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Indsil Hydro Power & Manganese Ltd.

BSE: 522165 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE867D01018
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OPEN 136.00
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VOLUME 33159
52-Week high 154.50
52-Week low 48.80
P/E 32.34
Mkt Cap.(Rs cr) 219
Buy Price 0.00
Buy Qty 0.00
Sell Price 138.10
Sell Qty 900.00
OPEN 136.00
CLOSE 135.40
VOLUME 33159
52-Week high 154.50
52-Week low 48.80
P/E 32.34
Mkt Cap.(Rs cr) 219
Buy Price 0.00
Buy Qty 0.00
Sell Price 138.10
Sell Qty 900.00

Indsil Hydro Power & Manganese Ltd. (INDSILHYDRO) - Director Report

Company director report

TO SHAREHOLDERS :

Dear Shareholders

The Board of Directors of your Company are pleased to present the 26thAnnual Report on the business of the Company along with the Audited Financial Statementsof the Company for the year ended 31 stMarch 2016.

THE FINANCIAL PERFORMANCE

During the period under review the Company has achieved on standalone basis revenueof Rs. 7304 Lakhs and net profit of Rs. 399 Lakhs. During the same period the Company onconsolidated basis has achieved revenue of Rs. 18092 Lakhs and net profit of Rs. 66Lakhs.

FINANCIAL RESULTS :

(for 9 months from 1st July 2015 to 31st March 2016)

A. STANDALONE

The Standalone performance for the Financial Year ended 31st March 2016 isas under:

The Financial Summary

Rs. in Lakhs

Sl. No. Particulars Current Year 2015-16 (for 9 months) Previous Year 2014-15 (for 12 months)
1. Revenue from Operations 7304 12344
2. Operating Expenses (6519) (10416)
3. Gross Profit 785 1928
4. Depreciation (326) (427)
5. Profit Before Tax 459 1501
6. Provision for Tax (60) (286)
7. Net Profit after Tax 399 1215
8. Dividend (95) (191)
9. Tax on Dividend Nil 38
10. Carried to Profit & Loss A/c 304 1062

B. CONSOLIDATED:

The Consolidated performance for the Financial Year ended 31st March 2016is as under: The Financial Summary

Rs. in Lakhs

Sl. No. Particulars 2015-16 (for 9 months) 2014-15 (for 12 months)
1. Revenue from Operations 18092 24296
2. Operating Expenses (17064) (22811)
3. Gross Profit 1028 1485
4. Depreciation (903) (931)
5. Profit Before Tax 125 554
6. Provision for Tax 60 105
7. Net Profit after Tax 66 659
8. Dividend (95) (191)
9. Tax on Dividend Nil 38
10. Carried to Profit & Loss A/c (29) 506

DIVIDEND & RESERVES :

The Board recommends a dividend of Rs. 0.60 per equity share of Rs. 10/- per share (6%)on the Equity Share Capital of Rs. 158867920/- for the Financial Year ended 31stMarch 2016 (for the period of 9 months under review) aggregating Rs. 9532075/- (onannualized basis this dividend works out to 8%). The total dividend payout works out to23.86% of the net profit of the Standalone results. The dividend on equity shares issubject to the approval of the shareholders in the Annual General Meeting. The dividendif approved will be payable to those shareholders whose names appear in the Register ofMembers as on Wednesday the 7th September 2016 the date fixed for thepurpose.

In terms of the Companies Act any unclaimed or unpaid dividend relating to thefinancial year 2008-09 is due for transfer on 28th January 2017 to theInvestor Education and Protection Fund established by the Central Government.

The Company does not propose to transfer any amount to the General Reserves for thefinancial year ended 31st March 2016.

STATE OF AFFAIRS OPERATIONS :

During the year under review (for 9 months) the Company has achieved a turnover of Rs.7304 Lakhs (2014-15 : Rs. 12344 Lakhs) resulting in a Profit before tax of Rs. 459 Lakhs.

The year under review saw comparatively poor monsoon cycles which resulted in lowergeneration of power of 26.85 million units (9 months) as against 50.53 million units (12months) during the previous year.

The Company undertook shut down for long maintenance work during the last quarter ofthe year under review which further deteriorated the performance of the smelting division.Apart from the above the year under review reflects a 9 months working performancecompared to that of 12 months during the previous years.

