DIRECTORS' REPORT Your Directors are pleased to present the 11th Annual Report and the Audited Accounts of the Company for the financial year ended 31st March 2015. REVIEW OF OPERATIONS During the year under review the Company's total turnover was Rs. 62,571.40 Lakhs when compared to Rs.70,136.21 Lakhs in 2013-14. Profit before tax was Rs. 583.80 lakhs as against Rs. 1717.65 Lakhs in the previous year. Building Materials During the year, this division has achieved a total turnover of Rs. 41,786.10 Lakhs and earned a net profit of Rs. 80.47 Lakhs against Rs. 37,000.56 Lakhs and Rs. 279.65 Lakhs respectively in 2013-14. This division improved sales revenue in 2014-15 considerably by 12.9% although recessionary trends prevailed in all commercial/industrial sectors and continued pressure on selling price including steel and construction related industries due to economic slowdown in 2014-15. The Company is planning to expand the business operation further beyond the existing range by catering to a wide customer base and increasing various product portfolios. As a result, the Company, during the year 2014-15, has entered into a new dealership arrangement with DANUBE for marketing the international standard sanitary products & CP fittings and opened new showrooms for distribution of DANUBE products at Eranakulam, Kerala and Chennai, Tamil Nadu. Commercial Vehicles The total turnover of this division was Rs. 12,630.39 Lakhs for the year 2014-15 as against Rs. 24,642.23 Lakhs in the previous year. During the year under review, this division has posted a net loss of Rs. 92.62 Lakhs as compared to net profit of Rs. 332.62 Lakhs in the previous year. A steep decline in sales of commercial vehicles was due to various factors such as economic slowdown, lower demand, increase in competition, interest rates etc, as a result of which the performance of this division has significantly affected for the past two years. Moreover, the operational expenditure for running commercial vehicles division especially maintenance of showrooms and service stations are high due to increase in both administrative as well as interest costs, which could not sustain the adequate profit margin. Under the current scenario and tough market condition during 2014-15, the Company, as part of re-structuring and re-organizing of trading and manufacturing activities and to facilitate the future growth of business, has discontinued its commercial vehicle operation, surrendered the trade license and decided not to renew the dealership agreement with Tata Motors Ltd, as it was not yielding expected return on investments. Governor Services The division continued to perform well and the revenue of the division during the year under review was Rs. 2710.37 Lakhs as compared to Rs. 2478.88 Lakhs in the previous year and the net profit was Rs. 439.27 Lakhs when compared to Rs. 423.20 Lakhs in the previous year. During the year, this division has executed two major Retrofit orders under Micronet platform for Rashtriya Chemical & Fertilizers and GMR Energy. This division has also signed as authorized distributor for SIEMENS for handling their large Motor drives including HT in Tamilnadu in the year 2014-15. Speciality Chemicals The Company's Speciality Chemicals division has posted a total turnover of Rs. 486.08 Lakhs and earned a net profit of Rs.137.71 Lakhs this year as compared to Rs.345.53 Lakhs and Rs. 74.23 Lakhs respectively in 2013-14. During the year, this division has bagged new contracts valuing Rs.53.58 Lakhs from power generation corporations such as NLC, APGENCO for supply of CWT (Cooling Water Treatment) chemicals and boiler chemicals. A contract for supply of CWT to ONGC was completed and new orders were also obtained during the year 2014-15. This division has produced and sold 321.45 MT of CWT chemicals valuing Rs. 468.43 Lakhs this year which represents 68% increase in sales of CWT as compared to previous year. Drums During the year, the drums manufacturing division has posted a total turnover of Rs. 3638.67 Lakhs as compared to Rs. 3097.06 Lakhs in 2013-14. The net profit of this division was Rs. 89.11 Lakhs as against Rs. 237.10 Lakhs in the previous year. The decline in profit was due to reduction in selling price on tough competition. This division has executed a total sales volume of 2,82,412 barrels during 2014-15 as compared to 2,31,309 barrels in 2013-14. This division has bagged new orders from Kothari Petrochemicals, Tectyl Oil India, Jain irrigation and BPCL. Boat Building This division has not posted any operational income during the year 2014-15 due to lack of new orders for boat building from BEML. There is a delay in receipt of new orders from Indian Army. This division expects new orders from BEML in the ensuing financial years for which discussions with the customers are going on to bag the contract. DIVIDEND Your directors have recommended a dividend of Re.0.60 per equity share (6% on equity capital of the Company) for the financial year 2014-15. Total dividend is Rs. 237.43 Lakhs and dividend distribution tax of Rs.48 lakhs. The dividend shall be paid to the eligible shareholders whose names appear in the Register of Members as on the record date fixed by the Board. Disclosures under the Companies Act, 2013 Pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, the Company has complied with requirements and the details of which are disclosed hereunder. 