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Centum Electronics Ltd.

BSE: 517544 Sector: Engineering
NSE: CENTUM ISIN Code: INE320B01020
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OPEN 393.70
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VOLUME 2035
52-Week high 490.00
52-Week low 237.00
P/E 21.48
Mkt Cap.(Rs cr) 515
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 393.70
CLOSE 397.05
VOLUME 2035
52-Week high 490.00
52-Week low 237.00
P/E 21.48
Mkt Cap.(Rs cr) 515
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Centum Electronics Ltd. (CENTUM) - Director Report

Company director report

Dear Members

We have pleasure in presenting the Twenty Seventh Annual Report on the business andoperations of the Company together with the audited Statement of Accounts for thefinancial year ended March 31 2020.

1. Financial Highlights:

(Rs. in Millions)
Particulars Consolidated Standalone
2019-20 2018-19 2019-20 2018-19
Total Income 8986 9375 4867 5025
Earnings Before Interest Tax Depreciation & 845 900 592 576
Amortisation (EBITDA)*
Depreciation 414 278 132 121
Interest 233 211 156 147
Earnings Before Tax** 352 481 348 346
Earnings After Tax** 278 484 250 251

* Excludes other income

** Excludes exceptional item & share of profit/loss from associate/discontinuingoperations

2. Performance:

During the current year of operations your Company has registered a consolidated totalincome of Rs. 8986 million compared to previous financial year total income of Rs.9375million. Your Company has earned a net profit after tax of Rs. 278millionforthe

At standalone level a total income of Rs. 4867 million compared to previous financialyear total income of Rs. 5025 million. Further your Company has earned a net profit ofRs. 250 million for the year.

3. Subsidiaries:

a. Centum Adetel Group S.A.

During the year Centum Adetel Group S.A. the subsidiary company (excludingdiscontinuing operations) has registered total income of Rs. 4139 million and posted anet profit (before exceptional items) oRs. 81 million.

b. Centum Electronics UK Limited

During the year Centum Electronics UK Limited a wholly owned subsidiary company hasregistered a revenue of Rs. 2 million and posted a net profit ofRs. 0.5 million.

c. Centum Adeneo India Private Limited

During the year Centum Adeneo India Private Limited a wholly owned subsidiarycompany has registered revenue of Rs. 125 million and earned a net profit after tax ofRs. 6.7 million for the year.

A statement containing the salient features of the of subsidiaries as required in FormAOC-1 is enclosed as Annexure-1 to this Report.

4. Consolidated Financial Statements:

The Consolidated Financial statements have been prepared by the Company in accordancewith the applicable Indian Accounting Standards (‘IndAS') and the same together withthe Auditor's Report thereon is provided in the Annual Report. The Financial Statements ofthe subsidiary and related detailed information will be kept at the Registered Office ofthe Company and will be available to investors seeking information at any time.

The Company has adopted a Policy for determining Material Subsidiaries in terms ofRegulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Policy as approved by the Board is available on the Investor page at Company'swebsite www. centumelectronics.com.

5. Dividend:

During the year the Board of Directors of the Company have recommended a finaldividend of Rs. 2.5 (i.e. 25%) per al yearfinanci equitysharefacevalueof Rs.10/-eachforthe 2019-20 which is subject to approval of the Shareholders in the ensuingAnnual General Meeting of the Company.

The dividend if approved by the Shareholders will involve a cash outflowof Rs. 32.2million.

6. Share Capital:

The authorised share capital of the Company is Rs. 155000000/- divided into15500000 equity shares of Rs. 10/- each. During the year your Company has issued andallotted 3723 equity shares of the Company to the eligible employees on exercise ofoptions granted under the Centum Employee Stock Option Plan. Consequently the issuedsubscribed and paid up equity share capital of the Company has increased from 12881058equity shares of Rs. 10/- each to 12884781 equity shares of Rs. 10/- each.

7. Debentures:

During the year under review the Company has not issued any Debentures. As on datethe Company does not have any outstanding Debentures.

8. Depository System:

Your Company's equity shares are tradable only in electronic form. As on March 312020 99.15% of the Company's total paid up equity share capital representing 12775145shares are in dematerialised form.