FUTURE PROSPECTS:

The outlook and future prospects of the Company are presented in the "ManagementDiscussion and Analysis Report" forming part of this Report.

RENEWABLE ENERGY CERTIFICATES (REC) :

The Central Electricity Regulatory Commission has unfortunately withdrawn theeligibility of RE status to all captive power plants that commenced before 2010.Therefore from 1st April 2016 your Company will no longer be eligible forREC Certificates and this will result in a deterioration of power price realization to thetune of Rs. 1.5 per kwhr.

AL-TAMMAN INDSIL FERROCHROME LLC (ATIFC) - JOINT VENTURE COMPANY

Ferro Chrome markets during the past year have exhibited the same trends as that ofmanganese alloy markets. The global steel and stainless steel recession took its toll onthe ferro chrome industry as well. However due to certain inherent cost advantages thatATIFC possesses it managed to break even during the year 2015 and post a negligibleprofit as well. The second half of the year 2016 is looking extremely good for ATIFC sinceferro chrome demand and price realization has improved considerably. The year 2016 isexpected to witness a reasonable profit figure from the Joint Venture.

SREE MAHALAKSHMI SMELTERS (P) LTD (SMS) - SUBSIDIARY OF THE COMPANY

Due to recessionary trends in manganese alloy industry and a very high power chargesthe Company was forced to shut down its smelting operations in May 2015. Smeltingoperations has not resumed yet. However the Andhra Pradesh Government has come out with apolicy measure to boost manufacturing sentiments in the State. This policy measure entailsreduction in power charges which if effected in the form of lower electricity cost to theCompany on a monthly basis will prove to be a boost and a strong case for reopening ofthe smelting division. In such an event your Company plans to take on lease the smeltingplant of Sree Mahalakshmi Smelters Private Limited and operate that plant to producesilico manganese or ferro chrome production as the case may be. However the said Companydid not have operations for major part of financial year 2015-16 and hence it is not amaterial subsidiary for the financial year 2016-17.

INDSIL HYDRO GLOBAL FZE SHARJAH AIRPORT INTERNATIONAL FREEZONE (WHOLLY OWNEDSUBSIDIARY)

The consolidated financial results incorporating the financial statement of the WhollyOwned Subsidiary Indsil Hydro Global FZE is attached to the Annual Report as requiredunder the Accounting Standards and SEBI (Listing Obligations and Disclosure Requirements)Regulations2015.

DISCLOSURE ON SUBSIDIARY / JOINT VENTURE

As per the provisions of Section 129 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 a separate statement containing the salient features of theSubsidiary Company / Joint Venture is attached (Form AOC-1) to this Report along with thefinancials (Annexure-1). No other Company has become Subsidiary Associate or JointVenture Company during the financial year 2015-16.

CONSOLIDATED FINANCIAL STATEMENTS :

The consolidated financial statements by consolidating the accounts of the CompanySree Mahalakshmi Smelters Private Limited (Subsidiary of the Company) Al-Tamman IndsilFerro Chrome LLC Sultanate of Oman (the JV) and Indsil Hydro Global FZE Sharjah AirportInternational Freezone (Wholly Owned Subsidiary of the Company) under the AccountingStandards 21 issued by the Institute of Chartered Accountants of India forms part of thisAnnual Report.

CHANGE OF FINANCIAL YEAR

The Board of Directors at its meeting held on 17th August 2015 approvedalignment of financial year of the Company to 31st March every year as requiredby Companies Act 2013. The same was also informed to Bombay Stock Exchange Ltd andrequisite Form MGT-14 was filed with the Ministry of Corporate Affairs.

Therefore this financial year under review of the Company is for a period of 9 monthsfrom 1st July 2015 to 31st March 2016 and thereafter eachfinancial year will be for 12 months from 1st April to 31stMarch.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details as per the provisions of Section 186 of the Companies Act 2013 are given underNote No. 2.32 to Financial Statements .

PARTICULARS OF CONTRACTS WITH RELATED PARTY

All the transactions of the Company with related parties are at arms length and havetaken place in the ordinary course of business. Provisions of Section 188 of the CompaniesAct 2013 are not applicable.

Form No. AOC-2 pursuant to Clause (h) of Sub-section (3) of Section 134 of theCompanies Act 2013 and Rule 8(2) of the Companies (Accounts) Rules 2014 is attached asAnnexure - 2.

