Your Director's have pleasure in presenting the 33rd Annual Report and the AuditedStatement of Accounts for the year ended 31st March 2017.
The Company's operating performance during the year ended 31st March 2017 issummarized below.
Rs. in Lakhs
| ||Standalone ||Consolidated |
|Particulars ||Year ended 31st March ||Year ended 31st March |
| ||2017 ||2016 ||2017 ||2016 |
|Sales ||5589.85 ||4775.88 ||6308.22 ||5291.96 |
|Other Income ||467.66 ||407.57 ||467.70 ||407.92 |
|Total Income ||6057.51 ||5183.45 ||6775.92 ||5699.89 |
|Profit before Interest Depreciation & Tax ||880.06 ||1053.75 ||914.74 ||1081.69 |
|Interest ||76.65 ||94.36 ||76.65 ||94.36 |
|Depreciation & Preliminary ||251.71 ||198.60 ||270.86 ||213.10 |
|Expenses written off || || || || |
|Profit/(Loss) before Tax ||551.70 ||760.79 ||567.23 ||774.23 |
|Provision for tax ||123.58 ||193.70 ||124.94 ||196.81 |
|Profit/(Loss) after Tax ||428.11 ||567.09 ||442.29 ||577.42 |
|Profit/(Loss) brought forward from previous year ||525.28 ||270.59 ||550.65 ||285.63 |
|Fixed Asset Adjustment ||- ||- || ||- |
|Deferred tax reinstatement || || || ||- |
|Profit available for appropriation ||953.39 ||837.68 ||992.94 ||863.05 |
|Appropriation || || || || |
|Extraordinary Items ||- ||- || ||- |
|Interim dividend ||(81.21) ||(159.33) ||(81.21) ||(159.33) |
|Transferred to General Reserve ||(42.81) ||(56.71) ||(42.81) ||(56.71) |
|Proposed dividend ||(81.66) ||(53.11) ||(81.66) ||(53.11) |
|Corporate dividend tax ||(33.16) ||(43.25) ||(33.16) ||(43.25) |
|Balance Carried forward ||714.55 ||525.28 ||754.10 ||550.65 |
On a Standalone basis the Company achieved a standalone Revenue of Rs. 5589.85 lakhsas against Rs. 4775.88 lakhs achieved during 12 months of previous year reflecting agrowth of 17.04%.
On a Consolidated basis the Company achieved a consolidated Revenue of Rs. 6308.22lakhs as against Rs. 5291.96 lakhs achieved during 12 months of previous year reflectinga growth of 19.20%.
However due to considerable bad debts write offs and loss of major client in ITdivision the overall net by profitability 24.51% from Rs. 567.09 Lakhs in FY 2015-16 toRs. 428.11 Lakhs in FY 2016-17.
During the current year we opened a new office in Atlanta Georgia USA where Mr.K.Prasad Raju taken over the charge as President & COO to widen our client base andpenetrate into larger fabricators and General Contractors. Many top class clients startedgiving us pilot projects and approved our quality and schedules. While Civil/Structuraldetailing services grew rapidly from $ 5.87 million to $ 7.93 million by 35.09% there isa drastic reduction in IT division performance due to cancellation of major project fromour European client as they were acquired by Sales Force.
Mechanical Engineering Services (MES) Division started adding Tier 1 clients for thefirst time and also enlarging services offerings in Industrial equipment design SpecialPurpose Machines (SPMs) and Bus body building. Mechanical Engineering Services Divisiongrew by 19.76% in revenues compared to FY 2015-16.
Civil Engineering Services division is expected to grow handsomely in the FY 2017-18based on the strong client addition made in the last FY 2016-17.
New client additions are happening frequently in the last few months and prospects ofachieving 20-30% top line growth seems possible. New PPC Systems and QA methods introducedin last few months are all set to improve the output and enhance quality of outputconsiderable.
Company recently expanded its Vijayawada office by moving into a larger facility andopened a new Civil Engineering Services (CES) office at Chennai Prospects of IT divisionseems to be improving and we hope to cross the Break Even Point (BEP) in the currentFinancial year with fixed long term client contracts.
Mechanical Engineering Services is also expected to add considerable growth thanks tothe new clients and new domains added in last few months.
Overall future outlook for the next Financial year 2017-18 seems to be favourable.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY
No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year to which the financial statementsrelate and the date of this Directors' Report.
