Your Directors have pleasure in presenting their Twenty Fourth Annual Report on thebusiness and operations of your Company and the audited Statement of Accounts for the yearended 31st March 2017.
1. FINANCIAL HIGHLIGHTS
| || || |
Rs. in Million
|Particulars ||Consolidated ||Standalone |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Revenue ||7645 ||4129 ||3979 ||3433 |
|Profit before Depreciation and Interest ||785 ||559 ||544 ||519 |
|Depreciation ||292 ||167 ||89 ||62 |
|Interest ||88 ||33 ||49 ||25 |
|Profit before tax ||405 ||359 ||406 ||432 |
|Profit after tax ||312 ||263 ||308 ||324 |
During the current year of operations your company has registered the highestconsolidated revenue in its history of Rs. 7645 million an increase of about 85%compared to the previous financial year. Your company posted Profit after Taxes of Rs. 312million with an increase of 19% over the previous financial year.
At standalone level a revenue of Rs. 3979 million an increase of about 16% comparedto the previous financial year. Your company posted Profit after Taxes of Rs. 308 millionfor the year.
i. Centum Rakon India Private Limited
During the year Centum Rakon India Private Limited has registered revenue of Rs. 744million and incurred a loss of Rs. 0.69 million.
ii. Centum Adetel Group S.A.
During the year Centum Adetel Group S.A. has registered revenue of Rs. 3052 millionand posted a profit of Rs. 7 million.
Statement containing salient features of the financial statements of subsidiarycompanies is attached herewith as Annexure - I.
During the year your company has declared an interim dividend of Rs. 2 per share andproposed a final dividend of Rs. 3 per share totaling to Rs. 5 per share for the year2016-17. The total dividend payout was Rs. 77 million for the year.
4. CO NSOLI DATED FINAN CIAL STATEM ENTS AND SUBSIDIARY
The Consolidated Financial statements have been prepared by the Company in accordancewith the applicable Accounting standards issued by the Institute of Chartered Accountantsof India and the same together with the Auditor's Report thereon is provided in the AnnualReport.
The annual accounts of the subsidiary and related detailed information will be kept atthe Registered Office of the Company and will be available to investors seekinginformation at any time.
The Company has adopted a Policy for determining Material Subsidiaries in terms ofRegulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Policy as approved by the Board is available on the Investor page at Company'swebsite centumelectronics.com.
5. RISK MANAGEMENT
Your Company has a robust Risk Management policy. Your Company regularly assess therisks and ensures that the risk mitigation plans are in place.
6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Company has appointed Ernst and Young LLP. as itsInternal auditor. The Audit Committee defines the scope and areas of internal audit. TheInternal Auditor audits the areas recommended by the committee every year.
The audit observations and corrective actions thereon are being presented to the AuditCommittee of the Board. Based on the report of Internal Auditors process owners undertakecorrective action in their respective areas and thereby strengthen the controls. Duringthe year the internal audit was done on the areas recommended and no material weaknesswas observed.
7. DIRECTORS AND KEY MANAGERIAL PERSONNEL
No Director or Key Managerial Person has been appointed or has retired or resignedduring the year.
Further all the Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149 (6) of the Act and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
a. Annual evaluation of Board its Committees and Individual Directors:
The Board of Directors has carried out an annual evaluation of its own performance itsCommittees and individual Directors pursuant to the requirements of the Act and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
Further Independent directors have reviewed the performance of the Board its Chairmanand Non-Executive Directors and other items as stipulated under the listing regulations.
b. Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Nomination and Remuneration Policy is attached to this report asAnnexure - II.
A calendar of Meetings is prepared and circulated in advance to the Directors.
During the year the company has convened nine meetings of the Board of directors andsix meetings of the Audit Committee. The details of which are given in the CorporateGovernance Report. The Intervening gap between the meetings was within the periodprescribed under the Companies Act 2013.
8. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors confirm:
i. that in the preparation of annual accounts for the year ended March 31 2017 theapplicable Accounting Standards have been followed along with the proper explanationsrelating to material departures;
ii. that such accounting policies as mentioned in Note 1 of the Notes to the FinancialStatements have been adopted and applied consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 31 2017 and of the profit of the Company for year ended onthat date;
iii. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
iv. that the annual financial statements have been prepared on a going concern basis.
v. that proper internal financial controls were in place and that the financialcontrols were adequate and operating effectively.
vi. that systems to ensure compliance with the provisions of all applicable laws werein place adequate and operating effectively.
9. CO NTRACTS AN D ARRAN G EMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the financial year were inthe ordinary course of business and were at an arm's length basis. There were nomaterially significant related party transactions made by the company during the year withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the company at large.
All the related party transactions were placed before the Audit Committee and also theBoard for approval. Prior omnibus approval of the Audit Committee is being obtained forthe transactions which are of a foreseen and repetitive nature in terms of Regulation23(3)(a) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The company has framed a policy on dealing with the related party transactions and thesame is available on the company website.
Your directors draw attention of the members to Note 34 to financial statement whichsets out the related party disclosures.
a. Statutory auditors
The present statutory auditors M/s. B.S.R & Co. LLP Chartered accountants (FirmRegistration No.101248W/W-100022) will hold office up to the ensuing Annual GeneralMeeting. They have been the auditors for the company since 1998. Pursuant to Section 139of the Companies Act 2013 and the Rules made thereunder it is mandatory to rotate thestatutory auditors on completion of two terms of five consecutive years. The Rules alsolay down the transitional period that can be served by the existing auditors depending onthe number of consecutive years for which an audit firm has been functioning as auditor inthe same company. The incumbent auditors M/s. B.S.R & Co. LLP Chartered accountants(Firm Registration No.101248W/W-100022) have served the company for over 10 years beforethe Act was notified and will be completing the maximum number of transitional period(three years) at the ensuing Annual General Meeting.
