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Shri Ram Switchgears Ltd.

BSE: 538430 Sector: Engineering
NSE: SRIRAM ISIN Code: INE634W01012
BSE 05:30 | 01 Jan Shri Ram Switchgears Ltd
NSE 05:30 | 01 Jan Shri Ram Switchgears Ltd

Shri Ram Switchgears Ltd. (SRIRAM) - Director Report

Company director report

To

The Members

Your directors have pleasure in presenting their 31st Annual Report on thebusiness and operations of the company and the accounts for the financial year ended March31 2017.

1. Extract of Annual Return:

Pursuant to the provisions of Section 92 (3) and Section 134 (3) (a) of the CompaniesAct 2013 read with rule 12 (1) of the Companies (Management and Administration) Rules2014 an extract of annual return in Form MGT 9 is attached herewith as Annexure I andforms part of this report.

2. State of Company's Affairs/Financial summary or highlights/Performance of theCompany (Standalone)

The details regarding state of Company's affairs in term of Section 134 (3) (i) of theCompanies Act 2013 and Financial Summary or highlights in terms of Rule 8 (5) (i) of theCompanies (Accounts) Rules 2014 are as follows:

Standalone (Rs. In Lacs)

Particulars Year Ended March 31 2017 Year Ended March 31 2016
Revenue from Operations 7090.54 4565.00
Other Income 56.09 25.80
Total Income 7146.62 4823.04
Total Expenditure 6831.23 4705.63
Extraordinary/Exceptional Items 15.00 10.28
Profit Before Tax (‘PBT') 327.86 127.68
Provision for Income Tax 116.95 42.41
Profit After Income Tax (including Deferred taxes) 210.91 85.28
Surplus Brought Forward from Previous Year 354.37 269.08
Amount Available for Appropriations 565.28 354.37
Proposed Dividend Nil Nil
Earnings Per Share (Amount in Rs.) Rs. 3.85 Rs. 1.74

3. Overview of the company and Performance Review and

Your company is involved in engineering and manufacturing of Electrical products. Wemanufacture Transformers (EHV Power Distribution and Special Application) upto 5 mVA -33 kV Class as well as Oil Type Compact Sub-Stations. We manufacture full range of HT& LT switchgears from Distribution boards to Distribution Boxes Control and RelayPanel Feeder Pillars ACB Boxes Single Phase Boxes MCB & MCCB panels JunctionBoxes A.C./D.C. Boards and other related products. The Company has developed VPI Dry TypeTransformer. A dry type transformer is used where there is space constraint and higherchances of occurrences of fire. These are mostly used by industrial and corporate clientsat software parks hotels hospitals high rise buildings etc. These transformers arecategorized as distribution transformers due to their nature of operation i.e. at enduser's locations.

For our manufacturing facility we do not need a Water or Air Treatment plant as we areproud to say that our plant is a zero pollution emission plant and received certificatedated November 23 2015 for the same from District Trade & Industries Centre Ratlam.We recently got elected as member in general category by Confederation of Indian Industry(CII) for its State Council of Madhya Pradesh for the year 2017-18. The Company alsoPartners with Govt. Industrial Training Institute Ratlam & Alot as a socialresponsibility and has received 2nd Skill Champions of India Award by FICCI andLeapvault The Company has also received Best dedicated Entrepreneur award by Zee.

Our vision is that we believe "Customer is the core of all the endeavors".Thus the primary objective of the company is up-holding the value of the"customer". Our Company strives to provide "solutions" rather than"selling of products." Our Objectives are to establish the organizationleadership in the area of electrical engineering both in the field of manufacturing andmarketing and to develop high level of satisfied customer profile with dedicated serviceand high grade of products and quality as well as to maintain the growth patternsconsistently both in terms of sales volume and return from sales.

The board feels pleasure in reporting that the company touched new heights in term ofsales and profit for the year ended March 31 2017. Sales clocked at Rs. 7090.53 Lacs asagainst Rs. 4565.00 Lacs in the previous year higher by 55.32%. Profit before Interestdepreciation and tax was higher at Rs. 975.88 Lacs as against Rs. 529.22 Lacs in theprevious year. Profit before tax was 325.87 Lacs and Net profit after tax was Rs. 209.58Lacs as compared to Rs. 85.28 Lacs in the previous year. Earnings per share for the yearwas Rs. 2.85/-.