Till 31st January 2017 the Company had two wholly owned subsidiaries viz CrossroadsDetailing Inc. Farmersburg Indiana USA and RMM Global Inc. Indiana.
The Board of Directors of the Company at its Board Meeting held on 23rd December 2016approved the merger of both the wholly owned subsidiaries.
The effective date of merger was 01st February 2017. Post merger Crossroad detailingInc is merged with RMM Global. The name of the surviving entity RMM Global Inc has beenchanged to Mold-Tek Technologies Inc
The consolidated financial statements of the Company prepared in accordance withAccounting Standards 21 and 27 as specified in the Companies (Accounts) Rules 2014 formpart of the annual report. Pursuant to the provisions of Section 129(3) of the CompaniesAct 2013 a statement containing salient features of financial statements of subsidiaryin Form AOC 1 forms part of Board's Report.
Separate audited financial statements of the subsidiary company shall be kept open forinspection at the Registered Office of the Company during working hours for a period of 21days before the date of the Annual General Meeting. Your Company will also make availablethese documents. upon request by any Member of the Company interested in obtaining thesame. The separate audited financial statements in respect of the subsidiary company isalso available on the website of your Company at: http://www.moldtekgroup.com
CONSOLIDATED FINANCIAL STATEMENTS(CFS)
The Consolidated Financial Statements of your Company for the financial year 2016-17are prepared in compliance with applicable provisions of the Companies Act 2013 read withthe Rules issued thereunder applicable Accounting Standards and the provisions ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (hereinafter referred to as the Listing Regulations). Theconsolidated financial statements have been prepared on the basis of audited financialstatements of your Company its Subsidiary as approved by the respective Board ofDirectors.
The Consolidated Financial Statements should therefore be read in conjunction with thedirectors' report financial notes cash flow statements and the individual auditorreports of the Subsidiary.
Pursuant to provisions of section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the Company's subsidiary isattached to the financial statements of the Company in form AOC-1.
Your Directors have recommended a final dividend of Rs.0.30/- per equity share @15% ofpaid up equity share of face value of Rs.2/- each in addition to interim dividend ofRs.0.30/- (15%) hitherto declared making a total of Rs.0.60/- (30%) per equity share(previous year Rs. 0.80/- per equity share @40% of paid up equity share of Rs.2/- each)for the financial year ended 31st March 2017.The final dividend if approved will be paidto those members whose names appear in Register of Members as on 15th September 2017. Inrespect of shares held in dematerialized form it will be paid to members whose names arefurnished by National Securities Depository Limited and Central Depository Services(India) limited as that date. This will entail an outflow of Rs.196.03 Lakhs (Inclusive ofdividend tax).
The dividend payout for the years under review has been formulated keeping in view yourCompanyRs.s need for capital for its growth plans and the intent to finance such plansthrough internal accruals to the optimum.
Equity shares that may be allotted on or before the Book Closure will rank pari passuwith the existing shares and will be entitled to receive the dividend.
TRANSFER TO RESERVE
The Directors propose to transfer a sum of Rs 42.81 Lakhs to General Reserve out of theprofits earned by the Company.
AUTHORISED SHARE CAPITAL
The Authorised Share Capital of the Company as on 31st March 2017 stands at Rs130000000/- (Rupees Thirteen Crores only) divided into 65000000 (Six Crores FiftyLakhs) Equity Shares of Rs 2/- (Rupees Two Only) each. During the year there has been nochange in the Authorised Share Capital of the Company.
PAID UP SHARE CAPITAL
The paid up share capital of the company was Rs. 53110560 divided into26555280 equity shares of face value of Rs 2/- each as on 31st March 2016
The Board of Directors in the meeting held on 20th April2016 allotted 227795 equityshares of face value of Rs 2/- each at a price of Rs 12.20/- [comprising nominal value ofRs.2/- and premium of Rs.10.20/- each] to its employees who have exercised the optionvested on them under the Mold-Tek Technologies Employees Stock Option Scheme 2009.
The Board of Directors via a circular resolution dated 23rd February 2017 allotted286232 equity shares of face value of Rs 2/- each at a price of Rs 14.60/- [comprisingnominal value of Rs.2/- and premium of Rs.12.60/- each] to its employees who haveexercised the option vested on them under the MTTL ESOS 2015.
