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Shanthi Gears Ltd.

BSE: 522034 Sector: Auto
NSE: SHANTIGEAR ISIN Code: INE631A01022
BSE LIVE 15:40 | 22 Aug 132.40 1.65
(1.26%)
OPEN

131.00

HIGH

133.95

LOW

130.15

NSE 15:40 | 22 Aug 132.00 1.25
(0.96%)
OPEN

130.55

HIGH

135.00

LOW

130.40

OPEN 131.00
PREVIOUS CLOSE 130.75
VOLUME 5781
52-Week high 167.60
52-Week low 93.40
P/E 47.63
Mkt Cap.(Rs cr) 1,082
Buy Price 132.40
Buy Qty 200.00
Sell Price 0.00
Sell Qty 0.00
OPEN 131.00
CLOSE 130.75
VOLUME 5781
52-Week high 167.60
52-Week low 93.40
P/E 47.63
Mkt Cap.(Rs cr) 1,082
Buy Price 132.40
Buy Qty 200.00
Sell Price 0.00
Sell Qty 0.00

Shanthi Gears Ltd. (SHANTIGEAR) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting to you the performance of the Company forthe year ended 31 March 2017 COMPANY PERFORMANCE

Rs Crores

Particulars Year Ended 31.03.2017 Year Ended 31.03.2016
Revenue from Operations (Net) 203.82 182.11
Earnings Before Interest Tax Depreciation & Amortisation 46.33 39.86
Depreciation & Amortisation Expense 17.83 16.71
Profit Before Tax 28.50 23.15
Less: Tax Expense 5.99 5.42
Profit After Tax 22.51 17.73
Add: Surplus brought forward 15.82 13.01
Appropriations:
Transfer to General Reserve 6.00 10.00
Interim Dividend paid - 4.09
Tax on Interim Dividend - 0.83
Balance Carried to Balance Sheet 32.33 15.82

Review of Operations

In 2016-17 your Company launched a program titled Connect 2016. The objective was toreach out to customers and end users across the country through structured programs tounderstand how the business could service them better. With special focus on revenuemodels the business deployed more resources to understand end user applications to providecomprehensive end to end solutions in gearing. R&D and Engineering teams unleased morecustom built solutions targeting conventional markets such Steel Cement and Power. Asuperior range of catalogue range of products was launched in the helical and worm seriesto target demanding needs of the market.

Operational Excellence remains a key priority for the business. Internally the plantsworked on improving efficiencies and productivity. Our efforts to engage talent in Valueadd activities continues and the business has seen good progress. Capital investmentsduring the year addressed enhancement of manufacturing capabilities and productivity.

Recruiting the right talent engaging and developing them created an ambience of highperformance culture within the business.

The revenue during the year was ' 203.82 Crores against ' 182.11 Crores in the previousyear with growth of 12%. The Profit before tax for the current year amounts to ' 28.50Crores as against ' 23.15 Crores in the previous year.

Management Discussion and Analysis

The Management Discussion and Analysis which forms part of this report sets out ananalysis of the business the industrial scenario and the performance of the Company.

Dividend

The Board of Directors has recommended a dividend of ' 0.75/- (Paise Seventy Five only)per equity share of Face Value ' 1/- each for the financial year 2016-17. Dividend ifapproved by the shareholders will be paid on or after 31 July 2017.

Directors

Mr. V Venkiteswaran Non-Executive Independent Director will retire at the ensuingAnnual General Meeting under Section 149 of the Companies Act 2013 ("the Act").The Board places on record its appreciation of the service rendered by Mr. V Venkiteswaranduring his tenure as Director of the Company.

Mr. C R Swaminathan was appointed as an Independent Director. He holds office up to thedate of the ensuing Annual General Meeting. The Board recommends his re-appointment as anIndependent Director under Section 149 of the Act for a term of one year viz. from thedate of 44th Annual General Meeting (2017) till the date of the 45th AnnualGeneral Meeting (2018).

Notice along with the deposit in terms of Section 160 of the Act has been received froma Member proposing the candidature of Mr. C R Swaminathan for appointment as anIndependent Director of the Company.

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting underSection 152 of the Act and being eligible he offers himself for re-appointment.

The Board takes pleasure in recommending the appointment Mr. L Ramkumar as Director andMr. C R Swaminathan as an Independent Director of the Company at the forthcoming AnnualGeneral Meeting.

All the Independent Directors of the Company have furnished necessary declaration interms of Section 149 (6) of the Act affirming that they meet the criteria of independenceas stipulated under the Act.

Key Managerial Personnel

Mr. Rajiv Narayanamoorty Chief Executive Officer and

Mr. C Subramaniam Company Secretary are the Key Managerial Personnel (KMP) of theCompany as per Section 203 of the Companies Act 2013.

Mr. Saurabh Jain Chief Financial Officer of the Company resigned from the services ofthe Company for personal reasons and was relieved on 14 March 2017.

