Your Directors are pleased to present the Thirty Seventh Annual Report on the businessand operations of your Company along with the audited Financial Statements for the yearended 31 March 2017 as approved by the Board:
The Company's financial performance for the year under review and the previous year isgiven as under:
|Particulars ||2016-17 ||2015-16 |
| ||Rs. in Lakhs ||Rs. in Lakhs |
|Gross Sales and Other Income ||16138 ||17166 |
|Profit before Interest and Depreciation ||2377 ||2608 |
|Finance Cost ||1375 ||1632 |
|Depreciation ||753 ||751 |
|Profit before Tax ||249 ||225 |
|Less: Provision for Tax ||48 ||45 |
|Less: Deferred Tax ||30 ||30 |
|Profit after tax ||171 ||150 |
|Add: Balance Brought forward from Previous Year ||923 ||773 |
|Balance Carried Over ||1094 ||923 |
There has been an improvement in the profits during the year under review as comparedto previous year. PAT at Rs. 171 Lakhs was higher by Rs. 21 Lakhs as compared to previousyear's Rs. 150 Lakhs. In order to conserve reserves the Board has not recommendeddividend for the year.
TRANSFER TO RESERVES
The Company proposes to retain the entire amount of Rs. 171 Lakhs in the Statement ofprofit and loss.
CHANGE IN THE NATURE OF BUSINESS:
There were no changes in the nature of business during the financial year.
Aggregate sales and other income for the year were marginally lower by 6% compared tothe previous financial year. The key reason for the drop in turnover was that the Companyhas made price correction in the end products due to softening of the raw material priceduring the year under review. Further the sluggish export market and the recentdemonetization move have also caused a decline in turnover. However the reduction ininterest costs has resulted in improving the Profit After tax to Rs. 171 Lakhs as comparedto Rs. 150 Lakhs reported in the corresponding previous year.
Globally India has the second largest GDP growth and third largest economy in terms ofpurchasing power parity (PPP). The packaging industry in India is one of the fastestgrowing industries which has its influence on all industries directly or indirectly suchas growing urbanization and the rising proportion of middle class consumers. These changesdrive the need for new packaging formats such as different sizes materials andstrength.
The packaging industry in India is expected to reach $ 73 billion in 2020 from $ 32billion in FY 17-18 according to a report prepared by FICCI and Tata Strategic ManagementGroup (TSMG) on plastic industry titled 'Plastic packaging: The sustainable choice'. Inthe coming years Indian packaging industry is anticipated to register 18 percent annualgrowth rate with the flexible packaging and rigid packaging expected to grow annually at25 percent and 15 percent respectively.
The highlights of the industry trend the outlook and the opportunities ahead for theCompany are discussed in detail in the Management Discussion and Analysis Report attachedas Annexure - IV to this report.
During the financial year 2016-17 the export turnover was Rs. 2142 Lakhs as comparedto the previous financial year turnover of Rs. 2285 Lakhs representing a decline of 6%over the previous year. The decline in export sales is mainly due to sluggish globaldemand coupled with a volatile global currency market.
The statement pursuant to Section 129 of the Companies Act 2013 containing details offinancial highlights of the Subsidiary Company forms part of the Annual Report as AnnexureVIII.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year to which this financialstatements relate on the date of this Report except as stated below:
MERGER OF SHETRON METROPAK PRIVATE LIMITED (WHOLLY OWNED SUBSIDIARY):
Post completion of the financial year the Board of Directors approved the Merger ofShetron Metropak Private Limited (Wholly Owned Subsidiary) with the Company subject tothe approval of the Shareholders and appropriate authorities under the provisions ofSections 230 to 234 of the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure requirements) Regulations 2015 in its Meeting held on 30 May 2017. TheCompany is in the process of filing the Scheme of Merger with appropriate authorities forrequisite approvals.
The proposed Merger of Shetron Metropak Private Limited with Shetron Limited wouldrationalize the operations optimize the efforts and resources and be in the bestinterests of the Company its Shareholders Creditors and all other stakeholders of theCompany.
In compliance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and in accordance with Accounting Standard AS-21 on ConsolidatedFinancial Statements the audited Consolidated Financial Statements incorporating theoperations of the Company and its Wholly Owned Subsidiary Company viz. Shetron MetropakPrivate Limited are provided in this Annual Report.
Further the report on the performance and financial position of the Subsidiary andsalient features of the financial statements in the prescribed Form AOC-1 is annexed tothis Report [Annexure VIII].
The audited financial statements of Subsidiary shall be kept open for inspection duringbusiness hours by any shareholders at the Registered Office of the Company and of theSubsidiary Company. The Company will also make available the audited Financial Statementsand related information of the Subsidiary company upon request by any shareholder of theCompany.
