Patels Airtemp (India) Ltd.
Your Directors have pleasure in presenting herewith the 25th Annual Report togetherwith the Audited Financial Statements for the year ended on 31st March 2017.
| || ||(Rs. in Lacs) |
|Particulars ||Year ended on 31-03-2017 ||Year ended on 31-03-2016 |
|Revenue from Operations (Net) ||13614.59 ||12664.72 |
|Other Income ||50.71 ||45.78 |
|Total Revenue ||13665.30 ||12710.50 |
|Less: Depreciation & Amortisation Expense ||258.16 ||239.59 |
|Finance Cost ||315.01 ||186.77 |
|Other Expenses ||11869.43 ||11176.34 |
|Total Expenses ||12442.60 ||11602.70 |
| ||1222.70 ||1107.80 |
|Profit/(Loss) on sale of Fixed Assets ||(2.62) ||0.93 |
|Profit before Tax ||1220.08 ||1108.73 |
|Tax Expenses : || || |
|- Net Current Tax Expenses ||429.45 ||392.31 |
|- Deferred Tax ||4.07 ||1.60 |
| ||433.52 ||393.91 |
|Profit after Tax ||786.56 ||714.82 |
|Balance brought forward from previous year ||4586.36 ||4095.79 |
|Less: Adjustment on Account of Change in ||Nil ||Nil |
|useful life of Assets || || |
|Less : Short Provision for Dividend ||Nil ||Nil |
|Distribution Tax || || |
|Profit available for Appropriation ||5372.92 ||4810.61 |
|Less: Proposed Dividend # ||- ||111.54 |
|Less: Tax on Dividend # ||- ||22.71 |
|Less Transfer to General Reserve # ||- ||90.00 |
|Surplus carried forward to Balance Sheet # ||5372.92 ||4586.36 |
|Total ||5372.92 ||4810.61 |
|Earning Per Share ||15.51 ||14.10 |
# Refer para "TRANSFER TO RESERVE" hereunder.
STATE OF COMPANY'S AFFAIRS:
The Company has earned revenue from operations (gross) of Rs.148.61 crores during theyear ended on 31st March 2017 as against Rs.137.66 crores earned during the previous yearended on 31st March 2016 giving a rise of 7.95 % as compared to previous year.
Out of the revenue from operations of Rs.148.61 crores earned by the Company during theyear under review Rs.1 43.75 crores represents sale of products (Domestic & Export)Rs.1.65 crores represents sale of Services (Processing Charges) and Rs.3.21 croresrepresents other operating revenues. The Company has also earned other income of Rs.50.71lakhs during the year under review as against Rs.45.78 lakhs earned during the previousyear.
The Company has earned the Profit before Tax of Rs.1 2.20 crores during the year endedon 31 st March 2017 as compared to Rs.11.09 crores earned during the previous year endedon 31st March 2016 showing a rise of 10 %.
The Company has earned Net Profit of Rs.7.87 crores for the year ended on 31st March2017 after making Provision for Tax Expenses of Rs.4.34 crores and other adjustments ascompared to Net Profit of Rs.7.15 crores earned by the Company during the previous yearended on 31st March 201 6 a rise of 10.07 %.
After adding the Surplus in the Statement of Profit & Loss of Rs.45.86 croresbrought forward from the previous year to the profit of Rs.7.87 crores earned by theCompany during the year under review the total amount of Rs.53.73 crores is available forappropriation.
As you aware that the Company is in engineering industry and is engaged inmanufacturing/fabricating tailor made machines and therefore the order book position ofsuch type of company can play pivotal role in the growth of the Company. Your Directorsare pleased to state that continuing the past trend; the Company is having confirmedorders of about Rs.252 Crores on hand as on 01/08/201 7. Thus your Directors are quitebullish on repeating similar performance in future. Your Directors are cautious and makinguntiring efforts so as not to compromise on growth quality and profitability of theCompany.
CHANGE IN SHARE CAPITAL
There is no change in the Share Capital of the Company during the year under review.
The Directors have recommended dividend of Rs.2.50 per share (@ 25 %) on 5070240Equity Shares of Rs.10/- each of the Company for the Financial Year ended on 31st March2017 (2016-2017) as compared to Dividend of Rs.2.20 per share (@ 22.00%) declared for theprevious Financial Year ended on 31st March 2016. This will absorb Rs.126.76 lakhs asagainst Rs.111.54 lakhs absorbed in the previous year. The corporate dividend tax payableby the Company on the said dividend will be Rs.25.81 lakhs as against Rs.22.71 lakhs inthe previous year.