Internal Control System and their Adequacy

The Company has an Internal Control System Commensurate with its size scale andcomplexity of its operations. Audit Committee reviews internal audit reports and overseesthe internal control system of the Company.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. Areport on Corporate Governance along with a certificate from the Statutory Auditors oncompliance with Corporate Governance norms forms a part of this report.

Corporate Social Responsibility (CSR)

As a corporate citizen your Company is committed to the conduct of its business in asocially responsible manner. The Company contributed a portion of its profit for thepromotion of worthy causes like education healthcare scientific research etc. As a partof Corporate Social Responsibility program the Company has undertaken projects in the areaof Education Scientific Research etc. List of CSR Activities Composition of CSRCommittee and CSR Policy is annexed herewith as Annexure-A

Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure C

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and belief confirm that:

i) in the preparation of the annual accounts applicable Accounting Standards have beenfollowed and that there were no material departures therefrom;

ii) they have in the selection of the accounting policies consulted the statutoryauditors and have applied their recommendations consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at 31 March 2017 and of the profit of the Company for theyear ended on that date;

iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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 were operating effectively duringthe year ended 31 March 2017; and

vi) proper system has been devised to ensure compliances with the provisions of allapplicable laws and that such systems were adequate and operating effectively during thefinancial year ended 31 March 2017.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178(3) of the Companies Act 2013 the Nomination and RemunerationCommittee of the Board of the Company has formulated the criteria for Board nominations aswell as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of theBoard Key Managerial Personnel and other employees of the Company. This policy is guidedby the principles and objectives enumerated in Section 178(4) of the Companies Act 2013and reflects the remuneration philosophy and principles of the Murugappa Group to ensurereasonableness and sufficiency of remuneration to attract retain and motivate competentresources a clear relationship of remuneration to performance and a balance betweenrewarding short and long term performance of the Company. The policy lays down broadguidelines for payment of remuneration to Executive and Non-Executive Directors within thelimits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the websiteof the Company at http://www.shanthigears.com/wp-content/uploads/2014/07/sgl-remuneration-policy.pdf.

Related Party Transactions

All related party transactions that were entered during the year under review were onan arm’s length basis and were in ordinary course of business. There are nomaterially significant related party transactions during the year which may have apotential conflict with the interest of the Company at large. Necessary disclosures asrequired under Accounting Standard (Ind AS 24) have been made in the notes to theFinancial Statements. The Policy on Related Party Transactions as approved by the Boardis uploaded and is available on the Company’s website http://www.shanthigears.com/wp-content/ themes/shanthi/pdf/Policy-on-Related-Party-Transactions.pdf. None of theDirectors had any pecuniary relationships or transactions visa-vis the Company.

Board Evaluation

The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report.

Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the CorporateGovernance Report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner thebusiness in the achievement of its ambitious growth plans and to build a strong leadershippipeline for the present and several years into the future. Industrial Relations continuedto be cordial.

The Company had 547 permanent employees on its rolls as on 31 March 2017.

The disclosure with respect to remuneration as required under Section 197 of theCompanies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is attached and forms part of this Report as Annexure-B.

The information relating to employees and other particulars required under Section 197of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 will be provided upon request. In terms of Section136 of the Companies Act 2013 the Report and Accounts are being sent to the Membersexcluding the information on employees particulars of which are available for inspectionby the Members at the Registered Office of the Company during business hours on allworking days of the Company up to the date of the forthcoming Annual General Meeting. Ifany Member is interested in obtaining a copy thereof such member may write to the CompanySecretary in the said regard.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of energy technology absorption and foreign exchange earnings and outgois annexed herewith as Annexure-D.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has in place an anti-sexual harassment policy in line with the requirementof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Compliance Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (Permanent contractual temporary andtrainees) are covered under this policy. The Company has not received any complaint aboutsexual harassment during the year 2016-17.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. M R L Narasimha Practicing Company Secretary to undertake

Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith andforms part of this Report as Annexure-E. No qualification or observation or other remarkshave been made by the Secretarial Auditor in his Report.

Auditors

The Members appointed M/s. Deloitte Haskins & Sells the Statutory Auditors of theCompany for a period of 4 years from the conclusion of 41st AGM (2014) till theconclusion of 45th AGM (2018). A resolution seeking ratification of theappointment of Statutory Auditors and remuneration payable to them for the financial year2017-18 is included in the aGm Notice dated 03 May 2017.

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accountingrecords of the Company for the year ended 31 March 2018. A resolution seekingMembers’ ratification of the Remuneration payable to Cost Auditor is included in theAGM notice dated 03 May 2017. The Cost Audit report will be filed within the stipulatedperiod.

The Directors thank all Customers Vendors Banks State Government and Investors fortheir continued support to your Company’s performance and growth. The Directors alsowish to place on record their appreciation of the contribution made by all the employeesof the Company in delivering the good performance during the year.

On behalf of the Board
Coimbatore M M Murugappan
03 May 2017 Chairman