Centum Electronics Ltd.
|BSE: 517544||Sector: Engineering|
|NSE: CENTUM||ISIN Code: INE320B01020|
|BSE 00:00 | 21 Oct||286.85||
|NSE 00:00 | 21 Oct||285.40||
|Mkt Cap.(Rs cr)||369|
|Mkt Cap.(Rs cr)||369.46|
Centum Electronics Ltd. (CENTUM) - Director Report
Company director report
We have pleasure in presenting the Twenty Sixth Annual Report on thebusiness and operations of the Company together with the audited Statement of Accounts forthe financial year ended March 31 2019.
1. Financial Highlights:
* Excludes exceptional item & share of profit/loss fromassociate/discontinuing operations
During the current year of operations your Company has registered aconsolidated total income of ' 9375 million compared to previous financialyear total income of ' 7941 million an increase of about 18%. Your Companyhas earned a net profit after tax of ' 484 million for the financial year.
At standalone level a total income of ' 5025 millioncompared to previous financial year total income of ' 3664 million anincrease of about 37%. Further your Company has earned a net profit of '251 million for the year.
a. Centum Adetel Group S.A.
During the year Centum Adetel Group S.A. the subsidiary company(excluding discontinuing operations) has registered total income of ' 4375million and posted a net profit of ' 213 million.
b. Centum Electronics UK Limited
During the year Centum Electronics UK Limited a wholly ownedsubsidiary company has not registered any revenue and incurred a net loss of '1.3 million.
c. Centum Adeneo India Private Limited
During the year Centum Adeneo India Private Limited a wholly ownedsubsidiary company has registered revenue of ' 37 million and incurred aloss of ' 9.2 million.
A statement containing the salient features of the financial statementsof subsidiaries as required in Form AOC-1 is enclosed as Annexure-1 to this Report.
4. Consolidated Financial Statements:
The Consolidated Financial statements have been prepared by the Companyin accordance with the applicable Indian Accounting Standards ('IndAS') and the sametogether with the Auditor's Report thereon is provided in the Annual Report.
The Financial Statements of the subsidiary and related detailed information will be kept at the Registered Office of the Company and will be available toinvestors seeking information at any time.
The Company has adopted a Policy for determining Material Subsidiariesin terms of Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Policy as approved by the Board is available on the Investor pageat Company's website www.centumelectronics.com.
During the year your Company has paid an interim dividend of '1/- (i.e. 10%) per equity share based on the approval provided by the Board of Directorsat their Meeting held on February 6 2019 and recommended a final dividend of '4/- (i.e. 40%) per equity share Totaling to ' 5/- (i.e. 50%) per equityshare face value of ' 10/- each for the financial year 2018-19. The finaldividend recommended is subject to approval of the Shareholders in the ensuing AnnualGeneral Meeting of the Company.
The total dividend payout was ' 15.53 million (includingDividend Distribution Tax) for the year.
6. Share Capital:
The authorised share capital of the Company is '155000000/- divided into 15500000 equity shares of ' 10/- each. Duringthe year your Company has issued and allotted 11434 equity shares of the Company to theeligible employees on exercise of options granted under the Centum Employee Stock OptionPlans. Consequently the issued subscribed and paid up equity share capital of theCompany has increased from 12869624 equity shares of ' 10/- each to12881058 equity shares of ' 10/- each.
During the year under review the Company has not issued anyDebentures. As on date the Company does not have any outstanding Debentures.
8. Depository System:
Your Company's equity shares are tradable only in electronic form. Ason March 31 2019 99.07% of the Company's total paid up equity share capital representing12761484 shares are in dematerialised form.
9. Transfer to Investor Protection Fund:
During the year the Company transferred ' 127670/- tothe Investor Education and Protection Fund the amount in unpaid Dividend Account openedin 2010-11 which was due & payable and remained unclaimed & unpaid for a period ofseven years as provided under Section 124(5) of the Companies Act 2013 read with theInvestor Education and Protection Fund Authority (Accounting Auditing Transfer andRefund) Rules 2016. The Company pursuant to the circulars issued by Ministry of CorporateAffair under the aforesaid rules mandated the transfer of shares on which dividend has notbeen paid or claimed by the shareholders for seven consecutive years or more to the demataccount of the Investor Education and Protection Fund Authority. The Company hasaccordingly transferred 5954 shares to the demat account of the Investor Education andProtection Fund Authority.