4. Reserves

The amount of surplus of Rs. 21091406/- (Rupees Two Crores Ten Lacs Ninety OneThousand Four Hundred and Six Only) of Profit and Loss account has been transferred toReserve and Surplus account in the Balance Sheet and the final amount of reserve andsurplus account as on 31.03.2017 is Rs. 38216355/-. Reserves of Rs. 24468550/- wereutilized towards issue of bonus shares during the year.

5. Cash Flow Statement

As required under Regulation 34(2) and Regulation 53(b) of Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 a CashFlow Statement is attached to the Balance Sheet along with Auditor's Report.

6. Dividend

In order to plough back the profits for the activities of the company your directorsdo not recommend any dividend for the financial year.

7. Change in Status of the company & filing of draft prospectus

The company has been converted from private limited to public limited vide specialresolution passed by the members at the Extra Ordinary General Meeting held on 14.12.2016and fresh certificate of incorporation was issued by the Registrar of Companies on03.01.2017. Further as the company intends to go for listing of NSE EMERGE Platform ithas filed a draft prospectus with the stock exchange on 18.01.2017.

8. Number of Meetings of the Board of directors:

During the financial year total 15 (22.04.2016 02.05.2016 02.06.2016 13.06.201601.07.2016

12.07.2016 26.07.2016 02.09.2016 16.09.2016 07.10.2016 07.12.2016 04.01.2017

09.01.2017 30.01.2017 27.03.2017) Board Meetings were held and particulars of meetingheld and attendance thereof is given in the Corporate Governance Report which forms partof Annual Report.

9. Directors' Responsibility Statement

Pursuant to the provisions of clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 your directors state that—

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to 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; and

(e) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

10. Board's Evaluation

In compliances with the provisions of Section 134(3)(p) of the Act read with Rule 8(4)of the Companies (Accounts) Rules 2014 the board carried out annual evaluation of itsown performance that of its Committees and individual directors.

The performance of board and its committees was evaluated by the board after seekinginput from all the directors on the basis of the criteria such as composition andstructure of the Board quality of deliberations effectiveness of the procedures adoptedby the Board participation at the Board and committee meetings governance reviews etc.Performance of individual directors was evaluated on the basis of criteria liketransparency analytical abilities qualifications leadership qualities experienceparticipation in the long-term strategic planning and responsibilities shouldered.

11. Particulars of loans guarantees or investments under section 186

The details of loans guarantees and investments covered under the provisions ofSection 186 of the Companies Act 2013 and rules made thereunder are shown under Note No.12 & 17 in the notes to the Financial Statements.

12. Related Party Transaction:

All related party transactions entered into by the company during the year were on anarm's length basis and in the ordinary course of business. During the year no transactionwas entered into by the company with key managerial personnel. The company did not enterinto any related party transactions which was in conflict with its interest. Statement oftransaction with related parties in summary form are periodically placed before the auditcommittee and are approved by committee in compliance with Section 134 (3) (h) of the Actand rule 8 (2) of companies (Accounts ) Rules 2014 particulars of Related Partytransactions are given form of AOC-2 as Annexure II to this report.

13. Directors and Key Managerial Personnel

During the year following changes have occurred in directors and key managerialpersonnel:

1. Mr. Nilesh Jhalani was appointed as Managing Director of the company at the BoardMeeting held on 07/12/2016 and consent of the members has been taken at the ExtraordinaryMeeting held on 14/12/2016.

2. Mr. Devraj Jhalani and Mr. Rohit Kumar Jhalani were appointed as Whole-TimeDirectors of the company at the Extra-ordinary Meeting held on 14/12/2016.

3. Mr. Naresh jhalani was appointed as Chief Financial Officer (CFO) of the company andCS Garima Mahalaha is appointed as Company Secretary & Compliance Officer of thecompany at the Board meeting held on 04/01/2017.