Post allotment the paid up share capital of the company has been increased to Rs.54138614/- divided into 27069307equity share of face value of Rs. 2/- each.
The Board of Directors via a circular resolution dated 12th May2017 (after theBalance Sheet Date i.e. 31st March 2017). allotted 20000 equity shares of face value ofRs 2/- each at a price of Rs 14.60/- [comprising face value of Rs.2/- and premium ofRs.12.60/- each] to its employee who have exercised the option vested on them under theMTTL ESOS 2015.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part ofthenotestothe this Annual Report.
The Company has neither accepted nor renewed any deposits from public within themeaning of Section 73 of the Companies Act 2013 read with Companies (Acceptance ofDeposits) Rules 2014 during the year under review.
INTERNAL CONTROLS SYSTEMS AND ADEQUACY
The Company's internal audit systems are geared towards ensuring adequate internalcontrols commensurate with the size and needs of the business with the objective ofefficient conduct of operations through adherence to the Company's policies identifyingareas of improvement evaluating the reliability of Financial Statements ensuringcompliances with applicable laws and regulations and safeguarding of assets fromunauthorized use.
Details of the internal controls system are given in the Management Discussion andAnalysis Report which forms part of the Directors' Report.
DETAILS OF DIRECTORS/KEY MANAGERIAL PERSONNEL
All the Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Companies Act 2013 and Regulation16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. In theopinion of the Board they fulfill the conditions of independence as specifiedin theCompanies Act 2013 and the Rules made there under and are independent of the management.
Based on the confirmations received none of the Directors are disqualified for beingreappointed as directors in terms of Section 164 of the Companies Act 2013.
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. ASubramanyam Director of the Company is liable to retire by rotation and is eligible forre-appointment.
Apart from above there has been no change in Directors and Key Managerial Personnel.
EMPLOYEE STOCK OPTION SCHEME
The Company has in operation Mold-Tek Technologies Employees Stock Option Scheme 2009MTTL ESOS-2015 MTTL ESOS 2016 for granting stock options to the employees of its companyin accordance with the Securities Exchange Board of India (Employee Stock Option Schemeand Employee Stock Purchase Scheme) Guidelines 1999 and Securities Exchange Board ofIndia (Share Based employee benefits) Regulations 2014.
There have been no Changes in the Scheme.
Disclosures pursuant to Regulation 14 of the Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 are enclosed as Annexure - A to thisreport.
The Annexure A is also available on website of the company atwww.moldtekgroup.com.
The Company has adopted Governance Guidelines or code of conduct on Board IndependentDirector Key Managerial Personnel or Senior Managerial Personnel. The GovernanceGuidelines or code of conduct cover aspects related to role of the Board diversitydefinition of independence and duties of independent Directors Code of Conduct Moralethics and principles to be followed.
NOMINATION REMUNERATION AND PERFORMANCE EVALUATION POLICY
The requisite details as required by Section 134(3) Section 178(3) & (4) ofCompanies Act 2013 and Regulation 34 of SEBI (LODR) Regulations 2015 is provided in theCorporate Governance Report.
TRANSACTION WITH RELATED PARTIES
The requisite details as required by Section 134 & 188 of Companies Act 2013 andRegulation 23 34(3) of SEBI (LODR) Regulations 2015 is provided in the CorporateGovernance and as Annexure- B in form AOC-2.
BOARD AND COMMITTEE MEETINGS
Details of the composition of the Board and its Committees and of the Meetings held andattendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Section 173(1) of Companies Act 2013 and Regulation 17(2) SEBI (LODR) Regulations2015.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory Costand Secretarial Auditors and the reviews performed by Management and the relevant BoardCommittees including the Audit Committee the Board is of the opinion that the Company'sinternal financial controls were and effective during the financial year 2016-17.
Accordingly pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013the Board of Directors to the best of their knowledge and ability confirm that:
(i) in the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures;
(ii) they have selected such accounting policies and applied them consistently and madejudgments 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 of the Company for that period;
(iii) they have taken proper and sufficient care 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) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;
(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
Pursuant to Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 the Company has constituted CSR Committeeconstituting 2 Executive Director 2 Non Executive Promoter Directors and 1 independentDirector chaired by Mr. J. Lakshmana Rao. The composition of the Corporate SocialResponsibility Committee meets the requirements of section 135 of the Companies Act 2013.The Board of Directors based on the recommendations of the adequate Committee formulateda CSR Policy. The requisite details on CSR activities pursuant to Section 135 of theCompanies Act 2013 and as per Annexure attached to the Companies (Corporate SocialResponsibility Policy) Rules 2014 are annexed as Annexure C to this Report.
POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted 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 alsoconstituted an Internal Complaints Committee known as the Prevention of Sexual Harassment(POSH) Committee to inquire into complaints of sexual harassment and recommendappropriate action. In the Financial year 2016-17 the Company has not received anycomplaints which fall within the scope of this policy. The policy is available on websiteof the company at www.moldtekgroup.com-Investors-Corporate Governance.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The requisite details as required by Section 177 of Companies Act 2013 and Regulation22 & 34 (3) of SEBI (LODR) Regulations 2015 is provided in the Corporate GovernanceReport.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
No significant material orders have been passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.
(1) Statutory Auditors:
M/s. Praturi & Sriram Chartered Accountants (Firm Registration Number 002739S)were appointed as the Statutory Auditors by the Members of the Company at the 30th AnnualGeneral Meeting to hold officefrom the conclusion of the 30th Annual General Meetinguntil the conclusion of the 33rd Annual General Meeting of the Company (subject toratification of the appointment by the Members at every subsequent Annual GeneralMeeting) in accordance with the provisions of the Companies Act 2013.
The term of M/s. Praturi & Sriram Chartered Accountants (Firm Registration Number002739S) expires in this Annual General meeting and based on the recommendation of theAudit Committee the Board of Directors at their meeting held on 28.08.2017 recommendedthe appointment of M/s. M. Anandam & Co. Chartered Accountants (FirmRegistration No. 000125S) for five years (subject to ratification of the appointment bythe Members at every subsequent Annual General Meeting) as the Statutory Auditors of theCompany and that the necessary resolution in this respect is being included in the noticeof the 33rd Annual General Meeting for the approval of the Members of the Company. Thenotes to the accounts referred to in Auditors' Report are self-explanatory and do not callfor any further comments. The Audit Report does not contain any qualification reservationor adverse remark.
(2) Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed M/s. P.Vijaya Bhaskar & Associates a firm of Company Secretaries inPractice to undertake the Secretarial Audit of the Company for the year ended 31st March2017. The Secretarial Audit Report is annexed as Annexure D. The Secretarial Audit Reportfor the financial year ended 31st March 2017 do not contain any qualificationreservation adverse remark or disclaimer.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed as Annexure E.
PARTICULARS OF REMUNERATION
The information required under Section 197 (12) of the Companies Act 2013 read withRule (1)(2) and (3) of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexure F.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12 (1) of The Companies(Management and Administration) Rules 2014 the extract of Annual Return in form MGT.9 isannexed as Annexure G.
MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE
The Management Discussion and Analysis Report and the Report on Corporate Governanceas required under Regulation 34 (2) of SEBI (LODR) Regulations 2015 forms part of theAnnual Report.
Your Company is committed to the tenets of good Corporate Governance and has takenadequate steps to ensure that the requirements of Corporate Governance as prescribed underSEBI (LODR) Regulations 2015 are complied with.
A separate report on Corporate Governance and a Management Discussion and AnalysisReport is being presented as part of the Annual Report.
A declaration of Code of Conduct from Mr. J. Lakshmana Rao Chairman andManaging Director forms part of the Corporate Governance Report.
Mr. J. Lakshmana Rao Chairman and Managing Director and Mr. Satya Kishore NadikatlaChief Financial Officer of the Company have given a certificate to the Board ascontemplated in Regulation 17(8) of SEBI (LODR) Regulations 2015.
All assets of the Company and other potential risks have been adequately insured.
The relationship with the workmen and staff remained cordial and harmonious during theyear and the management received full co-operation from the employees.
Your Directors wish to place on record their appreciation and gratitude for all theassistance and support received from Citibank and ICICI Bank Limited and officials ofconcerned government departments for their co-operation and continued support extended tothe Company. They also thank the Members for the confidence they have reposed in theCompany and its management.
| ||For and on behalf of the Board of Directors |
|Place:Hyderabad ||(J.LAKSHMANA RAO) |
|Date:28th August 2017 ||Chairman & Managing Director |
| ||(DIN:00649702) |