The proposed rate of dividend has been increase from 22% to 25% for the financial year2016-2017 being Silver Jubilee Year of the Company as 25 years completed by the Company.
A resolution to that effect has been placed for the approval of the members at thisAnnual General Meeting of the Company and that the same when declared shall be paid tothe Members.
TRANSFER TO RESERVE :
Government of India vide Notification dated March 30 2016 and Circular No. 4/2016dated April 27 2016 had amended the Companies (Accounting Standards) Rules 2016effective from March 30 2016. According to the amended rules the proposed dividend asrecommended by the Board will not be recorded as a liability as at March 31 2017 (ReferPara 8.5 of AS 4 - Contingencies and Events occurring after the Balance Sheet date).Accordingly the proposed dividend of Rs.2.50 per share (@ 25%) and tax thereon are notrecognized as Liability in the Annual Accounts for the financial year ended 31/03/2017.However the same will be considered as Liability on approval of shareholders at thisAnnual General Meeting.
In view of above the Company has not transferred any amount to the General Reserve forthe year ended on 31st March 2017 and the total amount of Rs.53.73 crores is proposed tobe retained as the Surplus in the Statement of Profit and Loss.
MATERIAL CHANGES AND COMMITMENTS
In terms of Section 134(3)(l) of the Companies Act 2013 no material changes orcommitments affecting the financial position of the Company have occurred between the endof the financial year and the date of this Report. There has been no change in the natureof business of the Company.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
The Company has not received any significant and material orders passed by theRegulators or Courts or Tribunals impacting the going concern status and Company'soperations in future.
EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company as required under Section 92(3) read withSection 134(3)(a) of the Companies Act 2013 and Rule 12 of the Companies (Management andAdministration) Rules 2014 in the prescribed Form MGT-9 is annexed herewith as Annexure- A to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
In terms of provisions of Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report has beenenclosed herewith as per Annexure - B and forming part of the Directors' Report.
RECOGNITION OR AWARDS
The Company's products have ASME (American Society of Mechanical Engineers-USA)"U"/ "U2"/ "S" Stamp authorization. Our Company is also amember of HTRI (Heat Transfer Research Inc U.S.A.) for updating Heat TransferTechnology.
We are proud to announce that after 5 years of rigorous Preparation & 4 days ofSurvey and Audit of Quality Systems Procedure Calibration and Skills by a team of SuperSpecialist of ASME (American Society of Mechanical Engineers-USA) Accredited N & NPTauthorization to our Company a Global Qualification to Manufacture Heat Exchangers &Pressure Vessels for Nuclear Power Plant. Our Company is the 3rd Company in India with"N-NPT" authorization to Manufacture above equipments which has put our Companyin elite League of Critical Nuclear Power Plant Equipments.
Due to "U"/ "U2"/ "S" and "N & NPT" Stampauthorization it is expected to improve the Quality of the products/ equipments of theCompany and to achieve higher growth and profitability of the Company in future.
FINANCE UNDER CONSORTIUM ARRANGEMENT WITH BANK OF BARODA & AXIS BANK
The Company is availing Working Capital facilities aggregating to '102.00 Crores underconsortium arrangement with Bank of Baroda and Axis Bank after the sanction of WorkingCapital facilities of '22.00 Crores by AXIS Bank Ltd. (AXIS Bank) in August 2016. TheCompany has duly executed security documents including Mortgage Deed SupplementalHypothecation Deed Deed of Rectification Personal Guarantees Undertakings and otherdocuments in favour of BOB and Axis Bank under Consortium arrangement and createdsecurities on pari-passu basis. The Company has made regular repayment of Loan &interest and there is no any overdue payment to the said Banks.
However BOB had reviewed in December 2016 with decrease in existing credit facilitiesfrom Rs.97 Crores to '80 Crores.
During the year under review HDFC Bank Ltd. has also granted to the Company BillDiscounting facility to the extent of Rs.7.00 Crores.
ACCEPTANCE OF DEPOSITS
During the year under review the Company has not accepted any deposits from the Publicand Members of the Company and therefore not required to comply with the requirement underthe Companies Act 2013 and the Rules made thereunder. As such no amount of principal orinterest was outstanding to the Public and Members of the Company as on March 31 2017 andthe Company is not required to furnish information in respect of outstanding depositsunder Non-banking Non-financial Companies (Reserve Bank) Directions 1966 and Companies(Accounts) Rules 2014.
