Your Directors have immense pleasure in presenting the 35th Annual Report on thebusiness and operations of the Company together with Audited Statement of Accounts of yourCompany for the financial year ended the 31st March 2016.
1. FINANCIAL HIGHLIGHTS
(Rs. in Crores)
|PARTICULARS ||2015-2016 ||2014-2015 |
|Sales ||818.18 ||736.45 |
|Profit Before Interest Depreciation & Tax (PBDIT) ||91.16 ||86.90 |
|Less : Interest & Finance Charges ||30.29 ||31.39 |
|Profit Before Depreciation & Tax (PBIT) ||60.87 ||55.51 |
|Less : Depreciation ||4.70 ||3.74 |
|Profit Before Tax (PBT) ||56.17 ||51.77 |
|Less : Provision for Current Tax /Deferred Tax ||19.70 ||18.01 |
|Profit After Tax (PAT) ||36.47 ||33.76 |
In view of the adequate profits earned by the Company your Directors have recommendeddividend of Re. 1.5/- per share on equity shares at the face value of Rs. 10/- each forthe financial year ended 31st March 2016.
The Company has transferred Rs 32.68 Crores to the General Reserve for the financialyear ended March 31 2016.
3. BUSINESS AND OPERATIONS REVIEW
During the year under review your Company has achieved gross sales of Rs. 818.18crores as compared to Rs. 736.45 crores in the previous year resulting in a growth of morethan 11% YOY.
The company continues to be a high quality supplier of Copper and all Copper basedalloy products i.e. Foils Strips Coils Rods Profiles Ingots. The company concentrateson getting the highest value addition by making consistent quality and precision productsfor highly critical end use applications Arcotech also uses modern technology to makespecialized alloys which give higher returns.
The company has over 100 OEM Customers to whom the company is supplying its productsconsistently. Your company is proud to have leading companies of its field as itscustomers apart from prestigious orders from the Indian Mint and Indian OrdinanceFactories.
During the year the company has also undertaken a project for forward integration tomanufacture value added end products by setting up a world class stamping division withR&D Center and Tool Room. The company has added the below Setup in addition to itsexisting facilities
1. Stamping Section
2. Tool Room
3. R&D & Design Center
The Company has started manufacturing the below products
1. Automobile Components
2. Electrical and Electronic Components
3. Key Blanks
4. Coin Blanks
The project has helped Arcotech move up the value chain and has resulted into expansionin market presence and capability to directly serve OEM and Tier 1customers with endproduct for industries such as Automotive Modular Switches Home AppliancesTelecommunications Switchgear Coinage Electronics White Goods etc.
In addition to its leadership position in Copper & Copper alloy flat products thecompany has emerged as one stop solution provider for product designing tool designingengineered and customized components. Arcotech has a unique and distinct advantage ofbeing the only completely integrated player which gives the company Cost and Qualitysavings. The Company is also venturing into Aluminum Products to manufacture packagingproducts from Aluminium. Arcotech has created the brands "ArcoFresh" and"SuperFresh" to manufacture and market Household Foil and Container forWholesale and Retail usage. The brand has been well received during its launch and companyexpects constant growth for this segment.
4. DIRECTORS AND KEY MANEGERIAL PERSONNEL
In pursuance with the provisions of Companies Act 2013 Shri Maninder Kohli NonExecutive Director of the Company who retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment. In terms of Regulation 36 ofSEBI (LODR) Regulations 2015 the details of the Director to be re-appointed are beingprovided in the notice of the ensuing Annual General Meeting.
The Board of the Company is constituted in accordance with the provisions of CompaniesAct 2013 and rules made there under and Regulation 17(1) of SEBI (LODR) Regulations2015.
None of the directors of the Company resigned from the board of the Company during theyear under review.
Change in Key Managerial Personnel:
a) During the year under review Shri Amit Sharma Chief Financial Officer; ShriKrishan Kumar Mishra Company Secretary were appointed as Key Managerial Personnel underthe provisions of the Companies Act 2013.
b) During the Year Ms. Prigya Gupta resigned from the post of Company Secretary of theCompany.