10. Risk Management:
Your Company has a robust Risk Management policy. Your Companyregularly assess the risks and ensures that the risk mitigation plans are in place.
11. Internal Control Systems and their adequacy:
The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The Company has appointed KPMG CharteredAccountants as its Internal Auditor. The Audit Committee defines the scope and areas ofinternal audit. The Internal Auditor audits the areas recommended by the committee everyyear.
The Audit observations and corrective actions thereon are beingpresented to the Audit Committee of the Board. Based on the report of Internal auditorprocess owners undertake corrective action in their respective areas and therebystrengthen the controls. During the year the Internal Audit was done on the areasrecommended and no material weakness observed.
12. Directors and Key Managerial Personnel:
The Board of Directors of the Company as on March 31 2019 comprises of7 Directors out of which 1 Executive Director 1 Non-Executive Director and 5Non-Executive Independent Directors. The composition of the Board of Directors is in duecompliance of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
Pursuant to applicable provisions of the Companies Act 2013 theNomination and Remuneration Committee and the Board of Directors at their respectiveMeetings held on May 29 2019 have recommended and approved the re-appointment of Mr.Pranav Kumar N Patel (DIN: 06784801) and Mr. S. Krishnan (DIN: 01807344) as IndependentDirectors of the Company for a second consecutive term period of 5 (five) years w.e.f.April 1 2019 upto March 31 2024 which is subject to approval of Shareholders at theensuing Annual General Meeting of the Company. Due notices under Section 160 of theCompanies Act 2013 have been received from a Shareholder of the Company proposing there-appointment of Mr. Pranav Kumar N Patel and Mr. S. Krishnan as Independent Directors ofthe Company at this Annual General Meeting.
Further Mr. Ramu Akkili has resigned from the position of CompanySecretary of the Company with effect from November 30 2018 and Mr. Nagaraj K V has beenappointed as Company Secretary & Compliance Officer of the Company with effect fromFebruary 6 2019. Mr. Nagaraj K V has been designated as Key Managerial Personnel of theCompany.
Pursuant to the provisions of Section 152 of the Companies Act 2013and the Articles of Association of the Company Dr. Swarnalatha Mallavarapu Director(DIN: 00288771) will retire by rotation at the Twenty Sixth Annual General Meeting andbeing eligible has offered herself for re-appointment.
The Notice convening the Annual General Meeting includes the proposalsfor the appointment of the Directors. Brief resume of the Directors proposed to bereappointed nature of their expertise in specific functional areas and names of theCompanies in which they hold directorship/ membership/ chairmanship of the Board orCommittees as stipulated under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 have been provided as an annexure to the Notice convening the TwentySixth Annual General Meeting.
None of the Directors of the Company are disqualified under Section164(2) of the Companies Act 2013.
a. Board Meetings:
A calendar of Meetings is prepared and circulated in advance to theDirectors.
During the year the Company has convened 4 (four) Meetings of theBoard of directors and 4 (four) Meetings of the Audit Committee. The details of which aregiven in the Corporate Governance Report. The Intervening gap between the meetings waswithin the period prescribed under the Companies Act 2013.
b. Declaration by Independent Directors:
The Company has received necessary declaration from each of theIndependent Directors under Section 149(7) of the Companies Act 2013 that he meets thecriteria of independence as laid down under Section 149 (6) of the Act and Regulation 25of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
c. Remuneration Policy:
The Board has upon recommendation of the Nomination & RemunerationCommittee framed a policy for selection and appointment of Directors Senior Managementand their remuneration as required under Section 178(3) of the Companies Act 2013. Thepolicy is available on the Company's website www. centumelectronics.com. There has been nochange in the policy since the last fiscal year.
d. Annual evaluation of Board its Committees and Individual Directors:
The Board of Directors has carried out an annual evaluation of its ownperformance its Committees and individual Directors pursuant to the requirements of theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Further Independent Directors have reviewed the performance of theBoard its Chairman and Non-Executive Directors and other items as stipulated under theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
13. Directors' Responsibility Statement:
Pursuant to Section 134(3)(c) of the Companies Act 2013 yourDirectors confirm:>
i. that in the preparation of annual accounts for the year ended March31 2019 the applicable Accounting Standards have been followed along with the properexplanations relating to material departures;
ii. that such accounting policies as mentioned in Note 1 of the Notesto the Financial Statements have been adopted and applied consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as at March 31 2019 and of the profit of the Company foryear ended on that date;
iii. that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv. that the annual financial statements have been prepared on a goingconcern basis.
v. that proper internal financial controls were in place and that thefinancial controls were adequate and operating effectively.
vi. that systems to ensure compliance with the provisions of allapplicable laws were in place were adequate and operating effectively.
