DIRECTORS’ REPORT Dear Member, Your Directors have pleasure in presenting the 23rd Annual Report along with the audited statements of accounts of your Company for the financial year ended 31st March, 2016. Financial Highlights Your Company has reported fabulous performance during the financial year. EBIDTA has improved by 99%, compared with previous year. The profit before exceptional items has also increased significantly by showing a growth of 273%, the PBT as well as the Net Profit has reported tremendous growth of 113% and 116% respectively, compared with the previous year. PE Ratio (based on last quoted price on BSE) as on 31st March 2015 and 31st March 2016 was 15.28 and 14.11 respectively. Operational Highlights The operations are exhaustively discussed in ‘Management Discussion and Analysis’ forming part of the annual report. Dividend The Board in its meeting held on 19th January, 2016 declared and paid an Interim dividend @ 5% (Rs. 0.50 per equity share of Rs. 10/- each). Based on the Company’s performance, the Board has further recommended a final dividend @ 5% (Rs. 0.50 per equity share of Rs. 10/- each) thus making a total dividend @10% for the financial year 2015-2016. Subject to the approval of shareholders, the final dividend will be paid on or after 20/06/2016 to the shareholders whose name appears on the Register of Members / Beneficial Owners at the close of business hours on Friday, 27/05/2016. Deposits The Company has not accepted any fixed deposits during the year to which the provisions of Section 73 of the Companies Act, 2013 are applicable. Board of Directors and Key Managerial Personnel Mr. Navas M Meeran, Chairman, retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. The Board recommends his appointment. Mr. M.E. Mohamed, Managing Director, Mr. Rajesh S, Chief Financial Officer and CS. Baiju T, Company Secretary are the Whole-time Key Managerial Personnel of the Company. The Board has considered the declarations given by independent directors under sub-section(6) of Section 149 and the company’s policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director. The Board has further evaluated its own performance and that of its committees and individual directors. Mr. M.S Sebastian, who was appointed as an independent director at the last Annual General Meeting has resigned from the Board with effect from 13/04/2016 as he lost his independence. None of the Directors is disqualified under Section 164 of the Companies Act, 2013. Directors’ Responsibility Statement Pursuant to the requirement of Section 134 (3) and (5) of the Companies Act, 2013, your Directors confirm that:- (a) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and that there are no material departures; (b) 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 your Company at the end of the financial year and of the profit of the Company for that year; (c) 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 your Company and for preventing and detecting fraud and other irregularities; (d) prepared the Annual Accounts on a going concern basis; (e) 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) devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively; Auditors & Audit Observations M/s. JVR & Associates, Chartered Accountants, Kochi-16, were re-appointed as the Auditors of the Company at the Annual General Meeting held on 24th June 2014 to hold office for a period of 3 consecutive years and their appointment was ratified in the previous Annual General Meeting. The proposal to ratify their appointment in compliance with the provisions of Section 139 of the Companies Act, 2013 has been placed before the Members. Necessary certificate has been obtained from the Auditors as per Section 139 (1) of the Companies Act, 2013. The Auditor’s observations are suitably explained in notes to the Accounts and are self-explanatory. Cost Audit Report Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 the Cost Audit Report is not mandatorily applicable to our Company for the financial year 2015-16, hence, no such audit has been carried out during the year. Secretarial Audit Report A qualified Practicing Company Secretary carries out secretarial audit and provides a report on the compliance of the applicable Acts, Laws, Rules, Regulations, Guidelines, Listing Agreement, Standards etc. as stipulated by the provisions of Section 204 of the Companies Act 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. The Secretarial Audit Report forms part of this report as Annexure - A. The findings of the audit have been satisfactory. Public Shareholding During the year 2014 the Board of Directors of the Company has forfeited 3,63,900 equity shares of the Company for non-payment of allotment money. Subsequently, the Board has annulled the forfeiture of 3400 equity shares. The Board at their meeting held on 19/01/2016 has further annulled the forfeiture of the 1000 equity shares, as this shareholder has later paid the amount due, with interest and other charges to make the shares fully paid. The Company has applied to Bombay Stock Exchange to approve the annulment of forfeiture of equity shares. Listing and Dematerialization The equity shares of the Company are listed on the Bombay Stock Exchange Ltd (BSE). The shareholder can avail the facility provided by NSDL and CDSL to demat their shares. Shareholders are requested to convert their holdings to dematerialized form to derive the benefits of holding the shares in electronic form. Extract of Annual Return The details regarding extract of Annual Return in Form No: MGT-9 pursuant to Section 92 of Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, is annexed herewith as Annexure - B. Related Party Transactions There were no materially significant related party transactions which could have had a potential conflict with the interests of the Company. Transactions with related parties are in the ordinary course of business on arm’s length and are periodically placed before the Audit Committee and Board for its approvals and the particulars of contracts entered during the year, in Form AOC-2 is enclosed as Annexure - C. 