Your Directors are pleased to present the 25th Annual Report of the Companyalong with the Audited Financial Statement and the Auditor's Report for the financial yearended 31st March 2017.
The financial statements of the Company have been prepared in accordance with theGenerally Accepted Accounting Principles in India (Indian GAAP) to comply with theAccounting Standards notified under Section 133 of the Companies Act 2013 in terms ofRule 7 of The Companies (Accounts) Rules 2014 and the relevant provisions of theCompanies Act 2013 as applicable and guidelines issued by the Securities and ExchangeBoard of India ("SEBI").
The Ministry of Corporate Affairs vide its notification in the Official Gazette datedFebruary 16 2015 notified the Companies (Indian Accounting Standard) Rules 2015 (IndAS) applicable for the specified class of Companies. The Ind AS replaced the existingIndian GAAP prescribed under section 133 of the Companies Act 2013 read with rule 7 ofthe Companies (Accounts) Rules 2014. Our Company has to comply with the provisions ofCompanies (Indian Accounting Standard) Rules 2015 with effect from 1st April 2017.Company has initiated adequate steps to ensure the due compliances.
Brief Financial Highlights with comparison of previous financial year are as follows:
| || ||( Rs in Lakhs) |
|Particulars ||Financial Year ended 31st March 2017 ||Financial Year ended 31st March 2016 |
|INCOME || || |
|Gross Sales & Other ||16577 ||22318 |
|Income || || |
|Gross Profit/(Loss) before depreciation interest & tax ||(821) ||938 |
|Depreciation ||482 ||535 |
|Profit/(Loss) before tax ||(1406) ||402 |
|Provision for Taxes ||220 ||-- |
|Prior period / Extraordinary items ||-- ||-- |
|Balance of Profit/(Loss) of earlier years ||(6179) ||(6582) |
|Balance available for appropriation ||(7806) ||(6179) |
|APPROPRIATIONS || || |
|General Reserve ||-- ||-- |
|Dividend ||-- ||-- |
|Tax on Dividend ||-- ||-- |
|Balance carried to Balance ||(7806) ||(6179) |
|Sheet || || |
Considering the general turmoil in the Industry operational performance of the Companyduring the period under this report was in an ordinary manner. The Consolidated andcombined operations of Thirumazhisai plant and Kancheepuram plant has contributedsignificantly to improve the performance through increase in production efficient andeffective utilisation of resources and reduced costs as compared to previous financialyears. Company witnessed unprecedented disruptions from the part of some customers onperformance of contract. Consequently financial and operational parameters declined tosome extent. In spite of several challenges year 2016-17 was indeed a positive year forthe Company in terms of quality order booking and operating margin.
We have improved our acceptability in the market on account of several short circuittest conducted in the previous financial years. Management has taken several steps toincrease production improve efficiency and reduce costs.
We continuously receive support from Parent Company fordesignoptimizationandtoimprovetheproductionoflargepower transformers. Our focus currentlyis to improve productivity and deliver the best quality transformers. Overall we expectfurther improvements by implementing our strategic plans for cost optimization and usingspecially developed software for transformer designs. However price pressure is immenseand it is impacting the entire industry. In the challenging environment with improvedsourcing strategies and cost optimization our focus is to improve the margin in thecoming years.
A detailed discussion on the performance of your company industry structure threatsopportunities risks future outlook and strategy is given separately in the Management'sDiscussion and Analysis section which forms a part of this annual report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Board of the Company comprises of six experienced directors from diverse areas whichenables the Board to provide effective leadership to the Company. Composition of the Boardis in conformity with the provisions of the companies Act2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. During the financial year Mr.V Ranganathan (DIN- 07489345) inducted in to the Board as an Additional Director witheffect from 12th April 2016 and later on appointed as the Director at theAnnual General Meeting of the Company. The Board of Directors of the Company as on date ofthis report is as follows:
|Mr. Ricardo Suarez Garza || Chairman |
|Mr. Indraneel Dutt || Non-Executive Director |
|Mr. V Ranganathan || Non-Executive Director |
|Mr. M S Srinivasan || Independent Director |
|Mr. P V Krishna || Independent Director |
|Ms. Tabassum M Wajid || Independent Director |
During this financial year Composition of the Key Managerial Personnel's has changedwith the resignation of Mr. Dhiraj Narula from the position of Chief Financial Officer andfollowed by the appointment of Mr. Abhishek Dalmia as Chief Financial Officer with effectfrom 25th May 2016.
