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SAB Industries Ltd.

BSE: 539112 Sector: Infrastructure
NSE: N.A. ISIN Code: INE137M01017
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VOLUME 15
52-Week high 89.15
52-Week low 16.65
P/E 69.57
Mkt Cap.(Rs cr) 122
Buy Price 0.00
Buy Qty 0.00
Sell Price 80.00
Sell Qty 34.00
OPEN 82.00
CLOSE 79.00
VOLUME 15
52-Week high 89.15
52-Week low 16.65
P/E 69.57
Mkt Cap.(Rs cr) 122
Buy Price 0.00
Buy Qty 0.00
Sell Price 80.00
Sell Qty 34.00

SAB Industries Ltd. (SABINDUSTRIES) - Director Report

Company director report

Dear Members

The Directors of your Company have pleasure in presenting the Annual Report on Accountsfor the Financial Year ending 31st March 2016.

FINANCIAL HIGHLIGHTS

(Rs in Lacs)
Particulars 2015-16 2014-15
Turnover and Other Income
- Turnover 4329.50 1527.74
- Other Income 137.76 224.74
Operating Profit 231.41 215.68
Financial Expenses 137.62 112.70
Depreciation 22.64 40.14
Net Profit from ordinary operations 71.15 62.84
Write Back from termination of Agreement 1000.00 100.00
Prior period Adjustments 88.67 0.85
Net profit before tax 622.79 161.99
Tax Expense 145.85 49.64
Profit after Tax 476.94 112.35

OPERATIONS AND FUTURE OUTLOOK

During the year under consideration the turnover of the Company was higher atRs.4329.50 lac as compared to a turnover of Rs.1527.74 lac during the previous year. TheCompany also earned a net profit of Rs.476.94 lac during the year as against Rs.112.35 lacduring the previous year.

The Central Government has taken new initiatives during the last two years to give aboost to the Real Estate Construction and Infrastructure Sector. A sum of Rs.1.00 laccrore approx. is being allocated for development of 100 smart cities and 500 rejuvenatedcities and mission Housing for all. In addition Govt. is giving major thrust on road andrailways. Tax benefits are being introduced to bring in FDI and Local investments in thesector.

These initiatives are giving a thrust to the Construction Sector. The Company had beenawarded new jobs worth Rs.59 crore approx. by Government Departments. Out of the above theCompany has executed jobs worth Rs.25 crore approx. till 31.03.2016 and the balance workis to be executed during the current year. Besides the Company has also submitted freshtenders which will also substantiate the turnover. Barring unforeseen circumstances weexpect to achieve a turnover of Rs.50 crore approx. during the current year 2016-17.

SEGMENT REPORT

Your Company has a number of activities in its fold. Its business activities includeConstruction and Engineering Real Estate Information Technology and Trading. The Companyis registered with various Government Departments like Uttranchal PWD (B&R) HP PWD(B&R) Madhya Pradesh PWD (B&R) PUDA and other Central Bodies as Class-1contractors. This segment presently has the largest share of revenue and profits in theperformance of the Company. This segment also provides consultancy in the field of civilengineering and preparation and award of claims.

The Infotech Division of the Company undertakes activities of an Internet ServiceProvider in Punjab Telecom Circle including Punjab Chandigarh Panchkula and parts ofHaryana and Himachal Pradesh.

The other important segment of activities of your Company is Development and Sale ofReal Estate. As stated above the Central Government is taking new initiatives to give aboost to the Real Estate Sector. Though the market growth in housing sector in NorthernRegion of the Country is presently low however it is likely to pick up in due course oftime.

A breakup of the segment-wise performance is given in the 'Notes on Accounts' whichforms a part of the Balance Sheet.

FINANCIAL STATUS

There is no change in the 'Issued and Subscribed Capital' of Rs.151883720 dividedinto 15188372 equity shares of Rs.10/- each during the year. There are no equityshares with differential rights or sweat equity or ESOP or scheme of purchase of Companyshares by employees or their trustees.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY

There are no material changes which occurred subsequent to the close of the financialyear to which the Financial Statements relate and upto the date of report.

CORPORATE SOCIAL RESPONSIBILITY AND GOVERNANCE COMMITTEE

The Company has constituted a Corporate Social Responsibility Committee and also frameda Corporate Social Responsibility Policy and the same is posted on the website of theCompany at http://www.sabindutries.in As per calculation of profits u/s 198 of theCompanies Act 2013 there is no CSR obligation on the Company. However the Company hasvoluntarily incurred an expenditure of Rs 9.70 lac during the year.