5. BOARD DIVERSITY AND POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION
The Company believes that building a diverse and inclusive culture is integral to itssuccess. A diverse Board among others will enhance the quality of decisions by utilisingdifferent skills qualifications professional experience and knowledge of the Boardmembers necessary for achieving sustainable and balanced development. Accordingly theBoard has adopted a policy on 'Nomination Remuneration and Board Diversity' which setsout the criteria for determining qualifications positive attributes and independence of aDirector. The detailed policy is available on the Company's website athttp://www.arcotech.in/New14/NOMINATION.pdf and http://www.arcotech.in/New14/Policy-on-Board-Diversity.pdf is also provided in the Corporate Governance Report whichforms part of this Report.
Annual Board Evaluation and Familiarisation Programme for Independent Directors
The statement pursuant to the provisions of the Companies Act 2013 and Regulation17(10) SEBI (LODR) Regulations 2015 indicating the manner in which formal annualevaluation of the Directors the Board and the Board level Committees are given in thereport on Corporate Governance which forms part of this Annual Report. A note on thefamiliarisation programme adopted by the Company is available at Company's websitehttp://www.arcotech.in/New14/ Familiarisation-programmes-for-Independent-Directors.pdf
Declaration by Independent Directors
The company has received necessary declaration from each independent director undersection 149 (7) of the Companies Act 2013 that he/ she meets the criteria of independencelaid down in section 149(6) of the Companies Act 2013 and Reg. 16(1) (b) and Reg. 25 ofSEBI (LODR) Regulations 2015. The Independent Directors have also confirmed that theyhave complied with the Company's code of conduct.
6. AUDITORS AND AUDITORS REPORT
The Members are informed that Shwetank Joshi & Co. is Statutory Auditors of theCompany for more than 10 years and are retiring at the conclusion of the ensuing AnnualGeneral Meeting (AGM).
As per the provisions of the Companies Act 2013 an audit firm functioning as auditorof the Company for ten years or more after the commencement of provisions of Section139(2) of the Act may be appointed in the same Company for further period of three yearsfrom April 1 2014. As maximum statutory tenure of Shwetank Joshi & Co. to continue asstatutory auditors is about to end they have requested not to be considered forreappointment at the conclusion of their present term at ensuing AGM of the Companywhich has been accepted by the Audit Committee and Board of Directors in their respectivemeetings held on August 12 2016. The Board places on record its appreciation for theservices rendered by Shwetank Joshi & Co. as the Statutory Auditors of the Company.
The Board on the recommendation of Audit Committee has appointed M/s. Amit Joshi &Associates (FRN: 004898N) Chartered Accountants as statutory auditors of the Companysubject to the approval of the members at the AGM. The proposed auditors have confirmedtheir eligibility to the effect that their appointment if made would be within theprescribed limit under the Act and that they are not disqualified for appointment.
The appointment of M/s. Amit Joshi & Associates Chartered Accountants if approvedby the members of the Company will take effect from the conclusion of the ensuing AGM.
A resolution proposing appointment of M/s. Amit Joshi & Associates CharteredAccountants as the Statutory Auditors of the Company pursuant to Section 139 of theCompanies Act 2013 forms part of the Notice for the ensuing AGM. The Notes on financialstatement referred to in the Auditors' Report are self-explanatory and do not call for anyfurther comments. The Auditors' Report does not contain any qualification reservation oradverse remark.
7. COST AUDITOR
The Board of your Company has appointed M/s SS Chug & Co. Cost Accountantsregistration no. 101595 for conducting the audit of cost records of the Company for thefinancial year 2016-17.
8. SECRETARIAL AUDITOR
The Board of your Company has appointed M/s A. Upadhyaya & Associates CompanySecretaries Certificate of Practice no. 4729 for conducting the secretarial audit of theCompany for the financial year 2016-17. The secretarial auditor's report for the financialyear 2015-16 does not contain any qualifications reservations or adverse remarks ordisclaimers.
9. NUMBER OF MEETINGS OF THE BOARD
During the year under review there were total 5 (Five) meetings of the Board wereconvened and held the details of which are given in the Report on Corporate Governancewhich is a forming part of this report. The intervening gap between the meetings waswithin the period prescribed under the Companies Act 2013 and Reg.17 (2) of SEBI (LODR)Regulations 2015.
The Composition and function of Audit Committee of the Board of Directors of theCompany is disclosed in the Report on Corporate Governance which is forming part of thisreport.