Accordingly the Audit committee and the Board of Directors of the company haverecommended to the shareholders for the appointment of M/s. S.R. Batliboi & AssociatesLLP Chartered Accountants as statutory auditors for a period of 5 consecutive years.
M/s. S.R. Batliboi & Associates LLP Chartered Accountants have furnished acertificate of their eligibility under Sec 139 of the Companies Act 2013 and the Rulesframed thereunder for the appointment as Auditors of the company. Also as required underRegulation 33(1)(d) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the auditors have confirmed that they hold a valid certificate issuedby the Peer Review Board of the Institute of Chartered Accountants of India.
b. Secretarial audit
The Board has appointed Ms. Aarthi G Krishna Practicing Company Secretary to conductSecretarial Audit for the financial year 2016-17. The Secretarial Audit Report for thefinancial year ended March 31 2017 is annexed herewith as Annexure III to this report.
11. AWARDS AND RECOGNITIONS
Your company has received the below awards during the year under review:
i. Champion of Innovation Award' received by Mr. Apparao V Mallavarapu Chairmanand Managing Director from the Prime Minister of New Zealand at the New ZealandInnovation Showcase 2016 event.
ii. Winner of IESA-NASSCOM Deftronics Award 2016 Best Electronics ManufacturingCompany in A & D category.
iii. The Mentor Graphics Silicon India Leadership award for Embedded/VLSI Industryunder the category Established Indian Company."
12. CORPORATE GOVERNANCE
Pursuant to Regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the company has complied with the requirements. The Certificate oncompliance of Corporate Governance requirements issued by the Statutory Auditors isannexed to the Report of Corporate Governance. The Report on Corporate Governance isattached herewith as Annexure IV.
13. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT ANDFOREIGN EXCHANGE EARNINGS AND OUTGO.
The particulars prescribed under subsection (3) (m) of Section 134 of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are given in theannexure - V attached to this report.
14. PARTICULARS OF EMPLOYEES
The information pursuant to Section 197 of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of the company will be provided upon request.
However as per the provisions of Section 136 of the Act the Report and Accounts arebeing sent to the Members and others entitled thereto excluding the information onemployees' particulars. The same is available for inspection by the Members at theRegistered Office of the company during business hours on working days of the Company upto the date of ensuing Annual General meeting. If any Member is interested in obtaining acopy thereof such Member may write to the Company Secretary in this regard.
15. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The details of the investments made by the Company are in Note 10 of the auditedfinancial statements. The Company has made an investment amounting to Rs. 474.44 Millionduring the year within the meaning of Section 186.
16. CORPORATE SOCIAL RESPONSIBILITY
As part of its initiatives under "Corporate Social Responsibility (CSR) theCompany has funded many projects that aid and improve education literacy and healthcarefor children. It has also funded and participated in projects that support and aidchildren with disabilities. These projects are largely in accordance with Schedule VII ofthe Companies Act 2013.
The Annual Report on CSR activities is annexed herewith as "Annexure VI".
17. DETAILS O F ESTABLISH MENT OF VIGIL MECHANISM
The Company has a Vigil mechanism to deal with the instances of fraud andmismanagement if any. The details of the Policy is explained in the Corporate GovernanceReport and also posted on the website of the company. During the year under review thereare no such instances to report.
18. PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE
The Company has zero tolerance for sexual harassment at workplace and has formulated aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure.
The Company has also constituted an Internal Complaints Committee to inquire intocomplaints of sexual harassment and recommend appropriate action.
The Company has not received any complaint of sexual harassment during the financialyear 2016-17.
19. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure VII.
20. MANAGEMENT DISCUSSION AND ANALYSIS
In compliance with the requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a detailed Management Discussion and Analysis Reportgiving details of the company's business and operating results is given in Annexure VIII attached to this report.
21. EMPLOYEE STOCK OPTION PLAN
As a measure of rewarding the employees your company had introduced an Employee StockOption Plan (ESOP) during the year 2007 & 2013.
The particulars prescribed under Guideline 12.1 of the SEBI (Employee Stock Optionscheme and Employee Stock Purchase Scheme) Guidelines 1999 are given in the Annexure - IXattached to this report.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
a. Details relating to deposits covered under Chapter V of the Companies Act 2013.
b. Issue of equity shares with differential rights as to dividend voting or otherwise.
c. Issue of shares (including sweat equity shares) to employees of the company underany scheme save and except ESOP referred to in this report.
d. There is no remuneration received by the Managing Director from the subsidiarycompany.
e. No significant or material orders were passed by the regulators or courts ortribunals which impact the going concern status and the company's operations in future.
Your Directors thank the customers for their continued patronage and the investorsbankers and vendors for their continued support.
Your Directors acknowledge and thank the invaluable contributions of all the employeeswho have demonstrated their skill teamwork and commitment through their competence hardwork cooperation and support.
Your Directors would also like to place on record the support received from theElectronic Hardware Technology Park the Customs and Excise Departments the Reserve Bankof India the Department of Industries and Commerce Karnataka the Karnataka Udyog Mitraand all the other Central and State Governmental agencies.
|By the order of the Board || |
|For Centum Electronics Limited || |
|Apparao V Mallavarapu ||S. Krishnan |
|Chairman & Managing Director ||Director |
|DIN : 00286308 ||DIN : 01807344 |
|Place: Bangalore || |
|Date: May 30 2017 || |