During the year under review the Company has accepted deposits from the Directors ofthe Company which are exempted deposits under Rule 2(1)(c)(viii) of Companies (Acceptanceof Deposits) Rules 2014 subject to compliance of the provisions of the Companies Act2013 and the Rules made thereunder.
During the year under review the Relatives of the Directors also brought in unsecuredloan/deposits by way of contribution to bring additional long term funds as a part ofconditions imposed by Bank of Baroda on the Directors and their relatives while reviewingworking capital facilities to the Company vide its letter dated 20-12-2016 which areexempted deposits under Rule 2(1)(c)(xiii) of Companies (Acceptance of Deposits) Rules2014.
Details of deposits accepted and repaid by the Company including interest to theDirectors & their Relatives during the financial year 2016-2017 are mentioned in NoteNo. 28 (Relate party information) of the Notes to the Financial Statements attached withthis Annual Report.
TRANSFER OF UNCLAIMED DIVIDEND TO IEPF
In terms of the provisions of Investor Education and Protection Fund Rules 2001(IEPF) during the year under review the Company has transferred the amount ofunclaimed/unpaid Dividend of Rs.329913/- for the financial year 2008-2009 to IEPFestablished by the Central Government under Section 124 & 1 25 of the Companies Act2013 and Rules made thereunder.
Pursuant to provisions of Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012 theCompany has uploaded the details of unpaid and unclaimed amounts lying with the Company ason July 30 2016 on the Company's website: http://www.patelsairtemp.com.
TRANSFER OF SHARES TO IEPF DEMAT AUTHORITY ACCOUNT
Pursuant to the provisions of Section 124(6) of the Companies Act 2013 and Rule 6 ofthe Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 as amended vide IEPF (Accounting Audit Transfer and Refund)Amendment Rules 2017 ("Rules") notified by the Ministry of Corporate Affairseffective from February 28 201 7 the Company is mandatorily required to transfer allsuch shares in respect of which dividend(s) has not been en-cashed or claimed by theshareholders for 7 (Seven) consecutive years or more from 2009-10 to 2015-16 to theInvestor Education and Protection Fund ("IEPF") Authority Demat Account set upby the Central Government.
In this regard the Company has communicated to the concerned shareholders individuallyto immediately claim their unclaimed dividends to avoid transfer of their shares to IEPF.In case the Company does not receive any communication from the concerned shareholderswithin three months from the date of letter issued the Company shall with a view toadhering with the requirements of the Rules transfer the shares to the IEPF Demat Accountof Authority as per the procedure set out in the rules. No claim shall lie against theCompany in respect of unclaimed dividend amount and shares transferred to IEPF pursuant tothe said Rules. The Company has also published the Notice in Indian Express and FinancialExpress for the aforesaid matters. The full details of such shareholders and shares duefor transfer to the IEPF Authority Demat Account are also uploaded on the website of thecompany www.patelsairtemp.com to enable the Shareholders to refer the above website toverify the details of the shares liable to be transferred to the IEPF.
Shareholders may claim back both the unclaimed dividend and corresponding sharestransferred to Demat Account of Authority including all the benefits accruing on suchshares if any from the IEPF Demat Account of Authority after following the procedureprescribed in the rules.
In case of shareholders holding shares in physical form and whose shares are liable tobe transferred to the IEPF Demat Account of Authority the Company will issue duplicateshare certificate(s) in lieu of the original held by them for the purpose of transfer ofthe shares to the IEPF Demat Account of Authority as per the Rules and upon such issuethe original share certificate(s) which are registered in their name will standautomatically cancelled and be deemed non-negotiable and Company shall inform toDepository by Corporate Actions for transfer of shares against the demat shares that needto be transferred in favour of IEPF Authority Demat Account. In case shares are held indematerialized form and are liable to be transferred the Company will inform toDepository by Corporate Actions for transfer of shares in favour of IEPF Authority Demataccount.
SUBSIDIARY ASSOCIATE OR JOINT VENTURE COMPANY
The Company does not have any subsidiary joint venture or associate companies withinthe meaning of Section 2(6) and 2(87) of the Companies Act 2013. As such a report in theprescribed Form AOC- 1 as per first proviso to sub-section (3) of Section 129 of theCompanies Act 2013 and Rules made thereunder is not required to be attached and a Policyfor determining material subsidiaries is not required to be framed by the Company.