1. Extract of Annual Return The details forming part of the extract of the Annual Return is enclosed in Annexure-I. 2. Number of Board Meetings The Board of Directors met 6 (six) times in the year 2014-15. The details of the Board meetings and the attendance of the Directors are given in the corporate governance report. 3. Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors report that : a) in the preparation of the Annual Accounts, 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 them consistently and made judgments and estimates which 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 & loss account of the Company for 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 preventing and detecting fraud and other irregularities. d) they have prepared the annual accounts on a going concern basis. e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 4. Statement on declaration given by Independent Directors The Company maintains the requisite number of Independent Directors as required under Section 149(4) of the Companies Act, 2013 and Clause 49 of the Listing agreement. The Independent Directors have submitted the declaration of independence, as required under Section 149(7) of the Companies Act, 2013, confirming that they meet the criteria of independence as provided in sub-Section(6) of the Act. 5. Remuneration Policy The Company follows a policy on remuneration of Directors, Key Managerial Personnel and Senior Management employees including criteria for determining qualification, positive attributes and independence of Directors. The Company has framed a new employee manual and policy which primarily focuses on all the employees of management and non-management cadre to provide a competitive and attractive remuneration and to retain, protect and develop competent personnel. The pay package shall be based on the roles and responsibilities and shall consist in addition to the fixed remuneration motivating payments like performance pay, leave travel allowance, education allowance, special allowance, medical reimbursement, personal accident Insurance etc. The remuneration payable to Executive Directors and sitting fee payable to Non-Executive Directors shall be decided by the Board from time to time and it shall be subject to the provisions of Companies Act, 2013. 6. Explanation of Board on qualification of statutory auditors & secretarial auditor, if any During the year ended 31st March 2015, there is no qualification, reservation or adverse remark made by the statutory auditor and by the practicing Company secretary in their respective reports. 7. Particulars of loans, guarantees or investments given or made by the Company During the year 2014-15, the Company has not given any loan to any person/other body corporate or given any guarantee or provided security in connection with a loan to any person/body corporate or made any investments in other body corporate. 8. Related Party Transactions The related party transactions entered into with related parties are on arm's length basis and are in compliance with the applicable provisions of the Companies Act and the listing agreement. There are no materially significant related party transactions made by the Company with promoters, directors or key managerial personnel etc which may have potential conflict of interest of the Company at large. The related party transactions are placed before the Audit committee and the Board specifying the nature, value and terms and conditions of the transactions. In principal approval is obtained for the transactions which are foreseen and repetitive in nature. 9. Amount transferred or proposed to transfer to any reserves The Company has not transferred or proposed to transfer any amount to any reserves as there is no necessity to transfer such amount as required under the Companies Act, 2013. 10. Material changes and commitments, if any, affecting the financial position of the Company There are no material changes and commitments affecting the financial position of the Company between the end of the financial year 31st March 2015 and the date of this report. 11. The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo The particulars required under Section 134 of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure II, which forms part of this Report. 12. Risk Management Committee The Company has constituted a Risk Management Committee which comprises of two Directors, finance head and operation heads as members for implementing, monitoring and reviewing of risk management plan periodically. The Committee constituted by the Company has been delegated with powers to oversee the risk management process, risk identification, effective implementation of mitigation plan and risk reporting. 13. Composition of Audit Committee The Board has constituted an Independent Audit Committee which comprises of Mr.B.Narendran, as Chairman and Mr.Sunil Deshmukh, Mr.Harish Chandra Chawla, Mrs.Sashikala Srikanth and Mr.Devidas Mali as members. More details on the Audit Committee are given in the corporate governance report. 