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the company on CSR activities during the year are setout in Annexure 1 attached to this report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014.

SUBSIDIARY COMPANY

There is no subsidiary Company reportable under Section 129(3) of the Companies Act2013.

DIVIDEND

Keeping in view the business commitments your Company has decided not to declare anydividend for the year 2015-16.

FIXED DEPOSITS

The Company has not accepted any fixed deposits covered under Chapter V of theCompanies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014 (as amended)during the year under review.

CORPORATE GOVERNANCE REPORT- DISCLOSURE REQUIREMENTS

The Company continuously strives to attain high levels of corporate performanceaccountability transparency responsibility and fairness in all aspects of itsoperations. Transparency in all dealings and providing better services withoutcompromising in any way on integrity and regulatory compliances have been the basicobjectives of corporate governance in the Company. The Corporate Governance practicesfollowed by the Company are enclosed as Annexure to this report.(Annexure-6)

EXTRACT OF THE ANNUAL RETURN

The extract of the annual return as provided under Section 92(3) of the Act isattached in Form No. MGT-9 which forms part of the Boards' Report. (Annexure-4)

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013 the Directors' confirm that:

a. in the preparation of the annual accounts for the year ending 31st March 2016 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;

b. 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 and ofthe profit and loss of the company for that period;

c. the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d. the Directors had prepared the annual accounts on a going concern basis;

e. the Directors had laid down internal financial control to be followed by the Companyand that such internal financial controls were adequate and were operating effectively;and

f. the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control systems and processes of the Company cover operational efficiencyaccuracy and promptness in financial reporting compliance with laws and regulations anddevelopment of mature disciplined and effective processes. The processes are alsodesigned to meet the goals of cost schedule functionality and quality thus resulting inhigher levels of customer satisfaction.

DIRECTORS

A) Changes in Directors and Key Managerial Personnel

Since the last Annual General Meeting following changes have taken place in the Boardof Directors.

- Shri Vijay G Kalantri ceased to be a Director on 14.11.2015

- Shri Shyam Sunder Dawra being an Independent Director vacated office on 12.02.2016due to his sudden demise.

Our Directors place on record their appreciation of the valuable guidance rendered byShri Vijay G Kalantri and Shri Shyam Sunder Dawra during their association with theCompany

Pursuant to the provisions of Section 149 of the Act Shri Kanwarjit Singh wasappointed as Independent Director at the Annual General Meeting of the Company held on30th September 2014 Shri Surinder Singh Virdi and Smt. Manju Lakhanpal were appointed asIndependent Directors at the Annual General Meeting of the Company held on 30th September2015. The terms and conditions of appointment of Independent Directors are as per ScheduleIV of the Act. They have submitted a declaration that each of them meets the criteria ofIndependence as provided in Section 149(6) of the Act and there has been no change in thecircumstance which could affect their status as Independent Director during the year.

As per the provisions of Companies Act 2013 Shri Humesh Kumar Singhal (DIN-00044328)Director retires by rotation at the forthcoming Annual General Meeting and being eligibleoffers himself for re-appointment

B) Declaration by an Independent Director(Rs.) and reappointment if any

A declaration by Independent Directors stating that he/they meet the criteria ofindependence as provided in sub-section (6) of Section 149 of the Companies Act 2013 hadbeen taken at the time of their appointment.

C) Formal Annual Evaluation

The Board of Directors has carried out an annual evaluation of its own performance andthat of the Board committees and individual directors pursuant to the provisions of theAct and the corporate governance requirements as prescribed by Securities and ExchangeBoard of India ("SEBI") under SEBI (LODR) Regulations 2015.

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of the criteria such as the Board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the Board after seeking inputs fromthe committee members on the basis of the criteria such as composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issue to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspects ofhis role.

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 The same was discussed in the Board meeting that followed the meeting of theIndependent Directors at which the performance of the Board its committees andindividual directors was also discussed.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year under review 4 Board Meetings were held one each on 18th May 201513th August 2015 14th November 2015 and 12th February 2016.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the corporate governancereport which forms part of the Directors' Report.