4. Ms. Amita Premswaroop Patel and Mr. Atul Krishna Khandelwal were appointed asIndependent directors at Extra-ordinary Meeting held on 06/01/2017.

5. Ms. Sapna Jhalani was appointed as Non-Executive Director of the company atExtraordinary Meeting held on 06/01/2017

In accordance with the provisions of Section 152 of the Companies Act 2013 and interms of the Articles of Association of the Company Mr. Rohit Jhalani (Whole TimeDirector) (DIN: 00666443) is liable to retire by rotation and being eligible seeksre-appointment at the ensuing Annual General Meeting. The Board of Directors recommendshis re-appointment. Mr. Rohit Jhalani is not disqualified under Section 164(2) of theCompanies Act 2013.

Brief resume of the Director proposed to be reappointed nature of his experience inspecific functions and area and number of public companies in which he holdsmembership/chairmanship of Board and Committees Shareholdings and inter-se relationshipswith other directors as stipulated under Regulation 36(3) of Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 are providedin the ‘Annexure to the Notice of AGM' forming part of the Annual Report.

14. Commission from holding or subsidiary company:

As the company is not having any holding or subsidiary company details as requiredregarding receipt of commission by Managing or whole time director of the company fromholding or subsidiary of the company in accordance with the provisions of Section 197 (14)are not applicable.

15. Particulars Of Employee and Related Disclosures

The ratio of remuneration of each Director to the median of employees' remuneration asper Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of theBoard's Report under "Annexure - III " as Median Remuneration.

The company was not having any employee who was in receipt of remuneration asspecified under Rule 5 (2) Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 hence the details.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 thelist of the top 10 employees in terms of remuneration forms part of the Board's Reportunder "Annexure- IV''

16. Audit Committee

The company constituted an Audit Committee pursuant to the provisions of Section 177 ofthe Companies Act 2013 at the board meeting held on 09.01.2017. The following persons aremembers of the Audit committee:

1. Mr. Atul Krishna Khandelwal (DIN : 00094242) - Independent Director (Chairman ofcommittee)

2. Ms. Amita Premswaroop Patel (DIN : 07687442) - Independent Director (Member)

3. Mr. Nilesh Kumar Jhalani (DIN : 01462299) - Managing Director (Member)

The function performed by the Audit Committee particulars of meeting held andattendance thereafter given in the Corporate Governance Report which form part of AnnualReport..

17. Nomination and Remuneration Committee

The company constituted and Nomination & Remuneration Committee pursuant to theprovisions of Section 178 of the Companies Act 2013 at the board meeting held on09.01.2017. The following persons are members of the Nomination and Remunerationcommittee:

1. Mr. Atul Krishna Khandelwal (DIN : 00094242) - Independent Director (Chairman ofcommittee)

2. Ms. Amita Premswaroop Patel (DIN : 07687442) - Independent Director (Member)

3. Ms. Sapna Jhalani (DIN : 07685341) - Non Executive Director (Member)

The Function performed by the Nomination and Remuneration particulars of meeting heldand attendance thereafter given in the Corporate Governance Report which part of AnnualReport. All recommendation made by the Audit Committee were accepted by the Board.

18. Stakeholders' Relationship Committee

The company constituted a Stakeholders' Relationship Committee pursuant to theprovisions of Section 178 (6) of the Companies Act 2013 at the board meeting held on09.01.2017. The following persons are members of the Stakeholders' relationship committee:

1. Ms. Sapna Jhalani (DIN : 07685341) - Non Executive Director (Chairperson)

2. Mr. Atul Krishna Khandelwal (DIN : 00094242) - Independent Director (Member)

3. Ms. Amita Premswaroop Patel (DIN : 07687442) - Independent Director (Member)

The function performed by the Nomination and Remuneration particulars of meeting heldand attendance thereafter given in the Corporate Governance Report which form part ofAnnual Report.

19. Vigil Mechanism/whistleblower Policy

In Compliance with the provision of section 177(9) of the Act read with Rule 7 ofCompanies (Meeting of Board and its Power) Rules 2014 the company formulated a VigilMechanism for directors and employees to report concerns detail of which are covered inthe Corporate Governance Report which form part of Annual Report.

