integral part of Company's day to day operations. The key business risks identified by the Company are as follows viz. Industry Risk, Management and Operations Risk, Market Risk, Government Policy risk, Liquidity risk, and Systems risk. The Company has in place adequate mitigation plans for the aforesaid risks. 11. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES Even though the provisions of Companies Act, 2013 regarding Corporate Social Responsibility were not attracted to the Company for the financial year 2014-15, yet the Company has been, over the years, pursuing as part of its corporate philosophy, CSR activities voluntarily in the areas of education, livelihood, health, water and sanitation. 12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the furnishing above information is not applicable. 13. RELATED PARTY TRANSACTIONS Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexure-II. The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company at www.shilchargroup.com under investors/ policy documents/Related Party Policy link. 14. DIRECTORS Pursuant to the provisions of the section 161(1) of the Companies Act, 2013 read with the Articles of Association of the company, Mrs. Reshma Patel is appointed as Additional Director in the category of Independent Director with effect from 27/03/ 2015 and she shall hold office only up to the date of this Annual General Meeting and being eligible, it is proposed to make her appointment as regular director of the Company, not liable to retire by rotation. Mr. Ashesh Shah, one of the promoters Director submitted his resignation from the Board of Directors of the Company which came into effect from 16/05/2015. Board has placed on record its appreciation for the valuable contribution made by Mr. Ashesh Shah during his tenure of office. In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. Jitendra C. Shah, non-executive Chairman retire by rotation and he is eligible for re-appointment. 14.1 BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report, attached herewith. 14.2 REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report, attached herewith. 14.3 MEETINGS A calendar of Meetings is prepared and circulated in advance to the Directors. During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. The required particulars of various Committees are stated in the Corporate Governance Report, attached herewith. 14.4 DECLARATION OF INDEPENDENT DIRECTORS The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. 15. AUDIT COMMITTEE AND VIGIL MECHANISM The composition and other particulars of Audit Committee are provided in the Corporate Governance Report, attached herewith. In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.shilchargroup.com under investors/policy documents/Vigil Mechanism Policy link. 16. DIRECTORS RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:— (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) 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 at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) 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. 17. ANNUAL RETURN The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure III and the same is attached to this Report. 18. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company does not have any Subsidiary, Joint venture or Associate Company. 19. DEPOSITS The Company has neither accepted nor renewed any deposits during the year under review. 20. AUDITORS 20.1 STATUTORY AUDITORS The Company's Auditors M/s. Naresh & Co, Chartered Accountants, Vadodara who retired at the ensuring Annual General Meeting of the Company is eligible for reappointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. 20.2 SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/S. H. M. Mehta & Associates, a Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure IV". 20.3 INTERNAL AUDITORS M/s.C G Pradhan & Co, Chartered Accountants performs the duties of internal auditors of the Company and their report is reviewed by the audit committee from time to time. 21. OBSERVATION OF AUDITORS There is no qualifications, reservations or adverse remarks made by the either by the Auditors or by the Practicing Company Secretary in their respective reports. 22. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company. The Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business. 23. SHARES a. BUY BACK OF SECURITIES The Company has not bought back any of its securities during the year under review. b. SWEAT EQUITY The Company has not issued any Sweat Equity Shares during the year under review. c. BONUS SHARES No Bonus Shares were issued during the year under review. d. EMPLOYEES STOCK OPTION PLAN The Company has not provided any Stock Option Scheme to the employees. 24. CORPORATE GOVERNANCE: As per Clause 49 of the Listing Agreement with Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report. 25. MANAGEMENT DISCUSSION AND ANALYSIS: The Management Discussion and Analysis Report is appended as Annexure-V to this Report. 26. PARTICULARS OF EMPLOYEES: The information required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of managerial personnel) Rules, 2014 as amended, has been furnished herein below. Except remuneration paid to Mr. Alay Shah, Managing Director, the Company has NIL employees who were employed throughout the year and were in receipt of remuneration of more than Rs. 60.00 lacs per annum or employed for part of the year and were in receipt of remuneration of more than Rs. 5.00 lacs per month. (i) The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2014-15, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2014-15 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under: ii) The median remuneration of employees of the Company during the financial year was Rs 1.44 lacs. iii) In the financial year, there was an increase of 11.28 % in the median remuneration of employees; iv) There were 94 permanent employees on the rolls of Company as on March 31, 2015. v) Relationship between average increase in remuneration and company performance:- Net sales increased by 5.41% and Profit after Tax for the financial year ended March 31, 2015 increased by 38.88% whereas the increase in median remuneration was 11.28 %. vi) Comparison of Remuneration of the Key Managerial Personnel(s) against the performance of the Company: The total remuneration of Key Managerial Personnel increased by 40.18 % from Rs. 1.22 crore in 2013-14 to Rs. 1.71 crore in 2014-15 whereas the Profit before Tax increased by 29.77% to Rs. 8.97 crore in 2014-15 (Rs. 6.91 crore in 2013-14). vii) a) Variations in the market capitalisation of the Company : The market capitalisation as on March 31, 2015 was Rs. 38.97 crore (Rs. 21.03 crore as on March 31, 2014). b) Price Earnings ratio of the Company was Rs. 10.93 as at March 31, 2015 and was Rs. 5.82 as at March 31, 2014 c) Percentage increase over/ decrease in the market quotations of the shares of the company as compared to the rate at which the company came out with the last public offer in the year: The Company had come out with initial public offer (IPO) in 1995. The share price of the company was Rs. 50/- per share including Rs. 40/- towards premium per share of the face value of Rs. 10/- per share. Share price of the Company quoted on BSE on 31st March 2015 was Rs. 102.20 per share of Company. Percentage increase in the Net-worth of the Company was 20.86% as compared to previous year. viii) Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2014-15 was 6.83 % whereas the increase in the managerial remuneration for the same financial year was 40.18 %. ix) The key parameters for the variable component of remuneration availed by the directors are considered by the Board of Directors based on the recommendations of the Nomination and Compensation-cum-Remuneration Committee as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees. x) 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; and xi) Remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees. 27. COST AUDIT Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014 dated 31/12/2014, the activity of your Company falls under Non-regulated sectors and hence, maintenance of cost records as well as the cost audit, as the case may be, will be attracted from the financial year commencing on or after 1st April, 2015. 28. HUMAN RESOURCES: During the period under review, the personal and industrial relations with the employees remained cordial in all respects. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The Company recognizes talent and has judiciously followed the principle of rewarding performance. 29. ACKNOWLEDGEMENTS Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company. For and on behalf of the Board of Directors For SHILCHAR TECHNOLOGIES LIMITED JITENDRA SHAH CHAIRMAN Place: Bil, District Vadodara Date: 16/05/2015 |