AWARDS & LAURELS:
In recognition for Decoration and Printing Quality under Cans Category the Company wasawarded the Bronze winner of the Canmaker for the year 2016 by the Canmaker magazine forthe Food Containers. The Company was also awarded with IMDA 2016 Annual Award under thecategory-Closures.
CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL:
In terms of Section 168 of the Companies Act 2013 Dr. M Mahadeviah who had held theoffice of Independent Director in the Company since 30 October 2006 had resigned from theCompany as on 22 December 2016 and the same was taken on record by the Board of Directorsof the Company at the Meeting held on 10 February 2017.
In terms of Section 149(10) of the Companies Act 2013 the Board in its Meeting heldon 30 May 2017 on the recommendation of the Nomination and Remuneration Committee hasdecided to re-appoint Mr. Mohan Narayan Menon as an Independent Director for anadditional term of 5 (Five) years subject to the approval of the Shareholders.
In terms of Section 161 of the Companies Act 2013 Dr. Narendra Mairpady was appointedas an Additional Director and Independent Director on 30 May 2017 and will hold the saidoffice till the date of the Annual General Meeting. The Company has received a noticeunder Section 160(1) of the Companies Act 2013 from a member proposing his candidature tothe office of the Directorship.
Brief resumes of Dr. Narendra Mairpady and Mr. Mohan Narayan Menon being appointed areattached to the Notice of the Annual General Meeting.
The Board has also appointed Mr. Gagandeep Singh as an Assistant Company Secretary andCompliance Officer of the Company w.e.f 10 November 2016.The Company is in the process ofappointing a Company Secretary in compliance with the Companies Act 2013.
During the year under review the Board of Directors met four (4) times i.e. on16-May-2016 29-July-2016 10-Nov-2016 and 10-Feb-2017.
The Independent Directors have submitted their declarations that they fulfill therequirements as stipulated in Section 149 (6) of the Companies Act 2013.
Pursuant to Clause VII (1) of Schedule IV of the Companies Act 2013 the IndependentDirectors had a separate meeting on 16-May-2016.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The policy of the Company on Director's appointment and remuneration including thecriteria for determining qualifications positive attributes independence of a directorand such other matters as required under sub-Section (3) of Section 178 of the CompaniesAct 2013 is available on our website athttp://shetrongroup.in/pdf/Nomination%20&%20Remuneration%20Policy.pdf
There has been no change in the policy since last fiscal. We affirm that theremuneration paid to the Directors is as per the terms laid out in the Nomination andRemuneration Policy of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT:
The Board based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory andSecretarial Auditors the reviews performed by the Management and the relevant BoardCommittees including the Audit Committee it is of the opinion that the Company'sinternal financial controls were adequate and effective during the financial year 2016-17.
Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:
1) In the preparation of the Annual Accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
2) 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;
3) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
4) The Directors had prepared the Annual Accounts on a Going Concern basis;
5) The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
6) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
BOARD EVALUATION :
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its performance and of the Directors individually as well asthe evaluation of the working of its Audit and Nomination & Remuneration Committees.The manner in which the evaluation has been carried out has been explained in detail inthe Corporate Governance Report which forms part of this Annual Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE :
During the year the Company has not given any loans or guarantees covered under theprovisions of Section 186 of the Companies Act 2013.
The details of the investments made by Company are given in the notes to the financialstatements.
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 an extract of Annual Return in MGT-9 isannexed as a part of this Annual Report
(Annexure - I).
ADDITIONAL DISCLOSURES :
In line with the requirements of Listing Regulations and Accounting Standards yourCompany has made additional disclosures in respect of Related Party Transactions andsegment reporting in notes to accounts.
RISK MANAGEMENT POLICY :
The Audit Committee has oversight in the area of financial risks and controls. Themajor risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continual basis. The policy for risk management isavailable on the Company website athttp://shetrongroup.in/pdf/Risk%20Management%20Policy.pdf
In terms of the provision of Sections 73 74 and 76 of the Companies Act 2013 readwith the Companies (Acceptance of Deposits) Rules 2014 your Company has not accepted/renewed any fixed deposits from the public during the year under review.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in Annexure- III and is attached to this report.
STATUTORY AUDITORS :
As per the provisions of Section 139 of the Companies Act 2013 ("the Act")read with Rules made there under no Listed Company and such other companies as prescribedunder the Companies Act 2013 can appoint or re-appoint an audit firm as Auditor for morethan two terms of five consecutive years.
