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Indo Tech Transformers Ltd.

BSE: 532717 Sector: Engineering
NSE: INDOTECH ISIN Code: INE332H01014
BSE LIVE 15:48 | 17 Aug 191.60 -0.35
(-0.18%)
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194.50

HIGH

194.50

LOW

188.25

NSE 15:56 | 17 Aug 190.95 -0.35
(-0.18%)
OPEN

197.95

HIGH

197.95

LOW

186.65

OPEN 194.50
PREVIOUS CLOSE 191.95
VOLUME 2185
52-Week high 270.00
52-Week low 177.25
P/E
Mkt Cap.(Rs cr) 203
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 194.50
CLOSE 191.95
VOLUME 2185
52-Week high 270.00
52-Week low 177.25
P/E
Mkt Cap.(Rs cr) 203
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indo Tech Transformers Ltd. (INDOTECH) - Director Report

Company director report

Your Directors are pleased to present the 24th Annual Report of the Company along withthe Audited Financial Statement and the Auditor’s Report for the financial year ended31st March 2016.

Financial results

The company`s revenue from operations for the financial year 2015-16 increased by 19%as compared to financial year 2014-15.

Brief Financial Highlights with comparison of previous financial year are as follows:

(Rs. in Lakhs)
Particulars Financial Year ended 31 March 2016 Financial Year ended 31 March 2015
Income
Gross Sales & Other Income 22318 18671
Gross Profit/(Loss) before depreciation interest & tax 938 632
Depreciation 535 518
Profit/(Loss) before tax 402 (374)
Provision for Taxes -- --
Prior period / Extraordinary items -- --
Balance of profit of earlier years (6582) (6208)
Balance available for appropriation (6179) (6582)
Appropriations
General Reserve -- --
Dividend -- --
Tax on Dividend -- --
Balance carried to Balance Sheet (6179) (6582)

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").

Operational performance

Your company’s performance has improved significantly during the financial year ascompared to previous financial years primarily on account of steps taken by the managementto increase production improve efficiency and reduce costs. Our focus during thefinancial year was to improve the production and sales of large power transformers.During the financial year we improved our acceptability in market on account of severalshort circuit test conducted in the previous financial year. We have successfullydelivered multiple quantities of large power transformers during the year. Similarly forrenewable segment we have successfully delivered multiple quantities of skid mountedsub-stations during the year.

We continuously receive support from parent company for improving production of largepower transformers. Our focus currently is to improve productivity and consolidatingoperations. Overall we expect further improvements by implementing our strategic plansfor cost optimization and using specially developed software for transformer designs.Momentum gained during previous year has helped us improve margin in the current year.However price pressure is immense and it is impacting the entire industry. We expectmargins to improve marginally in the coming year.

Directors and Key Managerial Personnel

During the financial year Mr. Ricardo Suarez Garza (DIN- 07194157) and Mr P VKrishna (DIN- 02459872) has been inducted into the Board as Directors of theCompany. Mr. Luis Carlos (DIN- 05122761) Mr. Arun Kumar Bhalla (DIN- 02073637)Mr. Arun Kumar Srivastava (DIN- 00006985) and Mr. Ajay Kumar Dhagat (DIN-00250792) has stepped down from their Office of Directorships during the financial yearand Company places on record their contribution and support during their tenure.

During the financial year Mr. Shridhar Gokhale has stepped down from his Office ofManager and Mr. Ajay Kumar Sinha appointed as Chief Executive Officer W.e.f 27th May2015. Mr. Sanjay Kasture Company Secretary has resigned from the Company and Mr.Sathyamoorthy A appointed as Company Secretary w.e.f 29th December 2015.

Mr. V Ranganathan (DIN- 07489345) was appointed as an Additional Director with effectfrom 12th April 2016 on the Board of your company and now it is proposed to appoint him asDirector.

The Board of Directors of the Company as on date of this report is as follows:

Mr. Ricardo Suarez Garza – Chairman
Mr. Indraneel Dutt – Non Executive Director
Mr. M S Srinivasan – Independent Director
Mr. P V Krishna – Independent Director
Ms. Tabassum M Wajid – Independent Director
Mr. V Ranganathan – Additional Director
The Key Managerial Personnel of the Company as on date of this report is as follows:
Mr. Ajay Kumar Sinha – Chief Executive Officer
Mr. Dhiraj Narula – Chief Financial Officer
Mr. Sathyamoorthy A – Company Secretary

Number of Meetings of the Board of Directors

The Board of Directors met Seven (7) times during the financial year on 27th May 201514th August 2015 9th September 2015 4th November 2015 29th December 2015 20th January2016 and 10th February 2016.

The provisions of Companies Act 2013 and listing regulations were adhered to whileconsidering the time gap between two meetings.

