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Stovec Industries Ltd.

BSE: 504959 Sector: Industrials
NSE: N.A. ISIN Code: INE755D01015
BSE LIVE 15:40 | 17 Nov 3016.45 15.90
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OPEN 3095.00
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VOLUME 161
52-Week high 3874.95
52-Week low 1860.00
P/E 25.32
Mkt Cap.(Rs cr) 630
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3095.00
CLOSE 3000.55
VOLUME 161
52-Week high 3874.95
52-Week low 1860.00
P/E 25.32
Mkt Cap.(Rs cr) 630
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Stovec Industries Ltd. (STOVECINDS) - Director Report

Company director report

TO THE MEMBERS

Your Directors are pleased to present the 42nd Annual Report and the AuditedFinancial Statement of the Company for the year ended December 31 2015.

1. FINANCIAL RESULTS

Particulars Current Year Previous Year
31.12.2015 31.12.2014
(Rs. in Millions) (Rs. in Millions)
Revenue from Operations 1567.02 949.09
Other Income 35.55 31.40
(a) Total Income: 1602.57 980.49
(b) Total Expenditure: 1240.34 789.19
Gross Profit before Depreciation
and Amortisation expenses 362.23 191.30
Less: Depreciation & Amortization expenses 51.57 26.15
Operational Profit/Profit Before Tax 310.66 165.15
Less: Current Tax 104.65 50.59
Deferred tax 2.06 3.55
Excess provision of income tax of earlier years (Net) (1.44) -
105.27 54.14
Profit After Tax 205.39 111.01
Add: Profit brought forward from previous year 314.00 253.48
Profit available for appropriation 519.38 364.49
Dividend on equity shares 60.55 32.36
Tax on Dividend 12.33 6.63
Amount transferred to General Reserves. 21.00 11.50
Short (Excess) Provision on earlier year's (0.038) -
Dividend Distribution Tax
Profit carried forward to Balance Sheet 425.54 314.00

2. PERFORMANCE OVERVIEW

Standalone

Your Company has demonstrated excellent performance during the year and outshined allits previous records for revenue by recording standalone revenue from operations of Rs.1567.02 Million (Previous year Rs. 949.09 Million) a growth of about 65 % in comparisonto prior year. The increase in revenue was contributed by growth in sales of all productlines and more particularly Rotary Screen Printing Machine and its Spare Parts NickelPerforated Rotary Screens and Sugar Screens and was driven by increased market presence.The Company has achieved standalone Profit before Tax of Rs. 310.66 Million (Previous yearRs. 165.15 Million) a remarkable growth of about 88 % in comparison to prior year.

Consolidated

The consolidated revenue from operations stood at Rs. 1621.98 Million (Previous yearRs. 1023.44 Million) an impressive increase of about 58 % in comparison to prior year.The Company's consolidated Profit before Tax for the financial year 2015 stood at Rs.331.79 Million (Previous year Rs. 172.52 Million).

3. RESERVES AND SURPLUS

Out of the Net Profit of Rs. 205.39 Million for the year under report an amount of Rs.21 Million is transferred to the General Reserve.

4. DIVIDEND

Considering the Company's financial performance the Board of Directors haverecommended payment of Final Dividend of Rs. 29/- per equity share (290 %) for thefinancial year ended on December 31 2015. This Final Dividend is subject to the approvalof Members in the 42nd Annual General Meeting.

5. SUBSIDIARY COMPANY

Atul Sugar Screens Private Limited ("ASSPL") is a Wholly Owned Subsidiary ofthe Company. Your Company has obtained a certificate from the Statutory Auditors of theCompany certifying that the Company is in compliance with the Foreign Exchange Management(Transfer or issue of security by a person resident outside India) Regulations 2000 withrespect to the downstream investments made in Atul Sugar Screens Private Limited.

A Summary of Performance of ASSPL is provided below:

The revenue from operations of ASSPL during the financial year 2015 stood at Rs. 154.88Million [Previous year (For 9 months from April 1 2014 to December 31 2014) Rs.106.53Million]. ASSPL recorded Profit before tax of Rs. 22.96 Million (Previous year Rs. 8.8Million).

Pursuant to the provisions of Section 129 (3) of the Companies Act 2013("Act") a statement containing the salient features of financial statements ofASSPL in the prescribed Form AOC-1 is provided in Annexure-I forming part of thisreport. The Audited Financial Statements of ASSPL are available on the Company's websiteat www.stovec.com and the same are also available for inspection at the registered officeof the Company as per the details mentioned in the Notice of 42nd AnnualGeneral Meeting. Your Company will also make available these documents upon writtenrequest by any Member of the Company interested in obtaining the same.

The Annual Audited Consolidated Financial Statements together with the Report ofAuditor's thereon forms part of this Annual Report.

6. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO

Information as required to be given under Section 134(3)(m) of the Act read with Rule8(3) of the Companies (Accounts) Rules 2014 is provided in Annexure II formingpart of this Report.

7. FINANCIAL YEAR

The application made by the Company and its Indian wholly owned subsidiary M/s AtulSugar Screens Pvt. Ltd. to the Company Law Board seeking approval for continue to followcalendar year as financial year was approved and accordingly the Company and its Indianwholly owned subsidiary would follow the calendar year (i.e. January 1 to December 31) asfinancial year.

8. FIXED DEPOSITS

For the year ending December 31 2015 the Company has not accepted any depositsfalling within the purview of Section 73 of the Act and rules made there under.

9. CORPORATE GOVERNANCE

A separate report on Corporate Governance Compliance and a Management Discussion andAnalysis Report as stipulated in Regulation 34 (3) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") forms part ofthe Director's Report as Annexure-III and IV respectively along with the requiredCertificate from the Practicing Company Secretary regarding compliance of the conditionsof Corporate Governance.

10. AUDIT COMMITTEE

The Company has in place an Audit Committee in terms of requirements of the Act readwith rules framed thereunder and Listing Regulations. The details relating to the AuditCommittee are given in the Corporate Governance Report forming part of this report. Therecommendations of Audit Committee were duly accepted by the Board of Directors.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors ("Board") in its meeting held on February 16 2016 hasappointed Mr. Eiko Ris as an Additional Director on the Board of the Company w.e.f.February 16 2016 who holds office up to the date of the forthcoming Annual GeneralMeeting and is eligible for appointment as a Director of the Company. The Board welcomedMr. Eiko Ris on the Board of Directors of the Company.

Mr. Aschwin Nicolai Hollander due to his other pre-occupations has resigned from theBoard of the Company w.e.f. February 16 2016. The Board placed on record its appreciationfor the outstanding contribution made by him in the growth of the Company.

At the 42nd Annual General Meeting Mrs. Everdina Herma Slijkhuis retires byrotation and being eligible offers herself for re-appointment.

The Members at the 41st Annual General Meeting appointed Mr. Khurshed. M.Thanawalla (DIN: 00201749) and Mr. Marco Wadia (DIN: 00244357) as an Independent Directorof the Company for a consecutive term of five years as per requirement of the Act. Theabovenamed Independent Directors have furnished declarations to the Company confirmingthat they meet the criteria prescribed for Independent Directors under Section 149 (6) ofthe Act and Regulation 16(1)(b) of the Listing Regulations.

The tenure of Mr. Shailesh Chandrakrishna Wani as a Managing Director of the Companyexpires on September 30 2016. The Board of Directors in its meeting held on February 162016 noted that Company has grown under his leadership and it will be in the interest ofthe Company to re-appoint him. The Board has re-appointed Mr. Shailesh ChandrakrishnaWani as a Managing Director of the Company for a further period of three years w.e.f.October 1 2016 subject to the approval of Members of the Company and of the CentralGovernment if required.

Mr. Girish Deshpande Chief Financial Officer retired from the Company w.e.f. July 12015 and Mr. Paras Mehta was appointed as the Chief Financial Officer of the Company w.e.fJuly 1 2015. The Board placed on record its appreciation for the contribution made by Mr.Girish Deshpande in his role as a Chief Financial Officer of the Company.

12. BOARD MEETING

During the financial year ended December 31 2015 five meetings of the Board ofDirectors were held. The details of the attendance of Directors at the Board Meeting arementioned in the Corporate Governance Report annexed hereto.

13. PERFORMANCE EVALUATION

The details of Annual Performance Evaluation of Individual Directors includingChairperson Board of Directors and Committees of Board of Directors are mentioned in theCorporate Governance Report.

14. CORPORATE SOCIAL RESPONSIBILITY

In accordance with Section 135 of the Act and Rules framed thereunder the Company hasconstituted a Corporate Social Responsibility ("CSR") Committee of Directors.The details of composition of CSR Committee are given in the Corporate Governance Report.The details of CSR policy and CSR spending by the Company have been provided as Annexure-Vto this report as required under the Companies (Corporate Social Responsibility Policy)Rules 2014.

15. REMUNERATION POLICY

The details of the Remuneration Policy are mentioned in the Corporate GovernanceReport. A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act readwith Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided as Annexure VI forming part of this Report.

16. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope of Internal Audit is well defined in theorganization. The Internal Audit report regularly placed before the Audit Committee of theBoard. The Management monitors and evaluates the efficacy and adequacy of internal controlsystems in the Company its compliance with operating systems accounting procedures andpolicies. Based on the report of Internal Auditors process owners undertake correctiveaction in their respective areas and thereby strengthening the controls continuously.Significant audit observations if any and corrective actions suggested and taken arepresented to the Audit Committee of the Board.