The Key Managerial Personnel of the Company as on date of this report is as follows:
|Mr. Ajay Kumar Sinha || Chief Executive Officer |
|Mr. Abhishek Dalmia || Chief Financial Officer |
|Mr. Sathyamoorthy A || Company Secretary |
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met four (4) times during the financial year on 25thMay 2016 03rd August 2016 26th October 2016 and 08thFebruary 2017.
The provisions of Companies Act 2013 and listing regulations were adhered to whileconsidering the time gap between two meetings.
Board Committees plays a vital role in improving the Board effectiveness in areas wheremore focused and discussions are required. Board has constituted three Committees inaccordance with the provisions of Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and its compositions are as follows:
(i) Audit Committee
Mr . M.S Srinivasan Chairman Mr . Ricardo Suarez Garza Member Mr . P V KrishnaMember
(ii) Nomination and Remuneration Committee
Mr . P V Krishna Chairman Mr . M.S Srinivasan. Member Ms. T abassum M Wajid Member
(iii) Stakeholders' Relationship Committee
During the year in accordance with the Companies Act 2013 the Board re-constitutedStakeholder Relationship Committee at their meeting held on 03rd August 2016.Mr . Ricardo Suarez Garza Chairman Mr . Indraneel Dutt Member Mr . Ranganathan V Member
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 of the Companies Act 2013 your Directorsconfirm that;
1) in the preparation of the annual accounts for the year ended 31st March2017 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
2) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year 2016-17and of the Profit & Loss Account of the Company for the year under review;
3) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and preventing and detecting fraud and otherirregularities;
4) the Directors had prepared the accounts for the financial year ended 31stMarch 2017 on a going concern basis';
5) the Directors had laid down Internal Financial Controls to be followed by theCompany and such Internal Financial Controls are adequate and were operating effectively;
6) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
NOMINATION AND REMUNERATION POLICY
In terms of Section 178 of the Companies Act 2013 and the SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 Company's policy on nomination andremuneration of Directors Key Managerial Personnel (KMP) Senior Management and otheremployees shall act as a guideline for determining inter-alia qualifications positiveattributes and independence of a Director matters relating to the remunerationappointment removal and evaluation of performance of the Directors Key ManagerialPersonnel Senior Management and other employees.
As a policy the Independent Directors are paid sitting fees of Rs 20000/- per meetingper person for attending the Board and Audit Committee Meetings.
COMMENTS ON AUDITORSRs REPORT / SECRETARIAL AUDITORSRs REPORT
There are no qualifications reservations or adverse remarks or disclaimers made by BSR& Co. LLP Statutory Auditors in their report and by M/s. J B Bhave & Co.Secretarial Auditors in their secretarial audit report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
The Company has not provided any loans guarantee or made any investments covered undersection 186 of the Companies Act 2013.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFFERED TO IN SECTION188(1) OF COMPANIES ACT 2013
The particulars of contracts or arrangements with related parties referred to inSection 188(1) as prescribed in Form AOC - 2 of the rules prescribed under Chapter IXrelating to Accounts of Companies under the Companies Act 2013 is appended as Annexure"I".
Considering the accumulated losses no dividend has been recommended by the Board ofDirectors of the Company for Financial Year 2016-17.
MATERIAL CHANGES AND COMMITMENTS
There was no material changes and commitments affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report.
Board of Directors evaluated the performance of the Board its Committee and in theindividual capacity of each Director and Key Managerial Personnel of the Company. Theassessment of performance of Directors is based on their attendance at Board Meetings andBoard Committee Meetings quality of contributions during the meetings inputs for thestrategy and growth of the Company contributions in giving directions to the managementand commitment to the stakeholders.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are provided in the Annual Report.Disclosures pertaining to remuneration and other details as required under Section 197(12)of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report as Annexure IV.
Your Company is committed to good corporate governance aligned with the best corporatepractices. A separate Report on Corporate Governance along with Auditor's Certificate onCompliance with the conditions of Corporate Governance is provided as a part of thisAnnual Report besides the Management Discussion and Analysis.