CONSOLIDATED FINANCIAL STATEMENTS
Since the Company does not have any subsidiary joint venture or associate companies asmentioned above Consolidated Financial Statements are not required to be prepared andattached with the financial statement of the Company pursuant to the requirements ofSection 1 29 read with Schedule III of the Companies Act 2013 and Rules made thereunderand Listing Regulations and applicable Accounting Standards.
Being a Listed Company the Company has taken necessary measures to comply with theprovisions of Listing Regulations regarding Corporate Governance as amended from time totime. A separate report on Corporate Governance for the year ended on 31st March 2017 isattached herewith as a part of this Annual Report viz Annexure - C. A certificate fromStatutory Auditors of the Company regarding compliance of the aforesaid provisions ofCorporate Governance is obtained by the Company and annexed to the Corporate GovernanceReport. The Auditors' Certificate for the financial year 20162017 does not contain anyqualification reservation or adverse remark in respect of Corporate Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the confirmation andexplanations obtained by them your Directors make the following statement in terms ofSection 134(3)(C) and 134(5) of the Companies Act 2013 and confirm that :
(a) in the preparation of the annual accounts for the year ended 31st March 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
(b) the Directors have 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 as at 31 st March 201 7 and of theprofit of the Company for the year ended on that date;
(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 201 3 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) the Directors have prepared the annual accounts for the year ended on 31st March2017 on a going concern basis ;
(e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans given investments made guarantees given and securities providedby the Company under Section 186 of the Companies Act 2013 are not provided as duringthe year under review the Company has not given any loan nor made any investment norgiven any guarantee nor provided any security to any person.
RELATED PARTY TRANSACTIONS
Information on transaction with related party referred to under sub-section (1) ofSection 188 of the Companies Act 2013 in the prescribed Form AOC-2 is attached herewithviz Annexure - D and forming part of the Directors' Report pursuant to Section 1 34(3)(h)of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014.
Transaction with related parties pursuant to the provisions of Listing Regulations anderstwhile Listing Agreement are disclosed in Note No. 28 of the Notes to the FinancialStatements for the year ended on 31 st March 2017 in the Annual Report as required bythe Accounting Standard (AS) 18 issued by ICAI.
However there are no materially significant related party transactions made/enteredinto by the Company with its related parties including promoters directors or themanagement etc. that may have potential conflict with the interests of the Company atlarge.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website viz.www.patelsairtemp.com.
All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval. However the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material inaccordance with the provisions of Section 188 of the Companies Act 2013 and the Rulesmade thereunder and Listing Regulations and as such no approval of the Shareholdersrequire.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Mr. Devidas C. Narumalani (DIN No: 00097592) who retiredby rotation ceased to be a Director of the Company with effect from 30th July 201 6being the date of 24th Annual General Meeting of the members of the Company by notre-appointed by the Shareholders at the said 24th Annual General Meeting and throughRemote E-Voting. Mr. Devidas C. Narumalani was the Nonexecutive & Non-independentDirector of the Company.
Pursuant to the provisions of Section 1 52(6)(d) of the Companies Act 2013 and Rulesmade thereunder Mr. Prakash N. Patel (DIN: 00249210) Managing Director of the Companyshall retire by rotation as a Director of the Company at this Annual General Meeting asdetermined by lot at the Board Meeting of the Company held on 14th August 2017 betweenhimself and Mr. Narendra G. Patel (DIN: 00023205) Whole time Director of the Company asthey became Directors on the same day at the time of their last appointment and beingeligible offer himself for re-appointment for which necessary resolution has beenincorporated in the notice of the meeting. The Board of Directors recommends reappointmentof Mr. Prakash N. Patel as a Director of the Company.
The brief resume/details relating to the said Director who is to be re-appointed arefurnished in the Notes to the Notice of the Annual General Meeting.
There were no changes in the Key Managerial Personnel of the Company during the year.
The Company has received declarations from all the Independent Directors of the Companyin terms of Section 149(7) of the Act confirming that they meet the criteria ofindependence as prescribed under Section 1 49(6) of the Act and Regulation 16(b) & 25of SEBI Listing Regulations 201 5.