OTHER DISCLOSURES

As per Rule 8(5) of the Companies Accounts Rules 2014 the following additionalinformation are provided :

1. The financial summary or highlights The financial highlights including State of Affairs of the Company Dividend and Reserves are provided in this Report to the shareholders.
2. The change in the nature of business if any There is no change in the nature of business.
3. The details of Directors or Key Managerial Personnel who were appointed or have resigned during the year Sri S. Mahadevan and Sri R.Murali were appointed as Company Secretary and Chief Financial Officer respectively on 02.11.2015
4. a) The names of Companies which are Subsidiaries Joint Venture Sree Mahalakshmi Smelters Private Limited - Subsidiary
Indsil Hydro Global FZE Sharjah Airport International Freezone (SAIF) - Wholly Owned Subsidiary
Al-Tamman Indsil Ferrochrome LLC Sultanate of Oman - Joint Venture
b) Any of the above have become ceased during the year. No
5. The details of deposits under Chapter V of the Act The Company has not accepted deposits
6. The details of deposits which are in Compliance with requirement of Chapter V of the Act Not Applicable
7. The details of significant and material orders passed by the Regulators / Courts or Tribunals impacting the going concern status and Company's operation Nil
8. The details of adequacy of internal controls with reference to the financial statements Systems and procedures are in place to detect and protect the organizational resources both tangible and intangibles. The financial statements are prepared in accordance with the Accounting Standards issued by the ICAI.

DEPRECIATION

Depreciation on fixed assets is provided on Straight Line Method in accordance with therates specified under schedule II of the Companies Act 2013 except the useful life ofthe Plant and Machinery based on the technical evaluation. As per the technical evaluationsuch useful life has been taken as 20 years.

EXTRACTS OF ANNUAL RETURN

As per the requirements of provisions of the Companies Act 2013 the Extract of theAnnual Return in the prescribed Form MGT-9 is annexed to this Report (Annexure - 3)

COMMITTEES OF THE BOARD OF DIRECTORS

A. AUDIT COMMITTEE

Audit Committee was constituted by the Board of Directors of the Company to handle theactivities as set out in Regulation 18 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with the Stock Exchange read with Section 177 of theCompanies Act 2013.

COMPOSITION OF AUDIT COMMITTEE

The Board constituted the Audit Committee which comprises of Dr. A.K.Sreedharan asChairman Dr. T.C.P.Nambiar and Sri Vinod Narsiman as Members. All the recommendations ofthe Audit Committee were accepted by the Board. More details on the Committee like termsof reference are given in the Corporate Governance Report.

B. SHARE TRANSFER COMMITTEE

Share Transfer Committee was constituted by the Board of Directors of the Company toexpedite the process of Share Transfers in respect of shares held in physical form and totake on record the volume of shares transacted in the Demat segment periodically. TheBoard constituted the Share Transfer Committee which consists of Sri S.Inderchand asChairman and Smt. D.Pushpa Varadarajan as Member.

C. STAKEHOLDERS' RELATIONSHIP COMMITTEE

This Committee considers and resolves the grievances of shareholders of the Company.The said Committee comprises of Sri S.Inderchand as Chairman and Smt D.Pushpa Varadarajanas Member.

D. COMPENSATION COMMITTEE

Compensation Committee was constituted to administer Indsil Hydro Power and ManganeseLimited Employee Stock Option Scheme. The Committee consists of Dr. A.K.Sreedharan asChairman and Sri Vinod Narsiman and Dr. T.C.P.Nambiar as Members.

E. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) Committee was constituted by the Board ofDirectors to undertake and administer Corporate Social Responsibility of the Company. CSRCommittee consists of Sri S.N.Varadarajan Executive Vice-Chairman as Chairman of theCommittee and Sri Vinod Narsiman Managing Director and Dr. A.K.Sreedharan IndependentDirector as Members of the Committee.

The preference for spending CSR funds has been in and around the area where theCompany's plants are situated. However the Company could not identify the Agencies /Trusts suitable in line with CSR Policy of the Company for spending the entire amount.