9. Transfer to Investor Protection Fund:

During the year the Company transferred Rs. 142544/- to the Investor Education andProtection Fund the amount in unpaid Dividend Account opened in 2011-12 which was due& payable and remained unclaimed & unpaid for a period of seven years as providedunder Section 124(5) of the Companies Act 2013 read with the Investor Education andProtection Fund Authority (Accounting Auditing Transfer and Refund) Rules 2016. TheCompany pursuant to the circulars issued by Ministry of Corporate Affair under theaforesaid rules mandated the transfer of shares on which dividend has not been paid orclaimed by the shareholders for seven consecutive years or more to the demat account ofthe Investor Education and Protection Fund Authority. The Company has accordinglytransferred 4386 shares to the demat account of the Investor Education and ProtectionFund Authority.

10. Risk Management:

Your Company has a robust Risk Management policy. Your Company regularly assess therisks 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 size scale andcomplexity of its operations. The Company has appointed KPMG Chartered Accountants asits Internal Auditor. The Audit Committee defines areas of Internal Audit. The InternalAuditor audits the areas recommended by the Committee every year.

The Audit observations and corrective actions thereon are being presented to the AuditCommittee of the Board. Based on the report of Internal auditor process owners undertakecorrective action in their respective areas and thereby strengthen the controls. Duringthe year the Internal Audit was done on the areas recommended and no material weaknessobserved.

12. Directors and Key Managerial Personnel:

The Board of Directors of the Company as on March 31 2020 comprises of 9 Directors outof which 2 are Executive Directors 1 Non- Executive Director and 6 are Non-ExecutiveIndependent Directors. The composition of the Board of Directors is in due compliance ofthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

At the Board Meeting of the Company held on February 13 2020 Mr. Nikhil Mallavarapu(DIN: 00288551) has been appointed as Whole Time Director designated as ExecutiveDirector of the Company for a period of five years with effect from February 13 2020.Further the Board of Directors through Circular Resolution have appointed Ms. KavithaDutt Chitturi (DIN: 00139274) as an Additional Director in the capacity of Non ExecutiveIndependent Women Director of the Company with effect Pursuant to the provisions ofSection 152 of the Companies Act 2013 and the Articles of Association of the Company Dr.Swarnalatha Mallavarapu Director (DIN: 00288771) will retire by rotation at the TwentySeventh Annual General Meeting and being eligible has offered herself for re-appointment.

Pursuant to applicable provisions of the Companies Act 2013 the Nomination andRemuneration Committee and the Board of Directors at their respective Meetings held onJuly 28 2020 have recommended and approved the re-appointment of Mr. Manoj Nagrath (DIN:01974412) and Mr. Rajiv C Mody (DIN: 00092037) as Independent Directors of the Companyfor a second consecutive term period of 5 (five) years w.e.f. August 7 2020 upto August6 2025 which is subject to approval of Shareholders at the ensuing Annual General Meetingof the Company. Due notices under Section 160 of the Companies Act 2013 have beenreceived from a Shareholder of the Company proposing the re-appointment of Mr. ManojNagrath and Mr. Rajiv C Mody as Independent Directors of the Company at this AnnualGeneral Meeting. Mr. Apparao V Mallavarapu (DIN: 00286308) Chairman & ManagingDirector of the Company has been re-appointed for a further period of five years witheffect which will be subject to approval of the Shareholders at the ensuing Annual GeneralMeeting. the scope and

The Notice convening the Annual General Meeting includes the proposals for theappointment of the Directors. Brief resume of the Directors proposed to be reappointednature of their expertise in specific functional areas and names of the Companies in whichthey hold directorship/ membership/ chairmanship of the Board or Committees as stipulatedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 have beenprovided as an annexure to the Notice convening the Twenty Seventh Annual General Meeting.None of the Directors of the Company are disqualified under Section 164(2) of theCompanies Act 2013.

Mr. Apparao V Mallavarapu Chairman & Managing Director Mr. K S Desikan ChiefFinancial Officerand Mr. Nagaraj K are the Key V Company Secretary Officer &Compliance Managerial Personnel in accordance with the provisions of Section 203 of theCompanies Act 2013.

a. Board Meetings:

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year the Company has convened 4 (four) Meetings of the Board of Directorsand 4 (four) Meetings of the Audit Committee. The details of which are given in ibeentaken for 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 the Independent Directorsunder

Section 149(7) of the Companies Act 2013 that they meets the criteria of independenceas laid down under Section 149 (6) of the Act and Regulation 25 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

c. Remuneration Policy:

