DIRECTOR'S REPORT To THE MEMBERS STAR DELTA TRANSFORMERS LIMITED BHOPAL 1. Your Directors have pleasure in presenting the 39th Director's Report of your Company together with the Audited Statement of Accounts and the Auditors' Report of your company for the financial year ended, 31st March, 2015. 2. STATE OF COMPANY'S AFFAIRS & FUTURE OUTLOOK: The Company's revenue has been declined from Rs. 66,58,80,858 to Rs 534244817 i.e. 19.76% and Company's profit before tax has declined from Rs 30873013 to Rs 22183331 i.e. 28.14% due to slowdown in global and Indian economies, volatile markets, high competition, increase in production costs and other operating and administrative costs. Company is expected to have good demand for Distribution and Power Transformers and power related equipments because massive investments are planned in coming years by the Govt. (Central & States) as well as private sector. 3. DIVIDEND: Keeping in view the overall performance during the year, your Directors are pleased to recommend a dividend of Rs 0.50 per equity share on the face value of Rs. 10/- each 4. AMOUNTSTRANSFERREDTO RESERVES: The Company has transferred Rs 100 Lakh to its General reserve. 5. CHANGES IN SHARE CAPITAL, IF ANY: During the FinancialYear 2014-15, no change has been occurred in the share capital of the Company 6. MATERIAL CHANGES AND COMMITMENTS: No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate on the date of this report 7. EXTRACT OF ANNUAL RETURN: The Extract of Annual Return as required under section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is annexed herewith for your kind perusal and information. (Annexure: I) 8. LOANS, GUARANTEES AND INVESTMENTS: 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 said provision is not applicable. 9. RELATED PARTYTRANSACTIONS: The Company has entered into various Related PartiesTransactions as defined under Section 188 of the Companies Act, 2013 with related parties as defined under Section 2 (76) of the said Act. Further all the necessary details of transaction entered with the related parties are attached herewith in Form No. AOC-2.(Annexure: II). The policy on RPT as approved by Board is uploaded on the Company's website www.stardeltatransformers.com Suitable disclosures have been made in the financial statements as prescribed in accounting standards. All related party transactions which were entered into during the year were on an arm's length basis, in the ordinary course of business and not material under clause 49 of Listing Agreement and does not require shareholders' prior approval under the Companies Act, 2013 and Listing Agreement. Company has obtained approval from the Regional Director under Section 297 (1) of the Companies Act 1956 through letter No. RD(NWR)/Sec.297/310/2013/3238 dated 10 September 2013 and letter No. RD(NWR)/Sec.297/313/2013/2956 dated 22 August 2013. 11. RISK MANAGEMENT: Risk management policy and processes enable the Company to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. Risk Management is a central part of firm's strategic management.Risk Management is a continuous process. There are four fundamental approaches: Identity Asses & Evaluate Take action Review & report Identified risk elements State/local regulations Labourconcerns General economic conditions Commodity/ Raw material prices Competition Demand for products Technology innovation Legal/ Secretraial Natural disasters Company through its functional heads reviews from time to time the deviation from the benchmarks and promptly make report to the Board, which in turn takes the corrective action to avoid severe conditions. The framework seeks to create transparency, minimize adverse impacts on the business objectives and enhance the Company's competitive advantage. 12. DIRECTORS and KMP: During the financial year 2014-15 the following changes have occurred in the constitution of Directors/KMP of the company: > Mr. Kishore Gupta, (DIN: 00014205) was reappointed as the Managing Director in the Extra ordinary general meeting for a term of five years held on 27th March 2015 and was designated as KMP in the Board meeting held on 27th March 2015. > Mr. Rakesh Gupta (DIN: 00014139), Whole time director was Designated as Key managerial Personnel(Chief financial officer) in the Board meeting held on 27th March 2015. > Mrs. Chhavi Kharb (DIN: 01791358) was appointed as the Women cum Independent director for a term of five years in the Extra ordinary general meeting held on 27th March 2015 > Mr. Laxmendra Maheshwari (DIN:00278005) was reappointed as the Independent Director in the Extra ordinary general meeting for a term of five years held on 27th March 2015 > Mr. Shahshendra Lahri (DIN:02704101) was reappointed as the Independent Director in the Extra ordinary general meeting for a term of five years held on 27th March 2015 13. DEPOSITS: The company has not accepted any deposits during the year 2014-15. 