COMMITTEES OF DIRECTORS
The Board of Directors has the following Committees:
1. Audit Committee (AC)
2. Nomination and Remuneration Committee (NRC)
3. Stakeholders' Relationship Committee (SRC)
4. Corporate Social Responsibility Committee (CSR)
The details of various Committees of Directors constituted by the Board of Directorsunder various provisions of Companies Act 2013 and Rules made thereunder and ListingRegulations Meetings & Attendance terms of reference and other details are providedin the Corporate Governance Report annexed with the Directors' Report.
The composition of various Committees and their terms of references may be accessed onthe Company's website viz. www.patelsairtemp.com.
The Board has carried out an evaluation of its own performance and that of itsCommittees and Directors and also Chairperson in terms of Section 134(3)(p) of theCompanies Act 2013 and Rules made thereunder and Listing Regulations. The Board hasapproved a policy (NRC Policy) for criteria of determining qualifications selectionappointment and remuneration of Directors KMP and Senior Management and the same has beenuploaded on the Company's web-site www.patelsairtemp.com.
In a separate meeting of independent Directors performance of non-independentdirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of executive directors and non-executivedirectors and assessed the quality quantity and timeliness of flow of information betweenthe company management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Policy on appointment and remuneration of Directors KMP and other employees andother matters as required under Section 178(3) of the Companies Act 2013 is available onthe web-site of the Company viz. www.patelsairtemp.com.
NUMBER OF BOARD MEETINGS
During the financial year 2016-2017 4 (Four) Board Meetings were held on 28/05/201613/08/2016 1 2/11/201 6 & 03/02/2017. The gap between two Board Meetings did notexceed 1 20 days as prescribed in the Companies Act 2013 and Regulations 17 of theSecurities and Exchange Board of India (Listing Obligation and Disclosure Requirements)Regulation 2015.
The particulars of number of meetings held and attended by each Director are detailedin the Corporate Governance Report which forms part of this Report. Agenda of themeetings were prepared and all necessary papers were circulated to Members of the Board inadvance. Necessary disclosures were made by the Directors in the Board Meeting wheneverrequired. The Company has complied with Secretarial Standards 1 (SS-1) related to BoardMeeting of the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under Section 134(3)(m) of the Companies Act 2013 read with the Rule 8(3)of the Companies (Accounts) Rules 2014 details relating to Conservation of EnergyTechnology Absorption and Foreign Exchange Earnings and Outgo are given in the Annexure -E attached herewith and forming part of the Directors' Report.
Business risk evaluation and management covering the business operations of theCompany is an ongoing process within the Company and the management reviewed frequentlyrisk assessment and to minimize them. The ultimate goal of risk management is thepreservation of physical and human assets of the organization for successful continuationof its operations. Pursuant to the provisions of Regulation 21 of the Securities andExchange Board of India (Listing Obligation and Disclosure Requirements) Regulations2015 at present the Company is not required to constitute Risk Management Committee ofthe Directors of the Company.
CORPORATE SOCIAL RESPONSIBILITY
In terms of provisions of Section 135 of the Companies Act 2013 and Rules madethereunder a Committee of the Directors of the Company has been constituted as CorporateSocial Responsibility (CSR) Committee. CSR Committee has formulated a policy on theCorporate Social Responsibility measures to be undertaken by the Company as specified inSchedule VII to the Companies Act 201 3. The Corporate Social Responsibility Policy isavailable on the Company's web-site viz. www.patelsairtemp.com.
The Company has duly spent the required amount during the financial year ended on 31stMarch 2017 towards CSR activities. The Annual Report on CSR activities includingResponsibility Statement of the CSR Committee is annexed herewith marked as Annexure - F.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.
The Company's internal control system is commensurate with its size scale andcomplexities of its operations.
STATUTORY AUDITORS & AUDIT REPORT
The Companies Act 2013 ('the Act') was notified effective April 1 2014. Section 139of the Act lays down the criteria for appointment and mandatory rotation of statutoryauditors. Pursuant to Section 1 39 of the Act and the Rules made thereunder it ismandatory to rotate the statutory auditors on completion of two terms of five consecutiveyears. The Rules also lay down the transitional period that can be served by the existingauditors depending on the number of consecutive years for which an audit firm has beenfunctioning as auditor in the same company. The incumbent auditors M/s. Parikh &Majmudar Chartered Accountants Ahmedabad (Firm Registration No. 107525W) have served theCompany for more than 10 years before the Act was notified and will be completing themaximum number of transitional period (three years) at the ensuing 25th AGM. The Board ofDirectors places on record its appreciation to the services rendered by M/s. Parikh &Majmudar as the Statutory Auditors of the Company.