14. Evaluation of Board Pursuant to the provisions of Section 134 of the Companies Act, 2013 read with Schedule IV of the Act and also in line with Clause 49 of the Listing agreement, the Independent Directors of the Company without the attendance of Non-Independent Directors and members of management met on 24.03.2015 and reviewed the performance of non-independent Directors and the Board as a whole. They also reviewed the performance of the Chairperson. The evaluation of the Board was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, competencies, duties and responsibilities, attendance, valuable contribution given to the best of Company's progress etc. 15. Corporate Social Responsibility (CSR) Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has to spend at least 2% of last three years of its average net profit for carrying out necessary CSR activities as referred under Schedule VII of the Act. The Company has constituted a CSR Committee and framed a policy for implementation of CSR initiatives, which has been posted on the Company's website. During the year, the Company has donated a new TATA Winger vehicle to Lions Club, SPIC Nagar, Tuticorin to enable them to carry out mobile heath service in rural areas. The Company is also in the process of forming a new Company under Section 8 of the Companies Act, 2013 by participating with other likeminded persons/ companies to carry out necessary CSR activities in the ensuing years. A report on CSR activities forming part of this report is attached herewith as separate Annexure III. 16. Vigil Mechanism Pursuant to the provisions of Section 177 (9) of the Companies Act, 1956 read with the Rule 7 of the Companies (Meetings of Board and its powers) Rules, 2014 and Clasue 49 of the Listing agreement, the Company has established a vigil mechanism for its directors and employees to report their grievances or genuine concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct. In order to avoid fraudulent activities and also to ensure a corruption free work environment, a detailed Whistle Blower policy has been laid down by the Board, which has been posted on the Company's website. 17. Internal Complaints Committee The Company has constituted an Internal Complaints Committee to prevent and prohibit from any sexual harassment at workplace and provide redressal for woman employees as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Committee constituted by the Board has laid down a policy under the aforesaid Act and acts in accordance with the terms of reference framed therewith. 18. The particulars required under Section 197(12) read with Rule 5(1),(2) & (3) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 The particulars required under Section 197(12) read with Rule 5(1),(2) & (3) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 are given in Annexure IV & V, which form part of this Report. 19. Corporate Governance Report A Report on Corporate Governance as stipulated under Clause 49 of the Listing agreement forms part of this Annual Report. The requisite certificate from the practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is attached to this Report. 20. Management Discussion & Analysis Report Management Discussion & Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is attached along with this report. 21. Directors Mr.Dhananjay N Mungale resigned from the Board on 11.08.2014. The Board appreciated the valuable advice and guidance given by Mr.Dhananjay N Mungale during his tenure as Director. Mr.Sunil Deshmukh, Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself, for re-election. At the Board meeting held on 11.08.2014, Mrs.Sashikala Srikanth was appointed as Independent Director. As per the provisions of Sec.149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, she will hold office for a period of 5 years w.e.f 11.08.2014 and shall not retire by rotation as the relevant provisions of Section 152 of the said Act are not applicable. The aforesaid Independent Director has given declaration to the Company as required under Section 149(7) of the Companies Act, 2013. A brief profile of Mrs.Sashikala Srikanth is given in the notice to the shareholders. Pursuant to the provisions of Section 150 of the said Act, the appointment of above director shall be placed for approval of shareholders at the ensuing Annual General Meeting as required under Section 150 of the said Act. 22. Auditors a) Statutory Auditors At the 10th AGM, M/s.CNGSN & Associates LLP, Chartered Accountants, were appointed as statutory auditors of the Company for a period of 3 years and they will hold office until the conclusion of 13th AGM as per Section 139 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules 2014. The Board of Directors, based on the recommendation of Audit Committee, have appointed and fixed the remuneration payable to the aforesaid statutory auditors for the financial year 2015-16. Pursuant to the provisions of above referred Section, the said appointment shall be subject to ratification of the shareholders at the ensuing Annual General Meeting. The aforesaid