14. INDEPENDENT DIRECTORS & DECLARATION: The Board of Directors of the Company hereby confirms that all the Independent directors duly appointed by the Company have given the declaration and they meet the criteria of independence as provided under section 149(6) of the Companies Act, 2013. The Company issues a formal letter of appointment to independent directors in the manner as provided in the Companies Act, 2013 and clause 49 of the Listing Agreement. The terms and conditions of appointment of independent directors are placed on the Company's website. A separate meeting of Independent Directors was conducted as per the Clause 49 of the Listing Agreement on 30th October, 2014. All the independent directors were present for the meeting. 15. ANNUAL EVALUATION: Pursuant to the provisions of the Companies Act, 2013, Schedule IV & Clause 49 of the Listing agreement, the company has evaluated the performance of every Director, Independent Directors, Board and its Committees and Chairperson based on the criteria laid down by the Nomination and Remuneration Committee. Rating sheets were circulated to the directors for the purpose of evaluation. A summary of performance evaluation of the Board, its Committees and individual directors was prepared on the basis of rating sheets received from the individual directors and the same was placed before the Board. 16. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS: Internal financial controls with reference to the financial statements were adequate and operating effectively. 17. CORPORATE SOCIAL RESPONSIBILITY: Detailed information report on corporate social responsibility policy developed and implemented by the Company on CSR initiatives taken during the year pursuant to section 135 of the Companies Act, 2013 is given in the annexed Annual Report on CSR activities. (Annexure: III) Company has not spent on the CSR activities in the Financial year 2014-15. During the financial year, our efforts focused on monitoring and impact measuring systems so as to ensure that CSR Funds are optimally utilized. We are currently in the process of evaluating strategic avenues for CSR expenditure in order to deliver optimal impact. In the years to come, we will further augment our effort to meet the targeted CSR spends. We will make concerted efforts to spend the prescribed CSR amount in the subsequent years. 18. ANTI SEXUAL HARASSMENT POLICY: The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. All women employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year 2014-15, no complaints were received by the committee. 19. VIGIL MECHANISM: As per Section 177(9) and (10) of the Companies Act, 2013, and as per the Clause 49 of the Listing Agreement, the company has established Vigil Mechanism for directors and employees to report genuine concerns and made provisions for direct access to the chairperson of the Audit Committee. Company has formulated the present policy for establishing the vigil mechanism/ Whistle Blower Policy to safeguard the interest of its stakeholders, Directors and employees, to freely communicate and address to the Company their genuine concerns in relation to any illegal or unethical practice being carried out in the Company. The same has been posted on the website of the Company. 20. NUMBER OF MEETINGS OFTHE BOARD: 21. COMMITTEES OFTHE BOARD The Company's Board has the following Committees: 1. Audit Committee Pursuant to the provisions of Section 177 of the Companies Act 2013 and rules made there under, the Committee was reconstituted by the Board at its meeting held on 27th March 2015.The reconstituted Committee consists of the following members: 22. TRAININGTO INDEPENDENT DIRECTORS: The Company, being conscious of this responsibility, has been following the below mentioned practices which have helped its non-executive and independent directors to equip themselves: i Presentation by the Managing Director/ Senior Managerial Personnel covering: • the details of the Company, its history, shareholding pattern, the Board structure, the Board Committees and their functions, Code/policies applicable to the directors, their roles, responsibilities, duties, rights as a director, important developments etc. • the details of nature of industry, types of products, brands, position of the Company in the industry, sales and distribution channel, etc. • The details of the business model of the Company, financial details, risk management, treasury management. • major developments in legal & regulatory areas, as was done in 2014-15, in the areas of the new Companies Act 2013, the new Clause 49 of the Listing Agreement. ii. The Independent Directors are also encouraged to visit Company's plants and interact with plant heads, functional heads. The Company management has reviewed these practices from time to time and is of the opinion to continue them for the benefit of non-executive and independent directors. 