Board Committees

During the year in accordance with the Companies Act 2013 the Board re-constitutedAudit Committee Nomination and Remuneration Committee and Stakeholder RelationshipCommittee at their meeting held on 27th May 2015. Compositions of the Committees are asfollows:

(i) Audit Committee

Mr. M.S Srinivasan Chairman

Mr. Ricardo Suarez Garza Member

Mr. P V Krishna Member

(ii) Nomination and Remuneration Committee

Mr. P V Krishna Chairman

Mr. M.S Srinivasan. Member

Ms. Tabassum M Wajid Member

(iii) Stakeholders’ Relationship Committee

Mr. Ricardo Suarez Garza Chairman

Mr. Indraneel Dutt 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 financial year ended 31st March2016 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 2015-16and 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 31st March2016 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.

Board Independence

Based on the confirmation / disclosures received from the Directors and on evaluationof the relationships disclosed the following Non-Executive Directors are Independent interms of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 andSection 149(6) of the Companies Act 2013 :-

1) Mr. M.S Srinivasan

2) Mr. P V Krishna

3) Mrs. Tabassum M Wajid

The company has received a declaration from the Independent Director(s) that they meetthe criteria of independence as provided in sub-section (6) of Section 149 of theCompanies Act 2013.

Nomination and Remuneration Policy

In terms of Section 178 of the Companies Act 2013 and the SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 policy on nomination and remuneration ofDirectors Key Managerial Personnel (KMP) Senior Management and other employees of theCompany has been formulated by the Nomination and Remuneration Committee of the Companyand approved by the Board of Directors. This policy shall act as a guideline fordetermining inter-alia qualifications positive attributes and independence of aDirector matters relating to the remuneration appointment removal and evaluation ofperformance of the Directors Key Managerial Personnel Senior Management and otheremployees.

As a policy the non executive directors are paid sitting fees of Rs. 20000/- permeeting per person for attending the Board and Audit Committee Meetings.

Comments on Auditors` Report / Secretarial Auditors` 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. JDNASSA & AssociatesCompany Secretaries in Practice in their secretarial audit report.

There is an observation from Statutory Auditors as well as Secretarial Auditors ondelay in transferring the unpaid/ unclaimed dividend amount pertaining to the financialyear 2008-09 to the Investors Education and Protection Fund (IEPF) of the CentralGovernment. The delay primarily was on account of technical difficulty in MCA-21 websitewhile generating the challan for remitting the amount. However as on date of this reportthe said amount has been remitted and there is no unpaid/unclaimed amount which is due forremittance.

Particulars of Loans Guarantees or Investments under Section 186 of the Companies Act2013

The Company has not provided any loans or made any investments covered under section186 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".

Dividend

Considering the accumulated losses and the fact of Company’s potential sicknessno dividend has been recommended by the Board of Directors of the Company for financialyear 2015-16.

Material Changes and Commitments

There were 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 Evaluation

The assessment of performance of Directors is based on their attendance at BoardMeetings and Board Committee Meetings quality of contributions during the meetingsinputs for the strategy and growth of the Company contributions in giving directions tothe management and 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.

Corporate Governance

Your Company is committed to good corporate governance aligned with the best corporatepractices. A separate Report on Corporate Governance along with Auditor’s Certificateon Compliance with the conditions of Corporate Governance is provided as a part of thisAnnual Report besides the Management Discussion and Analysis.

Auditors

Pursuant to Section 139 of the Companies Act 2013 M/s B S R & Co. LLP CharteredAccountants (ICAI Firm Registration No. – 101248W/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 2016-17 pursuant to Section 139 of the Companies Act 2013forms part of the Notice.

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. During the year Internal Financial Controls weretested and no material weaknesses in the design or operating effectiveness were observed.

Cost Auditors

Pursuant to the notification issued by the Ministry of Corporate Affairs (MCA) andbased on the recommendation of the Audit Committee your Board has approved theappointment of Mr. M J Gopalakrishnan Cost Accountants as the Cost Auditor of theCompany for the financial year 2016-17.

Secretarial Audiors / Secretarial Audit Report

Pursuant to section 204 of the Companies Act 2013 the Secretarial Audit for thefinancial year 2015-16 was conducted by M/s. JDNASSA & Associates and theirsecretarial audit report is annexed as Annexure II forming part of this report. The Boardof Directors has appointed M/s J B Bhave & Co as Secretarial Auditors for thefinancial year 2016-17 to conduct the Secretarial Audit of the Company.

Vigil Mechanism / Whistle Blower Policy

In order to ensure that the activities of the company and its employees are conductedin a fair and transparent manner by adoption of highest standards of professionalismhonesty integrity and ethical behaviour the company has adopted a vigil mechanismpolicy. This policy is explained in corporate governance report and also posted on thewebsite of the company.

Risk Management Framework

The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to the Company. Risks identified and the mitigation plans are discussed at themeetings of the Audit Committee and the Board of Directors of the Company. The Company hasalso formulated a Risk Management policy.

