DIRECTORS’ REPORT Dear Members, Your Directors have pleasure in presenting the 25th Annual Report and the Audited Financial Statements for the financial year ended March 31, 2016. State of the Company's Affairs: During the period under review, the Company has achieved revenue of Rs.437,45,09,469/- and net profit of Rs.56,35,90,933/- on a standalone basis. During the same period, the Company has achieved revenue of Rs.436,69,69,605/- and net profit of Rs.56,26,18,883/- on a consolidated basis. Fund Raising Equity - Qualified Institutional Placement During the year under review, your Company successfully placed 47,86,450 equity shares through the process of Qualified Institutional Placement (QIP) and raised an amount of Rs. 64,99,99,910/-. The deployment of funds for the projects specified is yet to happen fully. Consequent to the above, the paid up value of the equity share capital of the Company stands increased from Rs. 16.36 crores to Rs. 17.32 crores. Debt Secured Non-Convertible Debentures (NCD) During the year under review, your Company issued Secured Non-Convertible Debentures (NCD) to the tune of Rs. 50.00 Crores. Listing of Equity Shares: The Company's Equity shares are listed at the following Stock Exchanges: (i) BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001; and (I) National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051. The Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2015-16. Awards Your Company was awarded for outstanding achievements in Business Excellence for the year 2014-15 from ELCINA Electronic Industries Association of India, New Delhi. Subsidiary Companies As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies/ Associate Company in Form AOC-1 is enclosed as Annexure-1 to this Report. Performance and financial position of the Subsidiaries, Associate and Joint Venture Companies: Report on the performance and financial position of the subsidiary and associate company of the Company is prepared and same is enclosed as Annexure -1 to this Report. Consolidated Financial Statements Consolidated financial statements have been prepared by the Company's Management in accordance with the requirements of Accounting Standards 21 issued by Institute of Chartered Accountants of India (ICAI) and as per the provisions of Companies Act, 2013. The audited consolidated financial statement is provided in the Annual Report. Number of Meetings of the Board of Directors During the year ended March 31, 2016, seven Board Meetings were held. The dates on which the Board meetings were held are April 02, 2015, April 30, 2015, July 30, 2015, October 29, 2015, December 04, 2015, December 26, 2015, and January 29, 2016. Management Discussion and Analysis The Management Discussion and Analysis forms an integral part of this Report and gives details of the overall industry structure, developments, performance and state of affairs of the Company and other material developments during the financial year. Directors Responsibility Statement Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms: I) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed; ii) that the Directors 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 as at March 31, 2016 and of Profit and Loss Account of the Company for that period; iii) that the Directors have 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; iv) that the Directors have prepared the Annual Accounts for the Financial Year ended March 31, 2016 on a going concern basis; v) that the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and vi) that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Statement on Declaration given by Independent Directors under Sub-Section (6) of Section 149 The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6). Nomination and Remuneration Committee The Nomination and Remuneration Committee consists of the following Directors namely Dr. G.Sabarinathan, Chairman, Dr.Shiban K Koul, Mr. T.Ramachandru, IAS. Brief description of terms of reference: a. Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees; b. Formulation of criteria for evaluation of Independent Directors and the Board. c. Devising a policy on Board diversity. d. Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board their appointment and removal. Nomination and Remuneration policy The objectives of the Policy 1. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration. 2. To determine remuneration based on the Company's size and financial position and trends and practices on remuneration prevailing in peer companies. 3. To carry out evaluation of the performance of Directors. 4. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage. Particulars of Loans, Guarantees or Securities or Investments under Section 186 Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in Note 2.11, 2.34 and 2.35 of the Notes to the financial statements. Particulars of Contracts or Arrangements with Related Parties All transactions entered by the Company with Related Parties were in the ordinary course of business and at Arm's Length pricing basis. The audit committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the audit committee and the Board of Directors. Your Directors draw attention of the members to Note 2.35 to the financial statement which sets out related party disclosures. Transfer of Amount to Reserves Your Directors have proposed to transfer Rs.600 lacs to the General Reserve for the Financial Year ended 31st March, 2016. Dividend The Board of Directors of the Company at its meeting held on April 29, 2016 have declared Final Dividend @ 60% on the paid up Equity share capital of the Company i.e., Rs.1.20 per Equity share on face value of Rs.2 each. Extracts of Annual Return Extract of Annual Return of the Company is annexed herewith as Annexure - 2 to this Report. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed under the Act, are provided in Annexure - 3 to this Report. Corporate Social Responsibility (CSR) initiatives Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your company approved a Policy on CSR and the policy was hosted on the website of the Company. The Board of Directors of the Company have constituted Corporate Social Responsibility Committee consisting of following persons namely Mrs. C.Prameelamma, Chairman, Dr.Shiban K Koul, and Mr. M. V. Reddy, as Members. Report on CSR activities is enclosed as Annexure - 4 to this Report. Mechanism for Evaluation of Board Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors. Directors and Key Managerial Personnel During the year under review, Mr.J.Venkatdas, Independent Director and Mr.Atim Kabra and Mr.U.K.Kalyanaramudu, Non-Executive Directors stepped down from the Board. The Board wishes to place on record its deep sense of appreciation for the valuable contribution made by them to the Board and the Company during their tenure as Directors. Mrs. C.Prameelamma and Mr. M.V. Reddy, Directors of the Company retire by rotation and being eligible offer themselves for re-appointment. Prof. Arun Kumar Tiwari, Mr. Vadlamani Venkata Rama Sastry and Mr. Buddharaju Lakshmi Narayana Raju were appointed as Additional Directors (Independent) on the Board with effect from January 29, 2016. Deposits The Company has not accepted any deposits from the public in terms of Section 73 of the Companies Act, 2013. Statutory Auditors The Shareholders of the Company at the Annual General Meeting held on July 30, 2015 have appointed M/s. Amar & Raju, Chartered Accountants as Statutory Auditors of the Company. The term of M/s. Amar & Raju, Chartered Accountants, Statutory Auditors shall hold the office from the conclusion of this Annual General Meeting until the conclusion of the next Annual general Meeting of the Company. It is proposed to re-appoint them as Statutory Auditors of the Company for a period of one consecutive year. The members are requested to consider their re-appointment and authorize the Board of Directors to fix their remuneration. M/s. Amar & Raju, Chartered Accountants (ICAI Registration No: 000092S) have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 139 of the Companies Act, 2013. Auditors Report M/s. Amar & Raju, Chartered Accountants (ICAI Registration No: 000092S) has issued Auditors Report for the Financial Year ended 31st March, 2016 and there are no qualifications in Auditors' Report. Internal Auditors The Board of Directors of the Company have appointed M/s. PricewaterhouseCoopers Private Limited, to conduct Internal Audit of the Company for the Financial Year ended 31st March, 2016. Audit Committee Audit Committee consists of the following Directors namely Dr. G. Sabarinathan, Chairman, Dr.Shiban K Koul, and Mr. S.Gurunatha Reddy as members of the committee. Except Mr.S.Gurunatha Reddy, all the members of the Audit Committee are Independent Directors. There is no such incidence where Board has not accepted the recommendation of the Audit Committee during the year under review. Corporate Governance A separate report on Corporate Governance is annexed as part of the Annual Report along with the Auditor's Certificate on its compliance. Vigil Mechanism The Board of Directors have adopted Whistle Blower Policy. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. All permanent employees of the Company are covered under the Whistle Blower Policy. A mechanism has been established for employees to report concerns about unethical behaviour, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairman of the audit committee in exceptional cases. Secretarial Auditor Report As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed Mr. L. Dhanamjay Reddy, Practising Company Secretary (C.PNo: 3752) as Secretarial Auditor to conduct Secretarial audit of the company for the Financial year ended on March 31, 2016. Secretarial Audit Report issued by Mr. L. Dhanamjay Reddy, Practising Company Secretary in form MR-3 is enclosed as Annexure - 5 to this Annual Report. There were no qualifications, reservation or adverse remarks in the Secretarial Audit Report of the Company. Statement of particulars of appointment and remuneration of managerial personnel The Statement of particulars of Appointment and Remuneration of Managerial personnel as per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - 6 to this Annual Report. Insurance All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured. Internal Financial Controls The company has in place adequate internal financial controls with reference to financial statements. The Company maintains all its records in SAP System and the work flow and approvals are routed through SAP Change in the nature of business There is no change in the nature of business of the Company. The 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 No Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. Material changes and commitments There are no Material changes and commitments in the business operations of the Company from the financial year ended 31st March, 2016 to the date of signing of the Director's Report. Human Resources The Industrial relations of the Company continued to be harmonious during the year under review. Policy on Sexual Harassment The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act, 2013. During the financial year ended 31st March, 2016, the Company has not received any Complaints pertaining to Sexual Harassment. Acknowledgments: Your Directors express their gratitude to all investors, customers, vendors, banks and regulatory and the State and the Central governmental authorities / departments for their continued support. For and on behalf of the Board of Directors Mr. B. Malla Reddy Managing Director DIN:00003154 Mr. P. A. Chitrakar COO DIN: 00003213 Place: Hyderabad Date: 28.05.2016 |