22. TRAININGTO INDEPENDENT DIRECTORS: The Company, being conscious of this responsibility, has been following the below mentioned practices which have helped its non-executive and independent directors to equip themselves: i Presentation by the Managing Director/ Senior Managerial Personnel covering: • the details of the Company, its history, shareholding pattern, the Board structure, the Board Committees and their functions, Code/policies applicable to the directors, their roles, responsibilities, duties, rights as a director, important developments etc. • the details of nature of industry, types of products, brands, position of the Company in the industry, sales and distribution channel, etc. • The details of the business model of the Company, financial details, risk management, treasury management. • major developments in legal & regulatory areas, as was done in 2014-15, in the areas of the new Companies Act 2013, the new Clause 49 of the Listing Agreement. ii. The Independent Directors are also encouraged to visit Company's plants and interact with plant heads, functional heads. The Company management has reviewed these practices from time to time and is of the opinion to continue them for the benefit of non-executive and independent directors. 24. REMUNERATION POLICY: The remuneration policy as recommended by the Nomination and Remuneration Committee and approved by Board in Board meeting is presented in the Corporate Governance report forming part of the Annual report. 25. SHARES IN SUSPENSE ACCOUNT: There are no shares in suspense account 26. SHARES IN UNCLAIMED SUSPENSE ACCOUNT: There are no shares in unclaimed suspense account 27. CODE OF CONDUCT: During the year, a revised code of conduct for all Board members and Senior Management of the Company was approved by the Board to comply with the provisions of revised clause 49. The said code has been posted on the website of the Company. All the Board members and Senior Management personnel have affirmed compliance with the code for the year ended 31 March 2015. A declaration to this effect signed by the Managing Director forms part of the Corporate Governance report. 28. MEMORANDUM AND ARTICLES OF ASSOCIATION: The Company has adopted a new set of Memorandum and Articles of Association in accordance with the provisions of Companies Act 2013 in the Extra Ordinary General meeting held on 27th March 2015. 29. CORPORATE GOVERNANCE: A separate report on the Corporate Governance and Management Discussion & Analysis is attached as a part of the annual report. The Auditors Certificate regarding Compliance of the conditions of Corporate Governance is also annexed hereto as Annexure IV which forms part of this report. 30. SECRETARIAL AUDIT: Pursuant to the provisions of section 204 of the Companies Act, 2013 and Rules made thereunder the Company has appointed, ASA & Associates, Company Secretaries in Practice, to undertake the secretarial audit of the Company. Secretarial Audit Report for the year 2014-15 in the prescribed form MR-3 is annexed to this Report (ANNEXURE-V). Pursuant to the provisions of Section 204 (3) and 134 (3) and rules made there under, the Board of Directors of Star DeltaTransformers Limited provide the following clarification in respect to the observations raised by the Secretarial Auditor in Secretarial Audit report: Company has always followed good secretarial practices and is in compliance with all the applicable provisions of various Acts, however being so vigilant, due to unavoidable technical reasons, Company missed some points of which Company has taken note of and will ensure compliances in the future. Also, The Companies Act 2013, is newly incorporated, Company is endeavouring to comply with all the new concepts and provisions. Company being fully conscious of the points raised by the Auditor assures compliance in the future. 31. AUDITORS and REPORT thereon: The Auditors M/s. A.K. Khabya & Co, Chartered Accountants, (FR No. 001994C) retire at the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting . There are no qualifications or adverse remarks in the Auditors' Report which require any clarification/ explanation. The Notes on financial statements are self-explanatory, and needs no further explanation. 32. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors of the Company confirms that- (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. ACKNOWLEDGEMENT: Your Directors wish to express their grateful appreciation to the continued co-operation received from the Banks, Government Authorities, Customers, Vendors and Shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed service of the Executives, staff and Workers of the Company. On behalf of Board of Directors (KISHORE GUPTA) (DIN : 00014205) MANAGING DIRECTOR Place : Bhopal Date : 13th August, 2015 |