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 (Disclosure of Particulars in the Report of the Board of Directors) Rules1988 is as follows:

A. Conservation of Energy

Your Company is not a power intensive industry and hence the scope for conservation ofenergy is limited. However the following energy saving measures have been carried out. a)Your Company has 2 wind mills in Tirunelveli Tamil Nadu. The Company is adjusting theunits generated against consumption at factories. This has reduced per unit energy cost tothe company. b) Your Company conducted a study of power consumption of Vapour Phase Dryingplant to improve efficiency by reducing vacuum leakages. Subsequent actions have reducedload on vacuum pump thus saving energy. During the year your Company took several measuresfor reducing the power and fuel cost including DG utilization and was able to reduce thepower and fuel cost significantly.

B. Technology Absorption Research & Development: Skid Mounted Substation:

Skid mounted substations were developed for wind mills in the previous year which wereprovided with transformer integrated with HV side protection gear complete with breakerand panel. The complete unit comprised of transformer HV bushings to breaker panelbus-duct HV breaker & panel LV side cable box connections. All components weredesigned to be assembled on single skid and transported to customer premises a singleunit. The entire assembly was reinforced at critical points to bear transportation loads.The transformer was sent with radiator/conservator mounted and completely oil filled toavoid any mounting and oil filtration at site.

The skid mounted substation resulted in great savings for customer in terms of erectiontime and the space needed when compared with conventional DP yard substations. The savingsin space was estimated to be close to 50% and the erection time crashed by 60%.

Sealed Dry Type Transformers:

Sealed tank dry type transformers were developed for city distribution in Kolkata. Thetanks were sealed from outside and provided with corrugations to dissipate the heatgenerated and keep the temperature rise in check despite no air circulation.

The transformer was designed with varnish impregnated technology with use of nomexinsulation on winding conductors for higher thermal withstand capabilities. Thetransformer was extensively tested for all routine and type tests including short circuittesting. The transformer for short circuit was selected randomly and tested at independentlaboratory.

C. Foreign Exchange Earnings and outgo

During the financial year under review there the foreign exchange earning of theCompany was Rs. 28123000 and outgo was Rs. 923206.

Subsidiary Companies

As at 31st March 2016 there are no subsidiary companies.

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 2015-16 there were no cases reported underSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

Potential Sickness

As per the audited financial statements of the Company for the year ended 31st March2016 the accumulated losses as on that date have resulted in erosion of 50% or more ofthe peak net worth of the Company in the immediately preceding four financial years andaccordingly the Company continues to be a Potentially Sick Industrial Company within themeaning of section 23 of the Sick Industrial Companies (Special Provisions) Act 1985 andhas already intimated to the Board for Industrial Financial Reconstruction (BIFR).

Financial Highlights

FINANCIAL HIGHLIGHTS 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09
Gross Sales & Other Income 22318 18671 11400 12495 12596 12416 11020 24157
Net Sales & Other Income 20263 17366 10430 11554 11572 11428 10249 21100
Earnings before Depreciation 937 632 -529 -3857 -3218 -1861 -533 6593
Interest and Tax (EBDIT)
Depreciation 535 518 299 504 412 380 387 392
Profit After Tax 402 -374 -1880 -5018 -3998 -2274 -839 3897
Equity Dividend % -- -- -- -- -- -- -- 124
Dividend Payout -- -- -- -- -- -- -- 1317
Equity Share Capital 1062 1062 1062 1062 1062 1062 1062 1062
Reserves and Surplus 14425 14023 -450 1430 6447 10446 12735 13574
Net Worth 15487 15085 612 2492 7509 11508 13797 14636
Gross Fixed Assets 10106 10003 9888 9902 9822 9945 9381 9501
Net Fixed Assets 6215 6635 7047 7309 7667 8130 7940 8212
Total Assets 21269 20659 18270 17684 17599 15923 14885 16632
KEY INDICATORS 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09
Earnings per Share - ` 3.79 -3.52 -17.7 -47.25 -37.65 -21.42 -7.9 36.69
Turnover per share - ` 210.16 175.82 107.35 117.65 118.71 116.91 103.79 227.47
Book value per share - ` 145.83 142.04 5.76 23.46 70.72 108.36 129.92 137.81
Debt : Equity Ratio 1.15:1 1.15:1 20.62:1 3.27:1 0.71:1 0.09:1 0.07:1 0.10:1
EBDIT / Gross Turnover % 4% 3% -5% -32% -26% -15% -5% 27%
Net Profit Margin % 2% -2% -19% -42% -32% -18% -8% 18%
RONW % 3% -61% -75% -67% -35% -16% -6% 27%
ROCE % 3% 1% -57% -64% -33% -15% -6% 35%

Acknowledgements

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

Ricardo Garza Suarez Indraneel Dutt
Chairman Director
DIN: 07194157 DIN: 01942447