Further the Board of Directors confirms that the Company has compliedwith the Secretarial Standards on the Board Meetings issued by the Institute of CompanySecretaries of India as applicable to the Company during the financial year ended March31 2019.
14. Contracts and Arrangements with Related Parties:
All related party transactions that were entered into during thefinancial year were in the ordinary course of business and were at arm's length basis.There were no materially significant related party transactions made by the Company duringthe year with Promoters Directors Key Managerial Personnel or other designated personswhich may have a potential conflict with the interest of the Company at large.
All the related party transactions were placed before the AuditCommittee and also the Board for approval. Prior omnibus approval of the Audit Committeeis being obtained for the transactions which are of a foreseen and repetitive nature interms of Regulation 23(3)(a) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
The Company has framed a policy on dealing with the related partytransactions and the same is available on the company's website www.centumelectronics.com.
Your Directors draw attention of the members to Note 43 to financialstatement which sets out the related party disclosures.
a. Statutory Auditors
The Members at the Twenty Fourth Annual General Meeting of the Companyheld on July 11 2017 approved the appointment of M/s. S. R Batliboi & AssociatesLLP Chartered Accountants (Firm registration number: 101049W/E300004) as StatutoryAuditors of the Company to hold office for a period of five years from the conclusion of24th Annual General Meeting till the conclusion of the 29th AnnualGeneral Meeting.
The Report of the Statutory Auditors for the financial year 2018-19does not contain any qualification on the financial statements of the Company.
b. Secretarial Audit
The Board has appointed Ms. Aarthi G Krishna Practising CompanySecretary (CP No.5645) to conduct Secretarial Audit for the financial year 2018-19. TheSecretarial Audit Report for the financial year ended March 31 2019 is enclosed as Annexure-2to this Report.
The said Secretarial Audit Report does not contain any qualificationreservation or adverse remark or disclaimer made by the Secretarial Auditor.
c. Cost Auditors
The Board of Directors of the Company have appointed M/s. K. S.Kamalakara & Co. Cost Accountants (Registration No. 10625) as Cost Auditors of theCompany for the financial year 2018-19 at a fee of ' 100000/- plusapplicable taxes and out of pocket expenses. The remuneration payable to Cost Auditors hasbeen ratified by the Shareholders at the Twenty Fifth Annual General Meeting of theCompany pursuant to provisions of Section 148 of the Companies Act 2013.
16. Corporate Governance:
Your Company believes in adopting best practices of CorporateGovernance. A report on Corporate Governance along with a Certificate from a PractisingCompany Secretary confirming the compliance for the year ended March 31 2019 as requiredunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is formingpart of this Annual Report.
17. Conservation of Energy Technology absorption Research &Development and Foreign Exchange Earnings and Outgo:
The particulars prescribed under subsection (3) (m) of Section 134 ofthe Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 areenclosed as Annexure-3 to this Report.
18. Corporate Social Responsibility:
As part of the Company's initiatives under "Corporate SocialResponsibility (CSR) the Company has funded several projects that aid and improveeducation literacy and healthcare for children. It has also funded and participated inprojects that support and aid children with disabilities.
The disclosures as required under Section 135 of the Companies Act2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules2014 is enclosed as Annexure-4 to this Report.
19. Details of establishment of Vigil Mechanism:
In accordance with Section 177(9) and (10) of the Companies Act 2013and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Company has established a Vigil Mechanism and has a Whistle Blower Policy. ThePolicy is available at the Company's website www.centumelectronics.com.
During the year under review there are no such instances to report.
20. Particulars of Employees:
The information relating to remuneration and other details as requiredpursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended is enclosed as Annexure-5to this report.