The Audit Committee of the Company has proposed and on 14th August 2017 the Board hasrecommended the appointment of M/s. Shah & Shah Associates Chartered AccountantsAhmedabad having Firm Registration No. 113742W as the statutory auditors of the Company.M/s. Shah & Shah Associates will hold office for a period of five consecutive yearsfrom the conclusion of the 25th Annual General Meeting of the Company till the conclusionof the 30th Annual General Meeting to be held in 2022 (subject to ratification of theappointment by the members at every Annual General Meeting held after this Annual GeneralMeeting). The first year of audit will be of the financial statements for the year endingMarch 31 2018 i.e. 2017-2018. They have expressed their willingness to be appointed asStatutory Auditors of the Company. The Company has received a certificate from the saidAuditors to the effect that their appointment if made would be within the prescribedlimits under Section 141 (3)(g) of the Act and they are not disqualified under the Act.The Members are requested to consider their appointment as Statutory Auditors of theCompany.
The Auditors' Report for the financial year 201 6-2017 does not contain anyqualification reservation or adverse remark.
SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT
Section 204 of the Companies Act 2013 and Rules made thereunder inter alia requiresevery Listed Company to annex with its Board Report a Secretarial Audit Report given by aCompany Secretary in Practice in the prescribed form. The Board had appointed Mr. PunitLath Practicing Company Secretary Ahmedabad (Regn. No. 11139) as the Secretarial Auditorto conduct Secretarial Audit of the records of the Company for the financial year2016-2017 and to submit his report to the Company. The Secretarial Audit Report for thefinancial year ended March 31 2017 is annexed herewith marked as Annexure - G to thisReport. The Board at its meeting held on 3rd February 2017 has reappointed Punit Lathas Secretarial Auditor for conducting Secretarial Audit of the Company for FY 2017-18.
The Secretarial Audit Report for the financial year 2016-2017 does not contain anyqualification reservation or adverse remark.
Pursuant to Section 148(2) of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 your Company is required to get its costaccounting records audited by a Cost Auditor.
Accordingly the Board at its meeting held on May 30 2017 has on the recommendationof the Audit Committee appointed M/s. Rajendra Patel & Associates Cost AccountantAhmedabad (Firm Registration No. FRN101163 and Membership No. 29021) to conduct the auditof the cost accounting records of the Company for FY 201 7-18 on a remuneration ofRs.70000/- plus taxes as applicable and reimbursement of actual travel and out of pocketexpenses. The remuneration is subject to the ratification of the Members in terms ofSection 148 read with Rule 14 of the Companies (Audit and Auditors) Rules 2014 and isaccordingly placed for your ratification.
The Cost Audit Report for the Financial Year ended 31st March 2016 has been duly filedin XBRL mode. The cost audit report of the Company for financial year ended March 31 2017will be filed with Central Government on or before the due date as prescribed underCompanies Act 2013 read with Companies (Cost Records and Audit) Rules 2014.
All insurable interests of the Company including buildings plant and machineryfurniture & fixtures and other insurable interest are adequately insured.
Pursuant to the provisions of Listing Regulations the Company declares that the EquityShares of the Company are listed on the BSE Limited (BSE). The Company confirms that ithas paid Annual Listing Fees to BSE up to the Financial Year 2017-2018.
PARTICULARS OF EMPLOYEES
The Disclosure required under Section 1 97(1 2) of the Companies Act 2013 read withthe Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended is annexed as Annexure - H and forms an integral part of thisReport.
A statement showing the names of top 10 employees in terms of remuneration drawn as perRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended is annexed as Annexure - H and forms an integral part of this Report.
The Statement of particulars of employees under Section 1 97(1 2) read with Rule 5 (2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is not provided with as during the financial year under review no employee of theCompany including Whole-time Directors and Managing Directors were in receipt ofremuneration in excess of the limits set out in the said rules.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has a Vigil mechanism and Whistle blower policy under which the employeesare free to report any act of serious misconduct or wrongful activity being occurred orsuspected to occur within the organization to his immediate HOD or the HR Head ordirectly to the concern Whole-time Directors or Managing Directors of the Company as hemay desire. No employee of the Company is denied access to the Audit Committee. The vigilmechanism/whisle blower policy is also available on the website of the Company viz.www.patelsairtemp.com.
