Directors’ Report Your Directors have pleasure in presenting the 21st Annual Report and audited financial statements for the financial year ended March 31, 2016. With the accretion Rs. 601.29 million to the reserves arising from the profitability of the year, the total reserves of the Company stand at Rs. 2627.36 million and the net worth of the Company is at Rs. 2957.33 million. No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company to which these financial statement relate and the date of this report. Business Operations and Future Prospects The year under review witnessed a growth for the Company both in turnover and net profit by 13% and 14% respectively, despite the tough macro-economic scenario in the domestic as well as in the global market. While the domestic market is showing no tangible signs of revival, the focus on exports is delivering results. During FY 16, the company achieved a growth of 52% in export order booking, which vindicates the strategy of the Company for geographical diversification. It is believed that there is a huge market potential for the products of the Company and the Company has formulated plans to effectively penetrate and exploit the export market in the order of its potential. With Corporate Overview Management Statements Statutory Reports Financial Statements footprint in over 50 countries in terms of installations / order booking and visibility in over 100 countries in the form of enquiries, the company is poised to achieve a significant growth in exports in the coming years. To extend the marketing reach and to be close to the customers, the Company had set two subsidiary /step down subsidiary companies in foreign jurisdictions. Further, international structures are being set up in key geographies where the visibility of the potential business is the highest. It will enable the Company to effectively present its credentials before the prospective customers, promote and seek business for its products, including for the after-market business, and help the Company to achieve scalability of export business. The success of the business stems from its philosophy of evolving products to meet the technical requirements, benchmark efficiency standards and to provide service levels beyond the expectations of its customers. The Company’s R&D programme is well aligned with its aforesaid philosophy and facilitates development of new variants / models. The intellectual property protection is also a key focus area and the Company has well documented systems to safeguard its assets. The IP & Design team has been adjudged as the winner of the National IP Award 2016 in the category “Top Organisation for Designs” by the Ministry of Commerce & Industry, Government of India. Overall, the Company is on a growth path with exports & aftermarket identified as high growth potential areas and priorities. It will take place with expansion of geographies and services. Further, revival of growth in the Indian economy is also expected which will propel an improved investment cycle for capital goods industry in the coming years. Dividend The Board had declared interim dividends aggregating Rs. 1.1 (110%) per equity share in November, 2015 and March, 2016 and has not recommended any final dividend for the FY 16. Accordingly, the interim dividends already paid to the shareholders shall be considered as the final dividend for the FY 16.The total outgo on account of equity dividend is Rs. 436.86 million including dividend distribution tax as against Rs. 334.83 million (corresponding to 85% dividend) in the previous year. Subsidiary Companies As on March 31, 2016, the Company has two subsidiaries and one step down subsidiary. As required under the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2013, a statement containing salient features of the financial statements of subsidiaries is provided in the prescribed format AOC-1 as Annexure A to the Board’s Report. Domestic Subsidiary The financial performance of GE Triveni Ltd. has significantly improved during the year driven by healthy exports. The turnover and PBT increased by 105% and 127% respectively over previous year. With the profits generated during the year, the entire accumulated losses have been wiped out. The enquiry pipeline continues to remain strong. With wider reach in international market and extensive marketing efforts, the prospects are encouraging and the company expects healthy order booking. International Subsidiaries The Company had set up international structures to give boost to global marketing of its products and services. Triveni Turbines Europe Pvt. Limited, UK, was set up as a wholly owned subsidiary of the Company, which in turn has a wholly owned subsidiary, Triveni Turbines DMCC, Dubai. These subsidiaries are extended marketing arms of the Company and provide marketing support services to the Company, in addition to seeking to build up after-market business, the potential of which is enormous in the global market. In the first year of operation of both the subsidiaries, the results have been encouraging and they have been able to undertake extensive marketing in select geographies. They have started receiving orders for after-market services and the business would be further expanded through further international structures planned to be set up. Material Subsidiaries In accordance with Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (Listing Regulations), none of the subsidiaries is a material non-listed subsidiary. The Company has formulated a policy for determining material subsidiaries. The policy has been uploaded on the website of the Company at http://www.triveniturbines.com/key-policies. Consolidated Financial Statements In accordance with Section 136 of the Companies Act, 2013 and the Accounting Standard 21 on the Consolidated Financial Statements, your Directors have attached the consolidated financial statements of the Company which form a part of the Annual Report. The financial statements including consolidated financial statements and the audited accounts of each of the subsidiary are available on the Company’s website www.triveniturbines.com Directors’ Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, your directors confirm that: a) In the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable accounting standards have been followed and there are no material departures; b) 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 at the end of the financial year and of the profit of the Company for that period; c) The directors 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) The directors have prepared the annual accounts on a ‘going concern’ basis; e) The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Corporate Governance In accordance with SEBI Regulations, a separate report on Corporate Governance is given in Annexure B along with the Auditors’ Certificate on its compliance in Annexure C to the Board’s Report. The Auditors’ Certificate does not contain any qualification, reservation and adverse remark. Related Party Transactions The Company has formulated a Related Party Transactions Policy which has been uploaded on its website at http://www. triveniturbines.com/key-policies. It is the endeavour of the Company to enter into related party transaction on commercial and arms’ length basis with a view to optimise the overall resources of the group. All transactions entered into with related parties during the year were in the ordinary course of business of the Company and at arms-length basis. The Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions Form AOC-2 is not attached with this Report as there was no such related party transaction for which disclosure in terms of Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is required. Risk management Policy and Internal financial controls The Company follows a risk management policy, the objective of which is to lay down a structured framework and system to identify potential threats to the organization and likelihood of their occurrences with a view to formulate effective mitigation of likely threats with clear accountability and ownership. During the year the Policy has been reviewed and strengthened by an external agency benchmarking to best practices. The policy recognizes that all the risks in the business cannot be eliminated but these could be controlled or minimized through effective mitigation measures, effective internal controls and by defining risk parameters. Pursuant to the risk management policy, the company has instituted a comprehensive risk management framework. Detailed identification of risks has been carried out along with categorization thereof based on their impact on the organization and the reputation of the company. Such categorization gives the highest weightage to the risks which have potential to threaten the existence of the company. A Risk Committee, comprising of functional heads and the Executive Director, oversees the risk management activities in the Company. The risk management policy and its effectiveness are reviewed regularly to maintain its effectiveness and relevance. In order to align with the requirement of Section134 (5) (e) of Companies Act 2013, the existing Internal Financial Controls System has been revisited and strengthened, wherever required and the System ensures adequate financial controls, financial reporting and timely preparation of reliable financial statements. Apart from delegation of authority, policies and procedures for efficient conduct of the business, operating and financial controls have been put in place to safeguard the assets, to identify and minimize leakages and wastages and to detect and prevent frauds and errors. There is a system of self-certification of the compliance of the prescribed internal control procedures, which is also reviewed by Internal Auditors from time to time and subject to other audit. Directors and Key Managerial Personnel (KMP) As per the provisions of the Companies Act, 2013, Mr. Arun Prabhakar Mote will retire by rotation at the ensuing Annual General Meeting (AGM) of the Company and being eligible, seek re-appointment. The Board has recommended his reappointment. The Board has, subject to the approval of the Shareholders, re-appointed Mr. Dhruv M Sawhney as Managing Director [designated as Chairman and Managing Director (CMD)] of the Company for a period of 3 years effective May 10, 2016 without any remuneration except certain benefits for effectively discharging and attending to his official duties and functions as CMD of the Company. The Board has also, subject to the approval of the Shareholders, re-appointed Mr. Nikhil Sawhney as Managing Director (designated as Vice Chairman and Managing Director) of the Company for a period of 5 years effective May 10, 2016 and fixed his remuneration. The Company has received declarations of Independence in terms of Section 149 of the Companies Act, 2013 and also under Listing Regulations from all the Independent Directors. As required under the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel namely, Chairman and Managing Director, Vice Chairman and Managing Director, Executive Director, Chief Financial Officer and Company Secretary continue to hold that office as on the date of this report. Employees Stock Option There are no outstanding stock options and no stock options were either issued or allotted during the year. AUDITORS Statutory Auditors At the Annual General Meeting held on August 08, 2014, M/s J.C. Bhalla & Co., Chartered Accountants (JCB), were appointed as Statutory Auditors of the Company for a period of three consecutive years until the conclusion of 22nd Annual General Meeting of the Company. The Company has received a letter from JCB that they are eligible for continuation as Statutory Auditors of the Company and consented to continue in office on ratification by the shareholders. The Board recommends the ratification of the appointment of JCB as Statutory Auditors for FY 17 for the entire audit of the Company. Cost Auditor In terms of the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 and the Companies (Cost Records and Audit) Rules 2014 duly amended, cost audit is applicable to the Company for the FY 17. M/s J.H & Associates, Cost Accountants, Bengaluru have been appointed as the Cost Auditors to conduct the cost audit of your Company for the FY 17. The Board recommends the ratification of the remuneration to the Cost Auditors. Secretarial Auditor In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board appointed M/s Sanjay Grover & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2016. The report on secretarial audit is annexed as Annexure D to the Board’s Report. The report does not contain any qualification, reservation or adverse remark. Corporate Social Responsibility (CSR) A CSR policy was formulated by the CSR committee which, on its recommendation, was approved by the Board. The CSR Policy is available on the Company’s website at http://www.triveniturbines.com/key-policies. The composition of CSR Committee and Annual Report on CSR Activities as approved by the CSR Committee is provided in Annexure E to the Board’s Report. Audit Committee The composition of Audit Committee is provided in the Corporate Governance Report that forms part of this Annual Report. Vigil Mechanism The Company has established a vigil mechanism through a Whistle Blower Policy and through the Audit Committee, oversees the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimisation of employees and Directors who may express their concerns pursuant to this policy. The Company has also provided a direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of the employees and the Company. The policy is uploaded on the website of the Company at http://www.triveniturbines.com/keypolicies. 