The Board has upon recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration as required under Section 178(3) of the Companies Act 2013. The Policy isavailable on the Company's website https://www.centumelectronics. com/investor-relations/.There has been no change 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 al statements. 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 your Directors confirm:

i. that in the preparation of annual accounts for the year ended March 31 2020 theapplicable Accounting Standards have been followed along with the proper explanationsrelating to material departures;

ii. that such accounting policies as mentioned in Note 1 of the Notes to the FinancialStatements have been adopted and applied consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at March 31 2020 and of the profit Company for year ended on that date;

iii. that proper and the maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities;

iv. that the annual financial statements have been prepared on a going concern basis.

v. that proper internal financial controls were in place and that the financialoperating effectively.

vi. that systems to ensure compliance with the provisions of all applicable laws werein place were adequate and operating effectively. Further the Board of Directors confirmsthe Company has complied with the Secretarial Standards on the Board Meetings issued bythe Institute of Company Secretaries of India as applicable to the Company during theended March 31 2020.

14. Particulars of Loans Guarantees or Investments:

The particulars of loans given investments made securities provided and guaranteesgiven as required under Section 186 of the Companies Act 2013 are provided in note 5 6and 46 formingpartofthestandalone

15. Contracts and Arrangements with Related Parties:

All related party transactions that were entered into during the financial year were inthe ordinary course of business and were at arm's length basis. There were no materiallysignificant related party transactions made by the Company during the year with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.

All the related party transactions were placed before the Audit Committee and also theBoard for approval. Prior omnibus approval of the Audit Committee is being obtained forthe transactions which are of a foreseen and repetitive nature in terms of Regulation23(3)(a) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

The Company has framed a policy on dealing with the related party transactions and thesame is available on the Company's website https://www.centumelectronics.com/investor-relations.

Your Directors draw attention of the members to Note 43 to financial statement whichsets out the related party disclosures.

16. Auditors: a. Statutory Auditors

The Members at the Twenty Fourth Annual General Meeting of the Company held on July 112017 approved the appointment of M/s. S.R Batliboi & Associates LLP CharteredAccountants (Firm registration number: 101049W/E300004) as Statutory Auditors of theperiod of five years from Company to hold office the conclusion of 24th AnnualGeneral Meeting till the conclusion of the 29th Annual General Meeting.

The Report of the Statutory Auditors for the financial year 2019-20 does not containany qualification on the al statements of the Company financial.

b. Secretarial Audit

The Board has appointed Ms. Aarthi G Krishna Practicing Company Secretary (CPNo.5645) to conduct Secretarial Audit for the financial year 2019-20. The SecretarialAudit Report for the financial year ended March 31 2020 is enclosed as Annexure-2to this Report.

The said Secretarial Audit Report does not contain any qualification reservation oradverse 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 the Company for financialyear the 2019 20 at a fee of Rs. 100000/- plus applicable taxes and out of pocketexpenses. The remuneration by the payable to Cost Auditors has been ratified Shareholdersat the Twenty Sixth Annual General Meeting of the Company pursuant to provisions ofSection 148 of the Companies Act 2013.

17. Corporate Governance:

Your Company believes in adopting best practices of Corporate Governance. A report onCorporate Governance along with a Certificate from a Practicing CompanySecretaryconfirming the compliance for the year ended March 31 2020 as required underSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is forming partof this Annual Report.

18. Conservation of Energy Technology absorption Research & Development andForeign Exchange Earnings and Outgo:

The particulars prescribed under subsection (3) (m) of Section 134 of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are enclosed as Annexure-3to this Report.

19. Corporate Social Responsibility:

As part of the Company's initiatives under "Corporate Social Responsibility (CSR)the Company has funded several projects that aid and improve education literacy andhealthcare for children. It has also funded and participated in projects that support andaid children with disabilities. The disclosures as required under Section 135 of theCompanies Act 2013 read with Rule 8(1) of the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is enclosed as Annexure-4 to this Report.

20. Details of establishment of Vigil Mechanism:

In accordance with Section 177(9) and (10) of the Companies Act 2013 and Regulation 22of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Companyhas established a Vigil Mechanism and has a Whistle Blower Policy. The Policy is availableat the Company's website https://www.centumelectronics.com/investor-relations.

During the year under review there are no such instances to report.