Pursuant to Section 139 of the Companies Act2013 M/s B S R & Co. LLP CharteredAccountants (ICAI Firm Registration No. 128510W/W-100022) have been appointed asStatutory Auditors for a period of five (5) years commencing from financial year 2014-15subject to the ratification by the members at each annual general meeting. A resolutionproposing ratification of appointment of M/s B S R & Co. LLP as Statutory Auditors ofthe Company for financial year 2017-18 pursuant to Section 139 of the Companies Act 2013forms part of the Notice of Annual General Meeting.
FIXED DEPOSITS / PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits or Public Deposits covered underchapter V of the Companies Act 2013 and as such no amount of principal or interest wasoutstanding on the date of the Balance Sheet.
INTERNAL FINANCIAL CONTROLS
The Company has an adequate system of Internal Financial Controls in place withreference to the financial statements. Audit Committee periodically reviews the InternalFinancial Control and Risk Assessment System of the Company. During the year InternalFinancial Controls were tested and no material weaknesses in the design or operatingeffectiveness were observed.
Pursuant to section 148 and rules made thereunder and based on the recommendation ofthe Audit Committee your Board has approved the appointment of M/s J G & Co CostAccountants as the Cost Auditor of the Company for the financial year 2017-18.
SECRETARIAL AUDITORS / SECRETARIAL AUDIT REPORT
Pursuant to section 204 of the Companies Act 2013 the Secretarial Audit for thefinancial year 2016 - 17 was conducted by M/s J B Bhave & Co and their secretarialaudit report is annexed as Annexure II forming part of this report. The Board of Directorshas appointed M/s J B Bhave & Co as Secretarial Auditors for the financial year2017-18 to conduct the Secretarial Audit of the Company.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations and in order to ensure that the activities of the Companyand its employees are conducted in a fair and transparent manner the Company has adopteda Whistle Blower policy to provide a mechanism for employees of the Company to raiseconcerns on any violations of legal or regulatory requirements incorrect ormisrepresentation of any financial statements and reports etc. This policy is explainedin corporate governance report and also posted on the notice board and the website of theCompany.
RISK MANAGEMENT FRAMEWORK
The Company has formulated a Risk Management policy to identify assess monitor andmitigate various risks to the Company. Identified risks and the mitigation plans arediscussed at the meetings of the Audit Committee and the Board of Directors of theCompany.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 has beengiven in the Annexure-III appended hereto and forms part of this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information as prescribed under Section 134 of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 is as follows:
A. CONSERVATION OF ENERGY
Your company acknowledges that power conservation is a necessity not only for futureavailability but also environmental safety. Your Company is not a power intensiveindustry and hence the scope for conservation of energy is limited. However the followingenergy saving measures have been carried out. a) Y our Company has 2 wind mills inTirunelveli
Nadu. The Company is adjusting the units generated against consumption at factories.This has reduced per unit energy cost to the Company. b) Y our company has in placeadequate safeguards excessive consumption and wastage of energy in form ofenergy-friendly apparatus modern technologies as well as minimal usage mechanism.
During the year your Company took several measures for reducing the power and fuel costincluding DG utilization and was able to reduce the power and fuel cost significantly.
B. TECHNOLOGY ABSORPTION Research & Development:
Y our Company is more focused towards the promotion of innovative ideas and hasinvested in equipement with sufficient resources for research and development. Skidmounted substations were developed for wind mills in the previous year which were providedwith transformer integrated with HV side protection gear complete with breaker and panel.The complete unit comprised of transformer HV bushings to breaker panel bus-duct HVbreaker & panel LV side cable box connections. All components were designed to beassembled on single skid and transported to customer premises a single unit. The entireassembly was reinforced at critical points to bear transportation loads. The transformerwas sent with radiator/conservator mounted and completely oil filled to avoid any mountingand oil filtration at site.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
During the financial year under review there the foreign exchange earning of theCompany was Rs 96461207 and outgo was Rs 939476.