20. Corporate Governance

Although provisions of Regulation 17 to 27 related with Corporate Governance read withSchedule V (c) of SEBI (LODR) 2015 are not applicable on the company the company as goodgovernance practice has attached a report on Corporate Governance as Annexure V to thisreport and forms part of Annual Report.

21. Corporate Social Responsibility (CSR)

As the company does not fall into any of the category mentioned thereunder theprovisions of Section 134 (3) (o) read with Section 135 and Rule 9 of Companies (Accounts)Rules 2014 related with Corporate Social Responsibility are not applicable on thecompany.

22. Material changes and commitments if any affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report

There were following material changes that took place between the date of balance sheetand the date of Board's report.

1. Company came out with an Initial Public Offer comprising of 2670000 equity sharesof Rs. 10/- each at a premium of Rs. 9/- per share on. The offer was open from 25.05.2017to 30.05.2017. The company received tremendous response from the market for its IPO andthe issue got oversubscribed by 70 times.

2. The company allotted 2670000 equity shares of Rs. 10/- each to the selectedapplicants vide resolution passed by circulation by the board on 02.06.2017.

3. Equity Shares of the company were successfully listed with SME platform of NationalStock Exchange - EMERGE w. e. f. 07.06.2017.

23. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

The details of conservation of energy technology absorption foreign exchange earningsand outgo in terms of Section 134 (3) (m) read with Rule 8 (3) of the Companies (Accounts)Rules 2014 are given in Annexure VI which is part of this Report.

24. Details of Subsidiary/Joint Ventures/Associate Companies

As the company is not having any subsidiary/joint venture/Associate Companies thedetails in terms of Section 134 (3) (q) read with Rule 8 (5) (iv) of the Companies(Accounts) Rules 2014 are nil.

25. Deposits

As the company has not accepted any deposits covered under Chapter V of the Act thedetails in terms of Section 134 (3) (q) of the Companies Act 2013 read with Rule 8 (5)(v) and (vi) of the Companies (Account) Rules 2014 are nil. The unsecured loan as areappearing in the balance sheet are the amount which are brought in by the promoters andtheir relatives in pursuant to the stipulation imposed by the financing banks and the sameshall not be treated as deposits in terms of provisions of Rule 2 (c) (XIII) of Companies(Deposit) Rules 2014.

26. Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future

No significant or material orders are passed during the financial year by theregulators or courts or tribunals which might impact the going concern status andcompany's operation in future.

27. Details in respect of adequacy of internal financial controls with reference to theFinancial Statements.

Your Company has put in place adequate internal financial controls with reference tothe financial statements some of which are outlined below:

Your Company has adopted accounting policies which are in line with the AccountingStandards prescribed in the Companies (Accounting Standards) Rules 2006 that continue toapply under Section 133 and other applicable provisions if any of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions ofthe Companies Act 1956 to the extent applicable.

A system of strict internal control including suitable monitoring procedures hasalways believed that transparency systems and controls are important factors in thesuccess and growth of any organization.

The Company has an adequate system of internal control supported by an extensiveprogramme of internal control; and systems are established to ensure that financial andother records are reliable for preparing financial statements.

Internal Audit Reports and significant Audit observations are brought to the attentionof the Audit Committee of the company. The internal controls existing in the Company areconsidered to be adequate vis-a-vis the business requirements.

Your Company ensures adequacy with its current size and business to ensure operationalefficiency protection and conservation of resources accuracy and promptness in financialreporting and compliance of laws and regulations. It is supported by the internal auditprocess and will be enlarged to be adequate with the growth in the business activity.

28. Internal Auditors

In accordance with the provisions of Section 138 of the Companies Act 2013 read withRule 13 of Companies (Accounts) Rules 2014 the company has appointed CA Neha JainChartered Accountant Ratlam as internal auditor of the company at the board meeting heldon 31.07.2017. The purpose of this Internal Audit will be to examine that the company iscarrying out its operations effectively and performing the processes procedures andfunctions as per the prescribed norms. The Internal Auditors will review the adequacy andefficiency of the key internal controls guided by the Audit Committee.

29. Explanation or comments on Auditor's Report:

Auditor's report being self explanatory no comments are required to be given in termsof Section 134 (3) (f) (i).