Expenditure of 2% of average net profit could not be fulfilled totally due to theCompany not being able to identify suitable local area projects for CSR activities despiteits constant efforts to identify suitable projects. Thus there was a short fall of Rs.1066297/-. The Company would continue its pursuit and strengthen the mechanism toexecute all identified local area projects in future and adopt constant monitoring.

CSR Policy was adopted by the Board of Directors on the recommendation of CSRCommittee. Report on CSR as per Rule 8 of Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is annexed to this Report (Annexure - 4).

F. NOMINATION AND REMUNERATION COMMITTEE

Nomination and Remuneration Committee was framed by the Board of Directors as per therequirements of the provisions of the Companies Act 2013. This Committee consists of :

1) Dr. A.K.Sreedharan Chairman (Non-Executive Independent)

2) Sri B.Balchand Member (Non-Executive Non-Independent)

3) Dr. T.C.P.Nambiar Member (Non-Executive Independent)

The said Committee has been empowered and authorized to exercise the powers asentrusted under the provisions of Section 178 of the Companies Act 2013. The Company hasa policy on Directors' appointment and remuneration including criteria for determining thepositive attributes independence of a Director and other matters provided under Section178(3) of the Act.

G. RISK MANAGEMENT COMMITTEE

Though it is not applicable the Company has constituted a Risk Management Committee.The Committee has formulated a Risk Management Policy for Risk Management. The RiskManagement Policy is periodically reviewed for improvement.

The Risk Management Committee duly constituted by the Board of Directors consists of :

1) Sri S.N.Varadarajan Executive Vice-Chairman as Chairman of the Committee

2) Sri Vinod Narsiman Managing Director as Member of the Committee

3) Dr. A.K.Sreedharan Director as Member of the Committee VIGIL MECHANISM

The Board has constituted Vigil Mechanism as per Rule 7 of the Companies (Meetings ofBoard and its Powers) Rules 2014. The Audit Committee has been authorized to oversee theVigil Mechanism. Sri Vinod Narsiman Managing Director has been nominated to facilitatethe Vigil Mechanism.

The Vigil Mechanism is intended to provide adequate safeguards against victimization ofemployees and to facilitate to report the genuine concerns or grievances.

WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report about unethical behaviour suspected fraud or violationof Code of Conduct and ethics. The Policy aims for conducting the affairs in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behavior. All permanent employees of the Company are covered under the WhistleBlower Policy.

BOARD APPROVED POLICIES

The Board of Directors approved and adopted the following policies which are publishedin the Company's website www.indsil.com.

Sl. No Name of the Policies Weblink
1. Code of Conduct applicable to the Board of Directors including Key Managerial Personnel (KMP) & Senior Managerial Personnel (SMP) http://www.indsil.com/policies/
2. IHPML Whistle Blower Policy http://www.indsil.com/policies/
3. Related Party Transactions Policy http://www.indsil.com/policies/
4. Policy on Material Subsidiary http://www.indsil.com/policies/
5. Code of Conduct to regulate monitor and report trading by Insiders http://www.indsil.com/policies/
6. Code of Practices for Fair Disclosure of Unpublished Price Sensitive Information SEBI (Prohibition of Insider Trading) Regulations 2015 http://www.indsil.com/policies/
7. Familiarisation Programme for Independent Directors http://www.indsil.com/policies/
8. Corporate Social Responsibility Policy http://www.indsil.com/policies/
9. Enterprise Risk Management Policy http://www.indsil.com/policies/
10. Policy on Determination of Materiality http://www.indsil.com/policies/

EVALUATION OF BOARD'S PERFORMANCE

On the advice of the Board of Directors the Nomination and Remuneration Committeeconsisting of three Directors of the Company formulate the criteria for the evaluation ofthe performance of the Board of Directors & its Committees Independent DirectorsNon-Independent Directors Executive Director Chairman and Managing Director.

The Board of Directors are aware of the performance and are familiar with the businessof the Company.

A Policy on succession planning for the Board and Senior Management was adopted by theBoard of Directors in its meeting held on 27th August 2014.

STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL :

Statement pursuant to Section 134 of the Companies Act 2013 read with the Companies(Particulars of Employees Rule 1975 and Section 197 (12) of the Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed to this Annual Report (Annexure-5)

RESIGNATION OF DIRECTOR(s) & RE-APPOINTMENT OF INDEPENDENT DIRECTOR(s)

There was no resignation and re-appointment of Independent Director(s) during the yearunder review.