AUDIT COMMITTEE

The Audit & Compliance Committee comprises of three non-executive IndependentDirectors viz. Shri S S Virdi Shri Kanwarjit Singh Smt. Manju Lakhanpal and Shri H KSinghal. During the year the committee held four meetings. Other details of the AuditCommittee are included in the Corporate Governance Report which forms part of this report.

The Board had accepted all recommendation of the Audit Committee.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM/ WHISTLE BLOWER POLICY FOR DIRECTORS ANDEMPLOYEES

The Company has formulated and published a Whistle Blower Policy to provide vigilmechanism for employees including Directors of the Company to report genuine concerns. Theprovisions of this Policy are in line with the provisions of Section 177(9) of the Act andthe Regulation 22 of SEBI (LODR) Regulations 2015.

There are no cases reported during the year.

NOMINATION AND REMUNERATION COMMITTEE

The committee has been constituted to review and recommend compensation payable to thewhole-time directors including Chairman and senior management of the Company. Thecommittee reviews the overall compensation structure and policies of the Company with aview to attract retain and motivate employees reviewing compensation levels of theCompany vis-a-vis other Companies and industry in general.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

There were no Loans/ Guarantee given and Investments made by the Company during theyear exceeding the limits prescribed under Section 186 of the Companies Act 2013.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All contracts/ arrangements/ transactions entered by the Company during the FinancialYear with related parties were in the ordinary course of business and on an arm’slength basis during the year the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. A statement insummary form of transactions with related parties in ordinary course of business andarm’s length basis is periodically placed before the audit committee for review andrecommendation to the board for their approval.

The policy on materiality of related party transactions and dealing with related partytransactions as approved by the board is uploaded on the website of the Company.

Disclosures as required under accounting standards (AS-18) have been made in thefinancial statements of the Company enclosed with this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review as stipulated underRegulation 34(2) (e) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of the Board’s report as (Annexure-5).

BUSINESS RISK MANAGEMENT

The risk management includes identifying types of risks and its assessment riskhandling monitoring and reporting which in the opinion of the Board may threaten theexistence of the Company The Board has formulated the Risk Management Policy to managerisks with the objective of maximizing shareholders value. The Risk Management Policy maybe accessed on the website of the Company at http://www. sabindustries.in.

AUDITORS

As per the Provisions of Section 139 of Companies Act 2013 M/s S.C. Dewan & Co.Chartered Accountants were appointed as Statutory Auditors of the Company to hold officetill the conclusion of Annual General Meeting to be held in the calendar year 2017(subjectto ratification of their appointment at every AGM). The Company has received a certificatefrom them pursuant to Companies (Audit & Auditors) Rules 2014 read with Section 139& 141 of the Companies Act 2013 confirming their eligibility for reappointment andthat they were not disqualified for reappointment.

AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT

The Auditors' Report and Secretarial Auditors' Report do not contain anyqualifications reservations or adverse remarks. Report of Secretarial Auditors isattached as an annexure which forms part of this report. (Annexure-2)

LISTING OF SHARES

We had filed application with Mumbai Stock Exchange (BSE) on 19.01.2015 for Listing ofequity shares of the Company. We are pleased to inform that BSE has granted listing andtrading permission vide their notice no.20150507-33 dated 7th May 2015 effective from 11thMay 2015.

DEMATERIALISATION

The equity shares of your Company are to be compulsorily traded in dematerialized form.As on 31.03.2016 a total of 15101210 equity shares representing 99.43% of equity sharecapital have been dematerialized.

INSURANCE

All the assets of the Company have been adequately insured.

PARTICULARS OF EMPLOYEES

Relations with the employees during the period under review continued to be peacefuland harmonious.

PERSONNEL AND RELATED DISCLOSURES

The information required under Section 197 of the Act read with rule 5 of the Companies(Appointment and remuneration of managerial personnel) rules 2014 is enclosed with thisreport. (Annexure-3)

INDUSTRIAL RELATIONS

Industrial relations continued to be cordial during the year under review.

HEALTH SAFETY AND ENVIRONMENT PROTECTION

Our Company has complied with all the applicable health & Safety standardsenvironment laws and labour laws and has been taking all necessary measures to protect theenvironment and provide workers a safe work environment. Our Company is committed forcontinual improvement in Health & Safety as well as Environmental performance byinvolving all the employees to provide a Safe & healthy work environment to all itsemployees

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder.