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 there under and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company. Conservation of Energy, Technology Absorption, Foreign Exchange Inflow & Outflow In pursuit of continual improvement towards energy conservation and compliance with environmental regulations, efforts have been taken to utilise the energy most efficiently and to nurture and preserve the environment. The Company has taken all possible efforts to conserve energy and absorb latest technology. The information required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, regarding Conservation of Energy, Technology Absorption, Foreign Exchange Inflow and Outflow are given in Annexure - D to this report. Corporate Governance Your Company has been complying with the principles of good Corporate Governance over the years and is committed to the highest standards of compliance. Pursuant to the Listing Agreement read with Regulation 15(2) of the SEBI (LODR) Regulations 2015, the compliance with the corporate governance provisions as specified in regulations 17 to 27 and clauses (b) to (i) of Regulation 46 (2) and para C , D and E of Schedule V shall not apply the Company. However, as a good Corporate Governance Practice the Company has generally complied with the Corporate Governance requirements and a report on Corporate Governance is annexed as Annexure - E and forms part of this Report. As required under SEBI (LODR) Regulations 2015 the Management Discussion and Analysis Report is annexed as Annexure – F and forms part of this Report. Personnel None of the employees is in receipt of remuneration in excess of the limit laid down under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors are annexed as Annexure - G and forms part of this Report. Corporate Social Responsibility (CSR) Company has generally taken corporate social responsibility initiatives. However, the present financial position of the company does not mandate the implementation of corporate social responsibility activities pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013. The company will constitute CSR Committee, develop CSR policy and implement the CSR initiatives whenever it is applicable to the Company. Vigil Mechanism 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. Particulars of Loans, Guarantees or Investments Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statement. Company has availed Line of Credit facility offered by IDBI Bank Ltd to the extent of Rs. 750 Lakhs in the form of Bill discounting facility to the Company’s approved vendors supplying raw materials to the Company and has guaranteed for its repayment. Development and Implementation of Risk Management Policy Company has developed and implemented a Risk Management Policy and formed a Risk Management Committee to address and evaluate various risks impacting the Company and a report on risk management is provided in this Annual Report in Management Discussion and Analysis Adequacy of Internal Financial Controls with reference to the Financial Statements The Company has implemented and evaluated the Internal Financial Controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Company Secretary has been appointed as the Internal Auditor with a dedicated internal audit team. The Internal Audit Reports were reviewed periodically by Audit Committee as well as by the Board. Further, the Board annually reviews the effectiveness of the Company’s internal control system. The Directors and Management confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report. Material Changes and Commitments No material changes and commitments, affecting the financial position of the Company has been occurred between the end of the financial year 2015-16 and till the date of this report. Statutory Orders No significant and material orders were passed by Courts, Tribunals and other Regulatory Authorities affecting the going concern status of the Company’s operations. Disclosure under The Sexual Harassment of Women at the work place (Prevention, Prohibition and Redressal) Act, 2013 The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the work place (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Company has not received any complaint under this policy during the year 2015- 2016. Acknowledgement Your Directors wish to take this opportunity to place on record their gratitude and sincere appreciation for the timely and valuable assistance and support received from Bankers, Share Transfer Agents, Auditor, Customers, Suppliers and Regulatory Authorities. The Board values and appreciates the valuable committed services of the employees towards performance of your Company, without which it would not have been possible to achieve all round progress and growth. Your Directors are thankful to the shareholders for their continued patronage. For and on behalf of the Board Navas M Meeran Chairman Date : 13/04/2016 Place : Kochi |