MEETING OF INDEPENDENT DIRECTORS

Pursuant to Regulation 25(4) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a meeting of the Independent Directors to review the performance ofNon-Independent Directors Board of Directors and to assess the quality quantity andtimeliness of flow of information between the Management and the Board of Directors toeffectively and reasonably perform their duties was conducted on 21st March2016 and all the Independent Directors attended this meeting.

AUDITORS

The Board of Directors of the Company recommends M/s Raja & Raman (Firm'sRegistration No. 003382S) Chartered Accountants 1055/1 First Floor Gowtham CentreAvanashi Road Coimbatore 641 018 the retiring Auditors to be reappointed as StatutoryAuditors of the Company from the conclusion of this Annual General Meeting till theconclusion of the next Annual General Meeting for the financial year 2016-17 subject tothe approval of the shareholders in the ensuing Annual General Meeting. The said itemregarding appointment of M/s Raja & Raman Auditors is placed before the shareholdersfor their approval.

The Auditors have consented and confirmed their eligibility and desire to continue asStatutory Auditors of the Company.

INTERNAL AUDITOR

Ms. K.R.Divya (Membership No. 228896) Chartered Accountant No. 37 P.M.SamyColony1st Street R.S.Puram Coimbatore 641 002 was appointed as Internal Auditorpursuant to the provisions of Section 138 of the Companies Act 2013 by the Board ofDirectors of the Company to conduct the internal audit functions.

COST AUDITOR

Pursuant to Section 148 of the Companies Act 2013 Sri B.Venkateswar Cost Accountantwas appointed by the Board of Directors of the Company for conducting audit of the CostAccount Records of the Company for the year 2016-17. He was the Cost Auditor of theCompany for the year 2015-16 as well.

SECRETARIAL AUDITORS

KSR & Co Company Secretaries LLP a firm of Company Secretaries is the SecretarialAuditors of the Company. The Secretarial Audit Report submitted by them forms part of thisReport (Annexure-6).

AUDITOR'S REPORT & ACCOUNTING POLICIES & SECRETARIAL AUDIT REPORT

The Auditors' Report read with the Notes on Accounts are self-explanatory and does notrequire any further clarification.

A statement detailing significant Accounting Policies of the Company is annexed to theAccounts.

The Reports of the Statutory Auditors and the Secretarial Audit Report (both appearingelsewhere in this Annual Report) are without any adverse comments.

EMPLOYEE STOCK OPTION SCHEME

Pursuant to the SEBI (Share Based Employee Benefits) Regulations 2014 issued by SEBIon October 28 2014 the Company has obtained approval of the shareholders through PostalBallot replacing the INDSIL ESOS 2008 with "INDSIL ESOS 2015" in conformitywith such regulations and accordingly executed Variation Deed of Trust with the concernedRegistering Authority in Coimbatore. The results of the Postal Ballot passing theresolution to this effect by the shareholders were furnished to the Bombay Stock Exchangeaccordingly and such results were published in the newspapers and website of the Companyhttp://www.indsil.com/news/

A copy of the INDSIL ESOS 2015 and the registered Variation Deed were furnished to theBombay Stock Exchange for the Exchange to take the same on record. A Corporateannouncement to this effect was published in the Bombay Stock Exchange website.

CORPORATE WEBSITE

The website of the Company www.indsil.com carries a comprehensive database ofinformation of interest to the stakeholders including the corporate profile informationwith regard to products plants and financial performance of the Company and Policies.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence as applicable under the provisionsof Section 149(6) of the Companies Act 2013 read with relevant rules and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

A familiarization programme for Independent Directors was conducted on 23rdMarch 2016 and the details are available in the Company's website:http://www.indsil.com/policies/

INSURANCE

All the properties of the Company including buildings plant & machinery and stockshave been adequately insured.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion and Analysis for the year under review as stipulated underRegulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is enclosed to this Annual Report (Annexure - 7).

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors based on the representations received from the Management and pursuant toSub-section 3(c) of Section 134 of the Companies Act 2013 hereby confirm that :

(i) in the preparation of Annual Accounts the applicable accounting standards havebeen followed and wherever required proper explanation relating to material departureshave been given.

(ii) have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit or loss of the Company for that year.

(iii) have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities.