During the financial year 2015-16 the Company has not received any complaint on sexualharassment and hence no complaints remain pending as on 31st March 2016.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 regarding Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo is not applicable as the Company did not have any manufacturingfacility during the period under consideration. There were no foreign exchange earnings/outgo during the period.

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude the assistance cooperation and supportreceived by the Company from the Banks Statutory/ Govt. Bodies Customers andShareholders of the Company.

For and on behalf of BOARD OF DIRECTORS
H.K. SINGHAL AVINASH SHARMA
Place: Chandigarh Director Executive Director
Date: 14.05.2016 DIN-00044328 DIN-02371722

ANNEXURE-3

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(2) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014

I) The ratio of the remuneration of each director to the median employee's remunerationof the Company for the financial year

Ratio to Median Remuneration
Non Executive Directors
Shri R K Garg 0.17
Smt. Manju Lakhanpal 0.28
Shri Kanwarjit Singh 0.11
Shri S.S.Virdi 0.31
Shri H.K.Singhal 0.25
Shri Sanjay Garg 0.21
Whole Time Director
Shri Avinash Sharma 14.17

(ii) The percentage increase in remuneration of each director Chief FinancialOfficer Chief Executive Officer Company Secretary in the financial year;

Director Chief Executive Officer Chief Financial Officer Company Secretary %age increase in Remuneration over previous year
Shri R K Garg -Non Executive Director -
Shri Avinash Sharma - Whole Time Director 2.06%
Sh. Bhagwan Singh Negi - Chief Financial Officer 15.21%
Ms Gurpreet Kaur - Company Secretary 14.04%

(iii) The percentage increase in the median remuneration of employees in the financialyear 2015-16.

The Percentage increase in median remuneration of employee is 18.55%.

(iv) The number of permanent employees on the rolls of company.

The number of permanent employees on the roll of company as of 31st March 2016 was 28.

(v) The explanation on the relationship between average increase in remuneration andcompany performance;

Increase in the remuneration during the year is 10 to 20% based on individualperformance. The profitability and performance of the company is improved during the year.

(vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company;

Aggregate Remuneration of KMP in FY-16 (Rupees in Lakhs) 51.27
Revenue (Rupees in Lakhs) 4467.25
Remuneration of KMPs (As %age of Revenue) 1.15%
Profit before tax (PBT) (Rupees in Lakhs) 622.79
Remuneration of KMP (As %age of PBT) 8.23%

(vii) Variations in the market capitalisation of the Company price earningsratio as at the closing date of the current financial year and previous financial year.Percentage increase or decrease in the market quotations of the shares of the Company incomparison to the rate at which the Company came out with the last public offer in case oflisted Companies.

Particulars March 31 2016 *March 31 2015 % change
Market capitalization (INR Lakhs) 18.98 - -
Market Price 12.50 - -
Price Earnings Ratio 3.98 - -

*The Company had filed application with Mumbai Stock Exchange (BSE) on 19.01.2015 forListing of its equity shares and permission of the same was granted on 7th May 2015 videtheir notice no.20150507-33 with effect from 11th May 2015.

(viii) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration;

Average annual increase during the year was around 18.55% and the average increase inmanagerial remuneration was 2.06%.

(ix) Comparison of the remuneration of the each Key Managerial Personnel against theperformance of the company;

Particulars Mr Avinash Sharma Mr Bhagwan Singh Negi Ms Gurpreet Kaur
(Wholetime Director) (Chief Financial Officer) (Company Secretary)
Remuneration in FY16 (Rupees in Lakhs) 37.63 6.61 7.03
Revenue (Rupees in Lakhs) 4467.25 4467.25 4467.25
Remuneration as % of revenue 0.84 0.15 0.16
Profit before tax (PBT) (Rupees in Lakhs) (Loss) 622.79 622.79 622.49
Remuneration of KMP (As %age of PBT) 6.04 1.06 1.13

(x) The key parameters for any variable component of remuneration availed by thedirectors;

Commission/ Remuneration @ 5% of net profits has been paid to Sh. Avinash SharmaExecutive Director of the company.

(xi) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year;

There is no employee in the company who is paid higher than highest paid director.

(xii) Affirmation that the remuneration is as per the remuneration policy of thecompany.

It is confirmed that the remuneration is paid as per the remuneration policy of theCompany