> During the year under review there was no change in the nature of business of theCompany and there is no material change and/or commitments affecting the financialposition of the Company during the period from 31st March 2017 till the date of thisreport.
> The Company does not provide any loan or other financial arrangement to itsemployees or Directors or Key Managerial Personnel for purchase of its own shares andhence the disclosure under Section 67(3)(c) of the Companies Act 2013 does not require.
> The disclosure in terms of Rule 4 of Companies (Share Capital and Debenture)Rules 2014 is not provided as the Company does not have any equity shares withdifferential voting rights.
> The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder. Allemployees (permanent contractual temporary trainees) are covered under this policy. Nocomplaints pertaining to sexual harassment were received during FY 2016-17.
> No fraud has been reported by the Auditors to the Audit Committee or the Board.
The Directors place on record the appreciation and gratitude for the co-operation andassistance extended by various departments of the Union Government State GovernmentBankers and Financial Institutions.
The Directors also place on record their appreciation of dedicated and sincere servicesof the employees of the Company at all levels.
The Company will make every effort to meet the aspirations of its Shareholders and wishto sincerely thank them for their whole hearted co-operation and support at all times.
| ||By order of the Board of Directors |
| ||NARAYANBHAI G. PATEL |
| ||Chairman & Whole-time Director |
|Date : 14th August 2017 || |
|Place : Rakanpur Dist. Gandhinagar || |
ANNEXURE-E TO DIRECTORS' REPORT
Details of particulars under Section 134(3)(m) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 forming part of the Directors' Report for the year endedon 31st March 2017 are given as under
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGOETC.
A) CONSERVATION OF ENERGY
The main source of energy is power. Energy conservation continues to receive priorityattention at all levels. All efforts are made to conserve and optimize use of energy withcontinuous monitoring improvement in maintenance and distribution systems and throughimproved operational techniques. Uses of natural lights are resorted at factory premisesto save energy. The Company is also looking forward in adopting the technology by whichconsumption of energy can reduce and also promote the natural sources of energy. As partof Green Initiative the Company has installed 130 KW Rooftop PV Solar Power Plant aftergetting required permissions from Govt. Authorities and UGVCL (Power Distribution Companyin Local Area). The Solar Plant will generate nearly 190000 Units of Energy every year;which equals to reduction of CO2 absorbed by 190 trees or plantation of 341 trees.
The Solar Plant being a stationary item renders almost negligible maintenance cost andhave long life of around 25 years.
B) RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION
The particulars as required under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8(3)(A) of the Companies (Accounts) Rules 2014 with respect to Research &Development and Technology Absorption are given hereunder :
(1) Research & Development (R & D)
The Company has established a well equipped testing & NDE laboratory with thenumber of sophisticated instruments for testing and non destructive examination related tothe product being manufactured. To upgrade the technology and technical qualificationsyour Company has renewed ASME "U" and "NB"/'R' Stamp of National Boardof USA and added ASME "U2"/ "S" and "N & NPT" Stampauthorization for improving the system and quality. Your Company is ISO 9001-2008certified. Various technical software's like PVElite Auto Desk Mechanical MicroprotolPro-e FE-Pipe/Nozzle Pro etc. were updated for design & development of variousproducts.
(2) Technology Absorption Adaptation & Innovation
Updation of Technology is a Continuous process absorption implemented and adapted bythe Company for innovation. Efforts are continuously made to develop new products requiredin the Engineering Industry.
The Company has invested about Rs.72.34 Lakhs for Plant & Machineries to upgradeHI-tech equipments. The Company has HTRI Membership agreement for Catagory - II andLicence agreement for EHT (for enhanced heat transfer) and Honeywell UniSim UHX (for feedwater heater) for latest technology in Heat Transfer from U.S.A. To increase productivityCompany has invested in Hydraulic Expander for tube to tube sheet expansion for highertube sheet thikness and finned tube expansion. In-house systems and operations are beinginnovated for better quality and to perform up to customers' requirement.
C) FOREIGN EXCHANGE EARNING AND OUTGO
The details of Foreign Exchange Earnings and Outgo by the Company during the year underreview are given in Note No. 38 39 and 40 of Notes on Financial Statements.