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 requirements of sexual harassment of women at Work place (Prevention, Prohibition and Redressal) Act 2013. The Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the period under review, no complaint was received by the ICC. Board Meetings During the year, six board meetings were held, the details of which are given in the Corporate Governance Report that forms part of the Board’s Report. The maximum interval between the two meetings did not exceed 120 days as prescribed in the Companies Act, 2013. Particulars of loans, guarantees or investments made under Section 186 of the Companies Act, 2013 The investment made by the Company in bodies corporate comprise only of investments made by it in equity share capital of its subsidiaries as disclosed in the notes to the audited financial statements forming part of this Annual Report. The Company has not given any loans or given any guarantee or provided any security in connection with a loan to any body corporate or person. Conservation of energy, technology absorption, foreign exchange earnings and outgo The particulars required under Section 134(3) (m) of the Companies Act, 2013 read with the relevant rules are provided in Annexure F to the Board’s Report. Listing Agreements Your Company has entered into new Listing Agreements with BSE Limited and National Stock Exchange of India Limited, in compliance with Regulation 109 of the Listing Regulations. Particulars of Employees The information as required under Section 197 of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure G to the Board’s Report. The particulars of employees drawing remuneration in excess of limits set out in the Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure H to the Board’s Report. However, as per the provisions of Section 136 of the Companies Act 2013, the annual report is being sent to all the members of the Company excluding the aforesaid information. The said information is available for inspection by the members at the registered office of the Company up to the date of the ensuing Annual General Meeting. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company. Management’s discussion and analysis In terms of provisions of Regulation 34 of the Listing Regulations, the Management’s discussion and analysis is set out in this Deposits The Company has not accepted any public deposits under Section 73 of the Companies Act, 2013. Extracts of Annual Return Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extracts of the annual return in the prescribed form is annexed as Annexure I to the Board’s Report. Significant and material orders There are no significant and material orders passed by regulators or courts or tribunals impacting the going concern status and Company’s operations in future. Human Resources The Company operates in technologically dynamic environment and competes with globally reputed players. The Company engages highly trained and motivated team to carry out continual product improvements, evolve new technologies, provide value proposition for its customers and offer products which meet benchmark efficiency and quality standards. The Company believes in continuous learning and the state of the art learning center provides theme based training to all employees round the year to keep them abreast with the technological and market developments. The learning center imparts focused training programmes dealing with product knowledge, skill building, design capabilities, and in-house developed computer based training on product and leadership. Specially designed development modules have been created for our customer care engineers. The Company has a robust and effective performance management system to identify and nurture talents, provide personal growth and job enrichment for retention, reward for their performance and achievements through set KRAs and goals. For the year 2015-16, the attrition rate was 5.2% and 3.4 man days of training for each employee including workmen were achieved. Policy on Directors’ appointment and remuneration The policy of the Company as approved by the Board on Directors’ appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 of the Companies Act, 2013, is uploaded on the website of the Company at http://www.triveniturbines.com/keypolicies. There has been no change in the policy since the last fiscal year and the remuneration paid to the directors is as per the terms laid out in the policy. Board Evaluation Mechanism Pursuant to the provisions of Companies Act 2013 and the Listing Regulations, the Board has carried out annual performance evaluation of its own performance, those of directors individually as well as evaluation of its committees. The evaluation criteria as defined in the Nomination and Remuneration Policy of the Company covered various aspects of Board such as, composition, performance of specific duties, obligations and governance. The performance of individual directors was evaluated on parameters, such as, number of meetings attended, contribution in the growth and formulating the strategy of the Company, independence of judgement, safeguarding the interest of the Company and minority shareholders, time devoted apart from attending the meetings of the Company, active participation in long term strategic planning, ability to contribute by introducing best practices to address business challenges and risk etc. The directors expressed their satisfaction with the evaluation process. Appreciation Your directors wish to take the opportunity to express their sincere appreciation to our customers, suppliers, shareholders, employees, the Central and Karnataka Government, financial institutions, banks and all other stakeholders for their wholehearted support and co-operation. Your Directors also wish to record their appreciation for the continued cooperation and support received from the Joint Venture partner. We look forward to their continued support and encouragement. For and on behalf of the Board of Directors Dhruv M. Sawhney Chairman and Managing Director Place: Noida (U.P.) Date: May 10, 2016 |