21. Particulars of Employees:

The information relating to remuneration and other details as required pursuant toSection 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 as amended is enclosed as Annexure-5 to thisreport. Further the details of employees who are in receipt of remuneration exceeding thelimits prescribed under Section 134 of the Companies Act 2013 read with Rule 5(2) &5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014will be provided upon request. In terms of Section 136(1) of the Companies Act 2013 andthe Rules made thereunder the Annual Report is being sent to the Shareholders and othersentitled thereto excluding the information on employees' particulars. The same isavailable for inspection by the Shareholders at the Registered Office of the Companyduring business hours on working days of the Company up to the date of ensuing AnnualGeneral meeting.

If any Member is interested in obtaining a copy thereof such Member may write to theCompany Secretary in this regard.

22. Prevention Prohibition and Redressal of sexual harassment at workplace:

The Company has zero tolerance for sexual harassment at workplace and has formulated aPolicy on Prevention Prohibition and Redressal of Sexual Harassment at the Workplace inline with the provisions of the Sexual Harassment of Women at Workplace (Prevention

Prohibition and Redressal) Act 2013 and the Rules there under. The Policy aims toprovide protection to employees at the workplace and prevent and redress complaints ofsexual harassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where employees feel secure.

The Company has also constituted an Internal Complaints Committee to inquire intocomplaints of sexual harassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the financialyear 2019-20.

23. Extract of Annual Return:

In terms of Section 92 (3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 the extract of the Annual Return of theCompany for the financial year 2019-20 in Form No. MGT-9 is appended as Annexure-6to this Report.

The extract of the Annual Return of the Company can also be accessed on the Company'swebsite https://www. centumelectronics.com/investor-relations.

24. Management Discussion and Analysis Report:

The Management's Discussion and Analysis Report for the year under review asstipulated under SEBI (LODR) Regulations 2015 is forming part of the Annual Report.

25. Employee Stock Option Plan:

As a measure of rewarding the employees your Company had introduced an Employee StockOption Plan (ESOP) during the year 2013.

The particulars prescribed under Guideline 12.1 of the SEBI (Employee Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines 1999 is enclosed as Annexure-7to this report.

26. Awards and Recognitions:

During the year under review your Company and its Top Management has received thefollowing awards and recognitions: i. Centum won SEEM National Energy Management Award2019 at National level: Your Company has participated in National level Energy Managementawards conducted by ‘Society of Energy Engineers & Managers' and the Company wasawarded ‘Silver Award' for our energy conservation and management activities done forlast one year. The award was received on September 26 2019 at New Delhi. ii. Centum wonBest Product Design Company in Space Technology (Indian / MNC) at the SPACETRONICS 2019:

The Company has received the IESA SPACETRONICS and DEFTRONICS 2019 Awards in thecategory Best Product Design Company in Space Technology (Indian/ MNC) at the SPACETRONICS2019.

This award aims to recognize Product Design for the Companies operating in the SpaceTechnology arena in India as a Large Enterprise who have brought-in excellence throughinnovations to their Product Design. On behalf of the Company Strategic Electronics BUPresident Mr. Vinod S Chippalkatti and Vice President Ms. Sandhya Thyagarajan havereceived the award from the Deputy Chief Minister of Karnataka on September 19 2019. iii.Centum won Kaizen awards at QMG Kaizen Competition: Both the Business Units of the Company(i.e. SEBU and EMS) had participated in a Kaizen competition organized by QMG (QualMindGroup).

The Company has got the 1st Prize as well as several Kiazens underOutstanding and Excellent categories.

Based on the Kaizen scores Centum as a Company was ranked 3rd in the competition.

27. General:

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions with regard to the following during the yearunder review:

a. Details relating to deposits covered under Chapter V of the Companies Act 2013.

b. Issue of equity shares with differential rights as to dividend voting or otherwise.

c. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOP referred to in this report.

d. There is no remuneration received by the Managing Director from the subsidiarycompany.

e. No significant or material orders were passed by the regulators or courts ortribunals which impact the going concern status and the Company's operations in future.

28. Acknowledgements:

Your Directors thank the customers for their continued patronage and the investorsbankers and vendors for their continued support.

Your Directors acknowledge and thank the invaluable contributions of all the employeeswho have demonstrated their skill teamwork and commitment through their competence hardwork cooperation and support. Your Directors would also like to place on record thesupport received from the Electronic Hardware Technology Park the Customs and GSTDepartments the Reserve Bank of India the Department of Industries and CommerceKarnataka the Karnataka Udyog Mitra and all the other

Central and State Governmental agencies.

By order of the Board
For Centum Electronics Limited
Place: Bengaluru Apparao V Mallavarapu S. Krishnan
Date: July 28 2020 Chairman & Managing Director Director