10. VIGIL MECHANISM
The Company has a established vigil mechanism which incorporates a whistle blowerpolicy in terms of the listing agreement for directors and employees to report theirgenuine concerns. The objective of the policy is to create a window for any person whoobserves an unethical behavior actual or suspected fraud or violation of Company's codeof conduct. Protected disclosures can be made by the whistle blower through an email orphone or a letter to the chairman of the audit committee. The policy can be assessed fromthe Company's website http://www.arcotech.in/ New14/WHISTLEBLOWERPOLICY.pdf.
The Company has framed a policy for Determining material Subsidiaries. The Company hadincorporated a subsidiary in Hongkong. The Subsidiary could not commence its operation andapplied for deregistration as on 31st December 2015.
12. DIRECTORS' RESPONSIBILITY STATEMENT UNDER SECTION 134(3)(C) OF THE COMPANIES ACT2013
The Board of Directors hereby confirms in terms of Section 134(5) of the CompaniesAct 2013:
a) That in the preparation of the Annual Accounts the applicable Accounting Standardshave been followed along with proper explanation relating to material departures if any;
b) That appropriate accounting policies have been selected and applied consistentlyand made judgments and estimates that are reasonable and prudent have been made so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for that period.
c) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
d) That the Annual Accounts have been prepared on a going concern basis.
e) That the Directors have laid down internal financial controls to be followed by thecompany and such internal financial controls are adequate and are operating effectively.
f) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
13. EXTRACT OF ANNUAL RETURN
In accordance with the provisions of section 134(3)(a) of the Companies Act 2013 anextract of the Annual Return in Form MGT-9 is given as Annexure-B of this report.
14. FIXED DEPOSITS
During the Year under review your Company has not accepted any fix deposit within themeaning of Section 73 and 74 of the Companies Act 2013 read with Companies (Acceptance ofDeposits) Rules 2014.
15. STATUTORY STATEMENTS
A. Conservation of energy and technology absorption
The information relating to Conservation of Energy and Technology Absorption asrequired to be disclosed under Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure - 'A'-Form A.
B. Foreign Exchange Earnings and outgo
During the year under review your Company has dealt with foreign exchange earning andoutgo pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 is annexed herewith as Annexure - 'A' -Form B.
C. Particulars of Employees
Information in accordance with the provisions of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended regarding employees is given in the Annexure to theDirectors' Report.
Disclosures regarding ratio of the remuneration of each Director to the medianemployee's remuneration and other details in terms of Section 197(12) of the CompaniesAct 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are as under :-
i) The Ratio of the remuneration of Directors to the Median remuneration of theemployees of the Company for the year 2015-16:
Executive Director : Mr. RN Pattanayak - 15:1
ii) The percentage increase in remuneration of each Director CFO and CS in thefinancial year:
Whole Time Director
Shri R N Pattanayak by 40% and increase in remuneration of Company Secretary
Shri Krishan Kumar Mishra by 110% due to change of post of Company Secretaryduring the financial year.
iii) The percentage increase in the median remuneration of employees in the financialyear: 9.97%
iv) The number of permanent employees on the rolls of Company: 207 employees as on31.03.2016
v) Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate of previous year.
|Particulars ||As at 31st March 2016 ||As at 31st March 2015 ||Variation(%) |
|Closing Share Price ||385.10 ||342.60 ||12.41 |
|Market Capitalization (Rs in Crores) || || || |
|(Market Value per share || || || |
|*No. of Outstanding Shares) ||808.71 ||719.46 ||12.41 |
|P/E ratio || || || |
|(Market Value per share/EPS) ||22.17 ||21.32 ||3.98 |
vi) average percentile increase already made in the salaries of employees other thanmanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
Average salary increase of non-managerial employees is 10.03% average salary increaseof managerial employees is 9.35%.there are no exceptional circumstances in increase inmanagerial remuneration.
vii) Comparison of the each remuneration of the Key Managerial personnel against theperformance of the Company:
| ||WTD ||CFO ||CS* ||CS* |
|Remuneration in FY 16 (Rs in Cr.) ||0.42 ||0.194 ||0.003 ||0.013 |
|Revenue (Rs in Cr.) || ||728.18 || || |
|Remuneration as % of revenue ||0.058% ||0.026% ||0.0004% ||0.001% |
|Profit before Tax (PBT) (Rs in Cr.) || ||56.17 || || |
|Remuneration (as % of PBT) ||0.75% ||0.34% ||0.005% ||0.02% |
* Ms. Prigya Gupta and Mr. Krishan Kumar Mishra Company Secretary Employed for thepart of the Year
viii) the key parameters for any variable component of remuneration availed by theDirectors: There is no such variable component
xi) The ratio of the remuneration of the highest paid director to that of the employeeswho are not Directors but receive remuneration in excess of the highest paid directorduring the year: NONE
x) The Remuneration is as per the remuneration policy of the Company.