|FINANCIAL HIGHLIGHTS || || || || || || || ||(Rs in Lakhs) |
|FINANCIAL HIGHLIGHTS ||2016-17 ||2015-16 ||2014-15 ||2013-14 ||2012-13 ||2011-12 ||2010-11 ||2009-10 |
|Gross Sales & Other Income ||16577 ||22318 ||18671 ||11400 ||12495 ||12596 ||12416 ||11020 |
|Net Sales & Other Income ||15046 ||20263 ||17366 ||10430 ||11554 ||11572 ||11428 ||10249 |
|Earnings before Depreciation Interest ||-821 ||937 ||632 ||-529 ||-3857 ||-3218 ||-1861 ||-533 |
|and Tax (EBDIT) || || || || || || || || |
|Depreciation ||482 ||535 ||518 ||299 ||504 ||412 ||380 ||387 |
|Profit After Tax ||-1627 ||402 ||-374 ||-1880 ||-5018 ||-3998 ||-2274 ||-839 |
|Equity Dividend % ||-- ||-- ||-- ||-- ||-- ||-- ||-- ||-- |
|Dividend Payout ||-- ||-- ||-- ||-- ||-- ||-- ||-- ||-- |
|Equity Share Capital ||1062 ||1062 ||1062 ||1062 ||1062 ||1062 ||1062 ||1062 |
|Reserves and Surplus ||12798 ||14425 ||14023 ||-450 ||1430 ||6447 ||10446 ||12735 |
|Net Worth ||13860 ||15487 ||15085 ||612 ||2492 ||7509 ||11508 ||13797 |
|Gross Fixed Assets ||9377 ||10106 ||10003 ||9888 ||9902 ||9822 ||9945 ||9381 |
|Net Fixed Assets ||5429 ||6215 ||6635 ||7047 ||7309 ||7667 ||8130 ||7940 |
|Total Assets ||20094 ||21269 ||20659 ||18270 ||17684 ||17599 ||15923 ||14885 |
|KEY INDICATORS ||2016-17 ||2015-16 ||2014-15 ||2013-14 ||2012-13 ||2011-12 ||2010-11 ||2009-10 |
|Earnings per Share - Rs ||-15.32 ||3.79 ||-3.52 ||-17.7 ||-47.25 ||-37.65 ||-21.42 ||-7.9 |
|Turnover per share - Rs ||156.09 ||210.16 ||175.82 ||107.35 ||117.65 ||118.71 ||116.91 ||103.79 |
|Book value per share - Rs ||130.51 ||145.83 ||142.04 ||5.76 ||23.46 ||70.72 ||108.36 ||129.92 |
|Debt : Equity Ratio ||0.93:1 ||1.35:1 ||1.15:1 ||20.62:1 ||3.27:1 ||0.71:1 ||0.09:1 ||0.07:1 |
|EBDIT / Gross Turnover % ||-5% ||4% ||3% ||-5% ||-32% ||-26% ||-15% ||-5% |
|Net Profit Margin % ||-9% ||2% ||-2% ||-19% ||-42% ||-32% ||-18% ||-8% |
|RONW % ||-11% ||3% ||-61% ||-75% ||-67% ||-35% ||-16% ||-6% |
|ROCE % ||-13% ||3% ||1% ||-57% ||-64% ||-33% ||-15% ||-6% |
As at 31st March 2017 there is no subsidiary company.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT2013
Your Company has in place an Anti-Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The Internal Complaints Committee ("ICC") has been set upto redress the complaints received regarding sexual harassment. All employees are coveredunder this policy.
During the financial year 2016-17 there were no cases reported under Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Your Directors express their appreciation of the continued cooperation of Governmentsand Government agencies bankers customers suppliers and also the valuable assistanceand guidance received from Xignux Prolec GE and all the shareholders. Your Directors alsowish to thank all employees for their contribution support and continued cooperationduring the financial year and are deeply grateful to the shareholders of the Company forthe confidence and faith.