17. EXTRACTS OF ANNUAL RETURN

The extracts of Annual Return in Form MGT-9 as required under Section 92(3) of the Actread with Rule 12 of the Companies (Management and Administration) Rules 2014 forms partof this Report as Annexure VII.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

During the year under review all the Related Party Transactions were entered into bythe Company in the ordinary course of business and on arm's length basis. Hence reportingin Form AOC-2 is not applicable to the Company.

19. PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS

A statement providing particulars of Loans Guarantees or Investments under Section 186of the Act is provided as Annexure VIII forming part of this Report.

20. VIGIL MECHANISM

As per the provisions of Section 177(9) of the Act the Company is required toestablish an Vigil Mechanism for Directors and Employees to report genuine concerns. TheCompany has a Whistle Blower Policy (also known as Vigil Mechanism) in place and thedetails of the Whistle Blower Policy are provided in the Report on Corporate Governanceforming part of this Report.

The Company has disclosed information about the establishment of the WhistleblowerPolicy on its website at www.stovec.com athttp://www.spgprints.com/include/files/About_us/Stovec/Policies/Whistle_Blower_Policy.pdf.

21. RISK MANAGEMENT

The Company has formulated Risk Management Policy in order to monitor the risks and toaddress/ mitigate those risks associated with the Company. The Board of Directors do notforesee any elements of risk which in its opinion may threaten the existence of theCompany.

22. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 (3)(c) and 134 (5) of the Act your directorsconfirm to the best of their knowledge and belief that:

a) in the preparation of the annual financial statements for the year ended December31 2015 the applicable accounting standards have been followed and that no materialdepartures have been made from the same;

b) they have selected such accounting policies and applied consistently and madejudgment and estimates that were reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at December 31 2015 and of the profit ofthe Company for the year ended on that date;

c) 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;

d) they have prepared the annual financial statements for the year ended December 312015 on a going concern basis;

e) proper internal financial controls are in place in the Company and that suchinternal financial controls are adequate and are operating effectively; and

f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

23. POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has in place a Policy on Prevention of Sexual Harassment of Women atWorkplace in line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunder and InternalComplaints Committee has also been set up to redress complaints regarding sexualharassment. During the year no complaint with allegations of sexual harassment wasreceived by the Company.

24. REPORTING OF FRAUDS

There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment.

25. STATUTORY AUDITORS

Pursuant to provisions of Section 139 of the Act and rules framed thereunder M/s.Price Waterhouse Chartered Accountants (Firm Registration No. 301112E) were re-appointedas Statutory Auditors of the Company for a term of five years to hold office from theconclusion of Forty first (41st ) Annual General Meeting until the conclusionof the Forty sixth (46th) Annual General Meeting of the Company to be held inthe calendar year 2020 subject to ratification of their appointment by Members at everysubsequent Annual General Meeting. A certificate from Statutory Auditors has been receivedto the effect that their appointment as Statutory Auditors of the Company if ratified atthe ensuing Annual General Meeting would be according to the terms and conditionsprescribed under Sections 139 and 141 of the Companies Act 2013 and rules framedthereunder.

The Board of Directors on recommendation of the Audit Committee recommends ratificationof re-appointment of M/s. Price Waterhouse as the Statutory Auditors of the Company fromthe conclusion of 42nd Annual General Meeting until the conclusion of nextAnnual General Meeting.

A resolution seeking ratification of their re-appointment forms part of the Noticeconvening the 42nd Annual General Meeting and the same is recommended forconsideration and approval of Members.

26. COST RECORDS AND COST AUDITORS

In terms of the provisions of Section 148 of the Act read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Board of Directors on the recommendation ofthe Audit Committee have appointed M/s Dalwadi and Associates Cost Accountants (FirmRegistration No.000338) as its Cost Auditors to audit the cost records of the Company forthe financial year 2016 for conducting the audit of the cost records maintained by theCompany for the various Company's products as mandated by the Central Government pursuantto the Companies (Cost Records and Audit) Amendment Rules 2014 and amendment thereof ata remuneration as mentioned in the Notice convening the 42nd Annual GeneralMeeting and subject to the approval of the Members on the remuneration to be paid to theCost Auditor. A certificate has been received from the Cost Auditors to the effect thattheir appointment as Cost Auditors of the Company if made would be in accordance withthe limits specified under Section 141 of the Act and Rules framed thereunder. Aresolution seeking Member's approval for the remuneration payable to Cost Auditors formspart of the Notice of 42nd Annual General Meeting of the Company and the sameis recommended for the consideration and approval of Members. The Company has filed theCost Audit Report for financial year 2014 on June 26 2015 which is within the time limitprescribed under The Companies (Cost Audit Report) Rules 2011.

27. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Sandip Sheth & Associates Practicing Company Secretaries (COP No.4354) for conducting Secretarial Audit of the Company for the financial year ended onDecember 31 2015. The Secretarial Audit Report is provided as Annexure-IX to thisreport.

28. AUDITORS REPORT

There are no qualifications reservations or adverse remarks made by M/s. PriceWaterhouse Chartered Accountants Statutory Auditors in their audit report and by M/s.Sandip Sheth & Associates Practicing Company Secretaries Secretarial Auditors intheir secretarial audit report and therefore need not require any comments under section134(3)(f) of the Act.

29. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY FROM THE END OF FINANCIAL YEAR AND TILL THE END OF THIS REPORT.

There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the Financial Year of theCompany to which the Financial Statements relate and the date of this Report.

30. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

As on date of this report there are no significant and material orders passed by theRegulators or Courts or Tribunals impacting the going concern status and operations of theCompany in future.

31. PARTICULARS OF EMPLOYEES

Your Directors place on record their deep appreciation for the contribution made by theemployees of the Company at all levels.

The information on employees particulars as required under Section 197 (12) of the Actread with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is provided in the Annexure forming part of the Report.In terms of Section 136 of the Act the Report and Financial Statements are being sent tothe Members and others entitled thereto excluding aforesaid Annexure. The saidinformation is available for inspection by the Members at the Registered Office of theCompany as per the details mentioned in the Notice of 42nd Annual GeneralMeeting on any working day (except Saturday Sunday and Public Holidays) up to the dateof the 42nd Annual General Meeting. Any Member interested in obtaining a copyof the same may write to the Company Secretary of the Company.

32. ACKNOWLEDGEMENT

We wish to place on record our gratitude for the contributions co-operation andconfidence reposed in the Board of Directors by SPGPrints B.V. and other shareholders ourvalued employees and customers our bankers suppliers and other stakeholders.

For and on behalf of Board of Directors
Sd/-
Place : Mumbai K.M.Thanawalla
Date : February 16 2016 Chairman
DIN: 00201749

Annexure-I

Form AOC-1

(Pursuant to first proviso to sub-section (3) of Section 129 of the Act read with Rule5 of The Companies Accounts Rules 2014)

Part "A" : Subsidiaries

(Amount in INR)

Name of Subsidiary Atul Sugar Screens Private Limited
Reporting period for the subsidiary concerned if different from the holding company's reporting period January 1 2015 to December 31 2015
Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries INR
Share capital 100000
Reserves & Surplus 21273273
Total assets 99918302
Total Liabilities 99918302
Investments Nil
Turnover 154884725
Profit / (Loss) before taxation 22963683
Provision for taxation 7689785
Profit / (Loss) after taxation 15273898
Proposed Dividend Nil
% of shareholding 100% Equity Shares are held by Stovec Industries Limited

Part "B": Associates and Joint Ventures: Not Applicable

Annexure – II

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

(Pursuant to provisions of Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014).

A. Conservation of Energy

(i) The steps taken or impact on conservation of energy 1. Usage of Energy data acquisition system for effective and efficient monitoring and control systems for overall electricity consumption.
2. Nickel bath efficiency maintained by keeping operating voltage at optimum levels.
3. Installed new energy efficient rectifiers and also replaced the old ones.
4. Replacement of old utility equipments with new energy efficient equipments.
5. Effective preventive maintenance helped in increasing energy efficiency of equipment.
(ii) The steps taken by the company for utilizing alternate sources of energy. Not Applicable
(iii) The capital investment on energy conservation equipment's • Replaced old overhead crane with new efficient crane.
• Used energy efficient rectifiers in all the new installation and replacements made during the year.
• Replaced old utility equipments (Chiller/ Compressors) with latest extremely efficient utility equipments.
• Replaced conventional rectifier power supply system with the compact easy to connect and efficient bus- trunking power supply system.

B. Technology Absorption

(i) The efforts made towards technology absorption The Company continues to perform R&D activities to improve quality of products and to reduce production cost to serve its customer better.
(ii) The benefits derived like product improvement cost reduction product development or import substitution • Development of new Products
• Reduction of Product cost
• Product and Process improvement
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)
(a) the details of technology imported; Manufacturing of Nova Screen
(b) the year of import; 2015
(c) whether the technology been fully absorbed; The above technology have been fully absorbed.
(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; Not Applicable
(iv) The expenditure incurred on Research and Development Capital Expenditure – Nil
Revenue Expenditure – Rs. 6134250

FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars Amount (in Rs.)
Earnings in foreign exchange on account of Goods and Services exported Commission etc. 106007174
Value of imports of raw materials components stores spares Commission technical know-how fees royalty etc. 541855518