In view of the same the term of the existing Statutory Auditors Messrs Pal &Shanbhouge Chartered Accountants is upto the conclusion of this Annual General Meeting(AGM). The Board of Directors based on the recommendation of the Audit Committee at itsmeeting held on May 30 2017 had proposed the appointment of Messrs Naresh & CoChartered Accountants (Firm Registration No. 011293S) as the Statutory Auditors of theCompany for a period of five years to hold office from the conclusion of the 37 AGM tillthe conclusion of the 42 Annual General Meeting of the Company to be held in the year2022 subject to ratification of their appointment at every Annual General Meeting. MessrsNaresh & Co Chartered Accountants have consented to their appointment as StatutoryAuditors and have confirmed that if appointed their appointment will be in accordancewith Section 139 read with Section 141 of the Act. None of the Directors and KeyManagerial Personnel or their relatives is in any way concerned or interestedfinancially or otherwise in the proposed appointment.
As per the requirement of the Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your Company has been carrying out audit of cost recordsrelating to Can Division. The Board of Directors on the recommendation of AuditCommittee has appointed Messrs Vishwanath Bhat & Co Cost Auditors to audit the costaccounts of the Company for the financial year 2017-18
As required under the Companies Act 2013 a resolution seeking Member's approval forthe remuneration payable to the Cost Auditor forms part of the notice convening the AnnualGeneral Meeting.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr. S. N. MishraProprietor of Messrs SNM & Associates Company Secretaries was appointed toundertake the Secretarial Audit. The Report of the Secretarial Audit for the year ended 31March 2017 is attached to the Board's Report (Annexure - II).
QUALIFICATION(S) IN AUDITORS' REPORT AND SECRETARIAL AUDIT REPORT :
There was no qualification reservations or adverse remarks made by the StatutoryAuditors in their Report which is attached. The Secretarial Audit Report with theirobservations is annexed to the Report.
REPORT ON CORPORATE GOVERNANCE :
Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. A report on compliance of the code is annexed herewith (Annexure - VII).
Certificate from Practicing Company Secretary confirming the compliance with theconditions of Corporate Governance as stipulated under Regulation 27 of the SEBI (LODR)Regulations 2015 is attached to this report.
CONTRACTS AND 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 at arm's lengthbasis. 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. All contracts /arrangements / transactions with Related Parties are placed before the Audit Committee andalso before the Board for approval.
The policy on materiality of Related Party Transactions and also on dealing withRelated Party Transactions as approved by the Audit Committee and the Board of Directorsis displayed on the Company's websitehttp://shetrongroup.in/pdf/Realted%20Party%20Transaction%20Policy.pdf.
All Related Party Transactions entered during the year were in the Ordinary Course ofthe Business and at Arm's Length basis. No Material Related Party Transactions i.e.transactions exceeding 10% of the annual consolidated turnover as per the last auditedfinancial statements were entered during the year by your Company. Accordingly thedisclosure of Related Party Transactions in Form AOC-2 does not form part of this Report.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:
Adhering to the provisions of Section 125 of the Companies Act 2013 relevant amountswhich remained unpaid or unclaimed for a period of seven years have been transferred bythe Company from time to time on due dates to the Investor Education and ProtectionFund.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has been employing women employees in various cadres within its office andfactory premises. The Company has in place a policy against Sexual Harassment in line withthe requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. Internal Complaint Committee is set up at shop floor level toredress any complaints received. All employees are covered under the policy. There was nocomplaint received from any employee during the financial year 2016-17 and hence nocomplaint is outstanding as on 31.03.2017 for redressal.
HEALTH SAFETY AND ENVIRONMENT PROTECTION :
Your Company has complied with all applicable environment laws and labour laws. TheCompany has been taking all the necessary measures to protect the environment and maximizeworker protection and safety. The Company's Policy require conduct of operation in such amanner so as to ensure safety of all concerned compliance of environmental regulationsand preservation of natural resources.
DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION) RULES 2014:
Disclosures required under Section 197 of the Companies Act 2013 read with rule 5 ofthe Companies (Appointment & Remuneration) Rules 2014 have been annexed as"Annexure VI".
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
The Management Discussion and Analysis Report as required is annexed as Annexure IV.
MATERIAL ORDER PASSED BY ANY COURT OR REGULATOR OR TRIBUNALS IMPACTING GOING CONCERNSTATUS OF COMPANY :
There were no order passed by any Court or Regulator or Tribunal during the year underreview which impacts going concern status of the Company.
Your Directors wish to place on record their sincere thanks to Bankers BusinessAssociates Consultants various Government Authorities and employees at all levels in theCompany for their continued support extended to your Company's activities during the yearunder review. Your Directors also acknowledge gratefully the shareholders for theirsupport and confidence reposed in your Company.
| ||By the order of the Board |
|Place : Bangalore ||For Shetron Limited |
|Date : 30 May 2017 ||Diwakar S Shetty |
| ||Executive Chairman |
| ||DIN : 00432755 |