| ||for and on behalf of the Board of Directors || |
| ||INDO-TECH TRANSFORMERS LIMITED || |
|Place : Chennai ||Ricardo Garza Suarez ||Indraneel Dutt |
|Date : 17 May 2017 ||Chairman ||Director |
| ||DIN: 07194157 ||DIN: 01942447 |
Annexure - I Form No. AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
This form pertains to the disclosure of particulars of contracts/arrangements enteredinto by the company with related parties referred to in sub-section (1) of section 188 ofthe Companies Act 2013 including certain arms length transactions under third provisothereto
1. Details of contracts or arrangements or Transactions not at arm's length basis : Nil
2. Details of material contracts or arrangement or transactions at arm's lengthbasis:
The Contracts or arrangements or transactions entered with the related parties duringthe financial year 2016-17 were not material and the same were disclosed in the notes toaccounts forming part of the financial statements for the year ended 31st March2017.
| ||for and on behalf of the Board of Directors || |
| ||INDO-TECH TRANSFORMERS LIMITED || |
|Place : Chennai ||Ricardo Garza Suarez ||Indraneel Dutt |
|Date : 17 May 2017 ||Chairman ||Director |
| ||DIN: 07194157 ||DIN: 01942447 |
Annexure IV Particulars of Employees
a) Information as per Rule 5(1) of Chapter XIII Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 Remuneration paid to Whole TimeDirector(s):
|Name of the Director ||Title ||Remuneration in FY 2016-17 ||% increase in FY 2016-17 as Compared to FY 2015-16 ||Ratio of remuneration to Median Remuneration of Employees ||Ratio of remuneration to Revenues ||Ratio of remuneration to Net Profit |
|NA ||NA ||NA ||NA ||NA ||NA ||NA |
Remuneration paid to Independent Directors:
|Name of the Director ||Remuneration in FY 2016-17* ||Remuneration in FY 2015-16* ||% increase of remuneration |
| ||(in Rs) ||(in Rs) ||(FY 2016-17 over FY 2015-16) |
|M S Srinivasan ||160000 ||200000 ||NIL |
|P V Krishna ||160000 ||140000 ||NIL |
|Tabassum M Wajid ||60000 ||80000 ||NIL |
* The Independent Directors were paid sitting fees of Rs 20000 for attending permeeting of Board and Audit Committee and no other remuneration was paid over and above thesitting fees during FY 2016-17 & FY 2015-16.
Remuneration paid to Key Managerial Personnel (KMP):
|Name of the KMP ||Title ||Remuneration in FY 2016-17 ||Remuneration in FY 2015-16 ||% increase of remuneration in FY 2016-17 as company to FY 2015-16 ||Ratio of remuneration to Revenues ||Ratio of remuneration to Net Profit |
|Ajay Kumar Sinha ||CEO ||6090000 ||5166670# ||Nil ||0.0041 ||0.037 |
|Abhishek Dalmia* ||CFO ||2178161 ||NA ||NA ||0.0014 ||0.013 |
|Sathyamoorthy A ||CS ||959891 ||226798# ||8% ||0.0006 ||0.0059 |
* appointed as "CFO" with effect from 25th May 2016 #Remuneration pertains to the part of the FY 2015-16
1. The number of employees on the rolls of the Company as of March 31 2017 were 294and as on 31st March 2016 were 291.
2. The median remuneration of employees was Rs 222096 for FY 2016-17 and Rs 237636for FY 2015-16.
3. The operating revenue for FY 2016-17 is Rs 148.80 crores whereas for FY 2015-16stood at Rs 189.87 crores. The net loss for the FY 2016-17 is Rs 16.26 crores whereas thenet profit for the FY 2015-16 was Rs 4.02 crores.
4. The aggregate remuneration of employees for the FY 2016-17 is Rs 16.19 Crores andfor FY 2015-16 was Rs 15.31 Crores. The aggregate remuneration of whole time director andkey managerial personnel for the FY 2016-17 is Rs 92.28 lakhs and for the FY 2015-16 wasRs 96.91 Lakhs.
5. The key parameters of remuneration availed by the directors are considered by theBoard of Directors based on the recommendations of the Nomination and RemunerationCommittee as per the Remuneration Policy for Directors Key Managerial Personnel and otherEmployees.
6. It is hereby affirmed that the remuneration paid is as per the as per theRemuneration Policy for Directors Key Managerial Personnel and other Employees. b)Information as per Rule 5(1) of Chapter XIII Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014
No employee of the Company was in reciept of remuneration in excess of Rs 60 Lakhsexcept CEO as stated above during the financial year 2016-2017