Further the details of employees who are in receipt of remunerationexceeding the limits prescribed under Section 134 of the Companies Act 2013 read withRule 5(2) & 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 will be provided upon request.
In terms of Section 136(1) of the Companies Act 2013 and the Rulesmade thereunder the Annual Report is being sent to the shareholders and others entitledthereto excluding the information on employees' particulars. The same is available forinspection by the shareholders at the Registered Office of the Company during businesshours on working days of the Company up to the date of ensuing Annual General meeting. Ifany Member is interested in obtaining a copy thereof such Member may write to the CompanySecretary in this regard.
21. Prevention Prohibition and Redressal of sexual harassment at workplace:
The Company has zero tolerance for sexual harassment at workplace andhas formulated a Policy on Prevention Prohibition and Redressal of Sexual Harassment atthe Workplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules there under. The Policyaims to provide protection to employees at the workplace and prevent and redresscomplaints of sexual harassment and for matters connected or incidental thereto with theobjective of providing a safe working environment where employees feel secure.
The Company has also constituted an Internal Complaints Committee toinquire into complaints of sexual harassment and recommend appropriate action.
The Company has not received any complaint of sexual harassment duringthe financial year 2018-19.
22. Extract of Annual Return:
In terms of Section 92 (3) of the Companies Act 2013 read with theCompanies (Management and Administration) Rules 2014 the extract of the Annual Return ofthe Company for the financial year 2018-19 in Form No. MGT-9 is appended as Annexure-6 tothis Report.
The extract of the Annual Return of the Company can also be accessed onthe Company's website https://www. centumelectronics.com/investor-relations.
23. Management Discussion and Analysis Report:
The Management's Discussion and Analysis Report for the year underreview as stipulated under SEBI (LODR) Regulations 2015 is forming part of the AnnualReport.
24. Employee Stock Option Plan:
As a measure of rewarding the employees your Company had introduced anEmployee Stock Option Plan (ESOP) during the year 2007 and 2013.
The particulars prescribed under Guideline 12.1 of the SEBI (EmployeeStock Option scheme and Employee Stock Purchase Scheme) Guidelines 1999 is enclosed as Annexure-7to this report.
25. Awards and Recognitions:
During the year under review your Company and its Top Management hasreceived the following awards and recognitions:
i. The Company has received STPI IT Export award under the category'High Growth in Electronic Hardware Exports: Bengaluru (Exports greater than US $ 15M andless than US $ 300M.)' This award was presented in र STPI IT Export award function' heldduring the event BENGALURU TECH SUMMIT 2018 on November 29 2018.
ii. The Embassy of Federative Republic of Brazil has appointed Mr.Apparao V Mallavarapu - Chairman and Managing Director of the Company as Honorary Consulof Brazil in Bangalore. This is a rare and prestigious honour that is given by foreignGovernments to very few distinguished people in the Country and the appointment has to beapproved by the President of India.
iii. Throughout India September 15 is celebrated in memory of thebirth anniversary of Bharat Ratna Dr. M Visveswaraya as Engineer's day. On this occasionREVA University Bangalore has awarded Mr. Vinod S Chippalkatti President - StrategicBusiness Unit of the Company for his contributions to the field of Engineering.
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions with regard to the followingduring the year under review:
a. Details relating to deposits covered under Chapter V of theCompanies Act 2013.
b. Issue of equity shares with differential rights as to dividendvoting or otherwise.
c. Issue of shares (including sweat equity shares) to employees of theCompany under any scheme save and except ESOP referred to in this report.
d. There is no remuneration received by the Managing Director from thesubsidiary company.
e. No significant or material orders were passed by the regulators orcourts or tribunals which impact the going concern status and the Company's operations infuture.
Your Directors thank the customers for their continued patronage andthe investors bankers and vendors for their continued support.
Your Directors acknowledge and thank the invaluable contributions ofall the employees who have demonstrated their skill teamwork and commitment throughtheir competence hard work cooperation and support.
Your Directors would also like to place on record the support receivedfrom the Electronic Hardware Technology Park the Customs and Excise Departments theReserve Bank of India the Department of Industries and Commerce Karnataka the KarnatakaUdyog Mitra and all the other Central and State Governmental agencies.