auditors have consented to act as statutory auditors and issued a confirmation certifying their eligibility as required under Section 141 of the Companies Act, 2013 read with the Companies (Accounts) Rules 2014. b) Cost Auditor and Cost Audit Report The Company appointed Mr.J.Karthikeyan, Cost Accountant as Cost Auditor of the Company for the financial year 2014-15 to carry out necessary cost audit in respect of manufacturing activities of the Company such as speciality chemicals, drums, governor services etc. Although the appointment of Cost Auditor for the financial year 2014-15 is not applicable, the Company continued to utilize his service to carry out necessary cost audit as part of implementation of good corporate governance. Pursuant to Section 148 of the Companies Act, 2013 read with the amended rules thereof, the Board of Directors on recommendation of the Audit Committee appointed MrJ.Karthikeyan, Cost accountant, as Cost Auditor of the Company for the financial year 2015-16 and recommended their remuneration to the shareholders for their ratification at the ensuing Annual General Meeting. c) Secretarial Auditor The Company has appointed Mr.R.Kannan, Practicing Company Secretary to carry out necessary secretarial audit as required under Section 204 of the Companies Act, 2013. The report of the secretarial auditor is annexed to this report as Annexure VI. d) Internal Auditor M/s.M.K.Dandeker & Co, Chartered Accountants, Chennai were appointed as Internal Auditors for a period of 2 years w.e.f 01.06.2013 to conduct necessary internal audit of the functions and activities of the Company. In order to comply with provisions of Section 138 of the Companies Act, 2013 read with the Rule 13 of the Companies (Accounts) Rules, 2014, the Company continued to utilize the service of the Internal Auditors for which the Board has approved for renewal of appointment for the further period of 1 year with effect from 01.07.2015. 23. Internal Control System A strong internal control system is formulated in the Company to ensure reliability of financial reporting, timely feedback on the achievement of operational and strategic goals, compliance with policies, procedures, rules and regulations safeguarding of assets and economical and efficient use of resources. The internal auditors appointed by the Company continuously monitor the effectiveness of internal controls. The scope of internal audit activity is well defined in the letter of appointment of internal auditors. The audit committee met regularly and reviewed the reports of internal audit submitted by the internal auditor. 24. Fixed Deposit The Company has not invited or accepted any deposits during the year. 25. Dematerialization of Equity Shares As at 31st March 2015, 3,81,53,626 equity shares representing 96.42% of the paid-up share capital of the Company have been dematerialized. The shareholders holding shares in physical form are advised to dematerialize their shares to avoid the risks associated with holding the share certificates in physical form. 26. Subsidiary & Associate Companies In terms of general permission granted by the Central Government earlier, vide its circular dated 08.02.2011 and also pursuant to Section 136 of the Companies Act, 2013 which has given exemption from attaching the annual reports of subsidiary Company along with the annual report of the Company, the copies of balance sheet, profit and loss account, report of Directors & Auditors and other related information of M/s.South India House Estates & Properties Ltd, M/s.Wilson Cables Private Ltd (Subsidiary Companies) and M/s.Edac Automation Ltd (Associate Company) are not attached with this annual report. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of Subsidiaries Companies and Associate Company (in Form AOC-1) is attached to the Financial Statement. The Company shall make available the annual accounts of the aforesaid subsidiary Companies to the shareholders of the Company upon their request. The annual accounts of the said subsidiary Companies shall also be kept available for inspection by any member at the Registered/ Corporate office of the Company. 27. Consolidated Financial Statements In accordance with Accounting Standard 21 of Institute of Chartered Accountants of India and Clause 32 of the Listing Agreement, the consolidated financial statements are prepared by the Company. The audited consolidated financial statements together with auditors' report for the financial year ended 31st March 2015 are attached with this annual report. Acknowledgement Your Directors take this opportunity to express their gratitude to Company's Bankers, NBFCs, Customers, Suppliers, Govt. Departments and other business associates for their unstinted support extended to the Company. Your Directors wish to place on record, their appreciation of the efficient and dedicated services rendered by the employees at all levels across the Company. We are sincerely grateful to all the shareholders for their confidence, faith and support in the endeavours of the Company. For and on behalf of the Board Ashwin C Muthiah Chairman Date: 31.07. 2015 Place: Chennai
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