(iv) have prepared the Annual Accounts on a going concern basis

(v) have laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and operating effectively ; and

(vi) have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

CODEOFCONDUCT

The Board of Directors approved a code of conduct which is applicable to the Members ofthe Board and all designated employees in the course of day to day business operations ofthe Company. The code is posted in the Company's website : http://www.indsil.com/policies/

All the Board Members and the Senior Management Personnel have confirmed compliancewith the code.

PREVENTION OF INSIDER TRADING

The Company adopted a Code of Conduct for Prevention of Insider Trading in order toregulate the trading in Securities by the Directors and designated persons of the Companyas per SEBI (Prohibition of Insider Trading Regulations 2015). The details of the Code ofConduct and Fair Disclosure is published in the Company's website :http://www.indsil.com/policies/

CORPORATE GOVERNANCE

As per Regulation 34 (3) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a separate disclosure on Corporate Governance Practices followed by theCompany together with a certificate from the Company's Secretarial Auditors KSR & CoCompany Secretaries LLP Practising Company Secretaries Coimbatore on such compliance areattached.

INDUSTRIAL SAFETY

Your Company has laid high emphasis on safety of all the personnel and mitigation ofdamage to equipments. The Company has thoroughly followed all the safety measures.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3) (m) of the Act read with theCompanies (Accounts) Rules 2014 is enclosed to this Report (Annexure - 8).

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments in the business operations of the Companyfor the financial year ended 31st March 2016 upto the date of signing of theDirectors' Report.

NUMBER OF BOARD MEETINGS

The Board of Directors met 4 times in the financial year 2015-16. The details of theBoard Meetings and the attendance of the Directors are provided in the CorporateGovernance Report.

LISTING FEE

Listing fee for the financial year 2016-17 has been paid to Bombay Stock Exchange wherethe shares of the Company are listed.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS

1. The Company maintains all its records in ERP System and the work flow and approvalsare routed through ERP ;

2. The Company has appointed Internal Auditors to check the Internal Controls and alsocheck whether the workflow of the organization is in accordance with the approved policiesof the Company. In every quarter during approval of Financial Statements InternalAuditors will present to the Audit Committee the Internal Audit Report and ManagementComments on the Internal Audit observations ; and

3. The Board of Directors of the Company have adopted various policies like CorporateSocial Responsibility Policy Code of Conduct to Regulate Monitor and Report Trading byInsiders Code of Practices for Fair Disclosure of Unpublished Price SensitiveInformation Code of Conduct applicable to the Board of Directors including Key ManagerialPersonnel and Senior Management Personnel Enterprise Risk Management Policy PerformanceEvaluation Board Diversity and Professional Code of Conduct Policy for Related PartyTransactions Policy on Determination of Materiality for Disclosure of events orinformation Policy on Material Subsidiary Prevention of Sexual Harassment at WorkplaceProfessional Code of Conduct for Independent and Non-executive Directors including SeniorManagerial Personnel (SMP) Succession Planning for the Board and Senior ManagementWhistle Blower Policy and such other procedures for ensuing the orderly and efficientconduct of its business for safeguarding of its assets the accuracy and completeness ofthe accounting records and the timely preparation of reliable financial information.

DECLARATION

The Company has been regular in filing all forms and returns with the Registrar ofCompanies as required under the Companies Act 2013 and has not defaulted in payment ofdividends.

REPORT ON SEXUAL HARASSMENT

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressel) Act 2013.

During the financial year ended 31st March 2016 the Company has notreceived any complaints pertaining to Sexual Harassment of Women.

ACKNOWLEDGEMENTS

Your Directors are extremely thankful to State Bank of Travancore Export Import Bankof India IDBI Bank Limited Yes Bank Limited Standard Chartered Bank and The FederalBank Limited for their continued support.

Your Directors acknowledge and express their grateful appreciation for the co-operationand support received from Government Authorities Kerala State Industrial DevelopmentCorporation employees customers and suppliers. They also thank the shareholders for theconfidence reposed by them in the management of the Company and for their continuedsupport and co-operation.

For and on behalf of the Board
Place : Coimbatore
Date : 5th August 2016 Sd/- Sd/-
VINOD NARSIMAN S.N. VARADARAJAN
Managing Director Executive Vice-Chairman
DIN:00035746 DIN:00035693