16. CORPORATE GOVERNANCE
A separate report on Board of Directors of the Company on Corporate Governance isincluded in the Annual Report and the Certificate from M/s A. Upadhyaya & AssociatesPracticing Company Secretary confirming compliance with the conditions of CorporateGovernance as stipulated in Schedule V of SEBI (LODR) Regulations 2015 is attached tothe report on Corporate Governance.
17. RISK MANAGEMENT POLICY
The company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis. These arediscussed at the meetings of the board of directors of the company.
The company's internal control systems are commensurate with the nature of its businessand the size and complexity of its operations. These are routinely tested and certified bystatutory as well as internal auditors.
18. CORPORATE SOCIAL RESPONSIBILITY
The Company has duly formulated CSR policy in place. The Company has been committedtowards the society at large. A separate note on the policy is a part of this report.Policy can be assessed from the Company Website http://www.arcotech.in/New14/CSR.pdf.
19. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The company has not given any loan guarantee or investments under section 186 of theCompanies Act 2013
20. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY.
There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.
RELATED PARTY TRANSACTIONS
During the year the Company had not entered into any arrangement / transaction withrelated parties which could be considered material in accordance with the Company's Policyon Related Party Transactions and accordingly the disclosure of Related PartyTransactions in Form AOC 2 is not applicable.
The Policy on the Related Party Transactions is available on the Company's website athttp://www.arcotech.in/New14/Policy-on-Materiality-of-and-dealing-with-Related-Party-Transaction.pdf.
Details of related party transactions have been disclosed in notes to the financialStatements.
21. MANAGEMENT DISCUSSION AND ANALYSIS
(a) Industry Scenario & Future Challenges
During the year Industrial Output of the economy has been sluggish; primarily becauseof higher interest rates in macroeconomic concerns. However your Company's approach ofdiversification of customer base has helped it to maintain steady growth. During the yeara risk analysis assessment was conducted and no major risks were noticed which maythreaten the existence of the Company.
(b) Human Resources / Industrial Relations
Your Company acknowledges the commitment competence and dedication of its employees atall areas of business. The Company is committed to nurture enhance and retain best talentthrough investment in its people to upgrade their technical domain and leadershipcapability. To retain leadership position the Company continuously innovates andcustomizes its Human Resource (HR) strategy to meet changing employee need. The Companyhas taken initiative for safety of employees and implemented regular safety auditimparted machine safety training wearing protective equipment's.
(c) Adequacy of Internal Controls
The company has a proper and adequate system of internal controls to ensure that allassets are safeguarded and protected against loss from unauthorized use or disposition andthat all transactions are authorized recorded and reported correctly. IndependentInternal auditors conduct audit covering a wide range of operational matters and ensurecompliance with specified standards.
(d) Operating Performance Future Outlook etc.
The foregoing paragraphs under the head - Financial Results Operations and FutureOutlook have discussed and analyzed other requisite issues mentioned in SEBI (LODR)Regulations 2015.
(e) Opportunities and Threats
Government focus on Non ferrous Industry and implementation of GST will give boost tononferrous industry. However Govt. will have to take edequate steps to provide levelplaying field to Indian Non ferrous Menufacturers by taking mitigant steps to nullify theimpact of inverted duty effect.
Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment. The enthusiasm and unstinting efforts of theemployees have enabled the Company to remain at the forefront of the Industry. YourCompany looks upon them as partners in its progress and has shared with them the rewardsof growth. Directors also take this opportunity to thank all Investors Banker ClientsVendors Companies Government authorities and Stock Exchange(s) for their continuedsupport.
| ||On behalf of the Board |
| ||For Arcotech Limited |
|Place : New Delhi ||(Arvind Kumar Saraf) |
|Date : 12th August 2016 ||Chairman |
| ||DIN : 00057323 |