30. Secretarial Audit

Pursuant the provision of the Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial personal) Rules 2014 theboard appointed CS Shweta Garg Practicing Company Secretary Indore to conductSecretarial Audit of the Company for the financial year 2016 - 2017. The Secretarial Auditreport in Form MR 3 is attached as Annexure VII and forms part of this report. TheSecretarial Audit Report is self explanatory and no comments are required to be given onthe same.

31. Management Discussion and Analysis

Management Discussion and Analysis Report for the year 2016-17 as stipulated underRegulation 34(2)(e) of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is attached as Annexure VIII forming part ofthis

Annual Report and gives detail of overall industry structure developments performanceand state of affairs of the Company's operations during the year.

32. Risk Management Policy

The risk management framework of the company defines roles and responsibilities forarriving at risk rating criteria for assessing risk impact likelihood of risks andeffectiveness of mitigations plans. The process includes identifications of risks involvedin various areas zeroing on ‘risk that matter' assessing mitigation plan andpreparedness to face ‘risk that matter'

33. Disclosure in respect of loan to employees for purchase of own shares

The company has not given any loan to any of the employees for purchasing its shareshence the information pursuant of Section 67 of the Act read with Rule 16 of Companies(Share Capital & Debentures) Regulations 2014 are nil.

34. Disclosure under Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013

No case was filed during the financial year under the provisions of Sexual Harassmentof Women at Workplace (Prevention Prohibition & Redressal) Act 2013.

35. Issue of Equity shares with differential voting rights Sweat Equity ESOP etc.

The company has not issued any equity shares with differential voting rights SweatEquity Shares or Shares to its employees under "Employee Stock Option Scheme"during the financial year.

36. Changes in Share Capital

1. The company has increased its authorize share capital from Rs. 55000000/- dividedinto 5500000 Equity share of Rs. 10/- each to Rs. 120000000/- divided into 12000000Equity share of Rs. 10/- each vide resolution passed at Extra-ordinary Meeting held on14.12.2016.

2. The company issued 2446855 Equity Shares of Rs. 10/- each as fully paid bonusshares vide resolution passed by the board of director at their meeting held on 04.01.2017in pursuance of authority granted by the members vide resolution passed at theExtraOrdinary Meeting held on 14.12.2016.

37. Auditors:

M/s Parth Jhalani & Company Chartered Accountants Ratlam who were appointed asstatutory auditors for a period of 5 years from the conclusion of 28th AnnualGeneral Meeting till the conclusion of 33rd Annual General Meeting resigned asstatutory auditor due to pre-occupation w. e. f. 07.12.2016. The members at the ExtraOrdinary General Meeting held on 14.12.2016 appointed M/s KVNG & ASSOCIATESChartered Accountants Indore as statutory auditor to fill the casual vacancy caused inthe office of statutory auditor to hold office till conclusion of ensuing Annual GeneralMeeting. The Auditors M/s KVNG & ASSOCIATES Chartered Accountants Indore areretiring at the conclusion of the ensuing Annual General Meeting of the company and beingeligible offer themselves for appointment as Auditors. The auditors have

given a declaration to the company to the effect that the firm is not disqualified tocontinue as auditor in terms of the provisions of Section 141 of the Companies Act 2013read with Rule 4 and Rule 10 of the Companies (Audit & Auditors) Rules 2013.

38. Acknowledgements

Your Directors convey a sense of high appreciations to all the employees of the companyfor their hard work dedication continued commitment and significant contributions. YourDirectors are grateful to acknowledge the support and cooperation's received from variousdepartments of the Central and State Governments Members Business Associates AnalystsBanks Financial Institutions Customers Distributors and Suppliers.

For & on behalf of the Board of Directors

Sd/- Sd/-
Place : Ratlam Rohit Kumar Jhalani Nilesh Kumar Jhalani
Date : 30.08.2017 Whole Time Director (DIN : 00666443) Managing Director (DIN: 01462299)
Shri Ram Bhawan Shri Ram Bhawan
Goshala Road Ratlam Goshala Road Ratlam
457001M. P. India 457001 M.P. India