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Centum Electronics Ltd.

BSE: 517544 Sector: Engineering
NSE: CENTUM ISIN Code: INE320B01020
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OPEN 426.80
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VOLUME 294
52-Week high 659.20
52-Week low 390.00
P/E 42.12
Mkt Cap.(Rs cr) 547
Buy Price 424.10
Buy Qty 9.00
Sell Price 428.60
Sell Qty 2.00
OPEN 426.80
CLOSE 420.70
VOLUME 294
52-Week high 659.20
52-Week low 390.00
P/E 42.12
Mkt Cap.(Rs cr) 547
Buy Price 424.10
Buy Qty 9.00
Sell Price 428.60
Sell Qty 2.00

Centum Electronics Ltd. (CENTUM) - Director Report

Company director report

Dear Members

We have pleasure in presenting the Twenty Eighth Annual Report on the business andoperations of the Company together with the Audited Statement of Accounts for thefinancial year ended March 31 2021.

1. Financial Highlights:

( Rs. in Millions)
Particulars

Consolidated

Standalone

2020-21 2019-20 2020-21 2019-20
Total Income 8232 8986 4284 4867
Earnings Before Interest Tax Depreciation & Amortisation (EBITDA)* 895 980 625 713
Depreciation 453 414 158 132
Finance Cost 295 368 174 277
Earnings Before Tax** 205 352 331 348
Earnings After Tax** 131 278 240 250

* Excludes other income and finance 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. 8232 million compared to previous financial year total income of Rs. 8986million. Your Company has earned a net profit after tax of Rs. 131 million for thefinancial year.

At standalone level a total income of Rs. 4284 million compared to previous financialyear total income of Rs. 4867 million. Further your Company has earned a net profit ofRs. 240 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. 4183 million and incurred anet loss of Rs. 68 million.

b. Centum Electronics UK Limited

During the year Centum Electronics UK Limited a wholly owned subsidiary company hasregistered total income of Rs. 1 million and incurred a net loss of Rs. 0.02 million.

c. Centum Adeneo India Private Limited

During the year Centum Adeneo India Private Limited a wholly owned subsidiarycompany has registered revenue of Rs. 151 million and earned a net profit after tax ofRs. 5.6 million for the year.

A statement containing the salient features of the financial statements of subsidiariesas 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 Company in accordancewith the applicable Indian Accounting Standards ('Ind AS") and the same together withthe Auditor's Report thereon is provided in the Annual Report.

The Financial Statements of the subsidiary and related detailed information will bekept at the Registered Office of the Company and will be available to investors seekinginformation 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 your Company has paid an interim dividend of Rs. 2/- (i.e.20%) perequity share based on the approval provided by the Board of Directors at their Meetingheld on February 10 2021 and recommended a final dividend of Rs. 2 (i.e.20%) per equityshare totaling to Rs. 4/- (i.e.40%) per equity share face value of Rs. 10/-each for thefinancial year 2020-21. The final dividend recommended is subject to approval of theShareholders in the ensuing Annual General Meeting of the Company.

The total dividend payout was Rs. 51.54 million for the year.

6. Share Capital:

During the year there was no changes in the share capital of the Company. As on March31 2021 the authorised share capital of the Company is Rs. 155000000/- divided into15500000 equity share of Rs. 10/- each and paid - up equity share capital of theCompany is 128847810/- divided into 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 312021 99.15% of the Company's total paid up equity share capital representing 12775892shares are in dematerialised form.

9. Transfer to Investor Protection Fund:

During the year the Company transferred Rs. 139544/- to the Investor Education andProtection Fund the amount in unpaid Interim Dividend Account opened in 2013-14 which wasdue & payable and remained unclaimed & unpaid for a period of seven years asprovided under Section 124(5) of the Companies Act 2013 read with the Investor Educationand Protection Fund Authority (Accounting Auditing Transfer and Refund) Rules 2016. TheCompany pursuant to the circulars issued by Ministry of Corporate Affairs 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 3900 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 the scope and areas of Internal Audit.The Internal Auditor 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 2021 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.

Pursuant to the provisions of Section 152 of the Companies Act 2013 and the Articlesof Association of the Company Dr. Swarnalatha Mallavarapu Director (DIN: 00288771) willretire by rotation at the Twenty Eighth Annual General Meeting and being eligible hasoffered 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 onJune 15 2021 have recommended and approved the re-appointment of Mr. Thiruvengadam P(DIN: 00016375) as an Independent Director of the Company for a second consecutive termwith effect from February 8 2021 to December 27 2025 which is subject to approval ofShareholders at the ensuing Annual General Meeting of the Company. Due notices underSection 160 of the Companies Act 2013 have been received from a Shareholder of theCompany proposing the re-appointment of Mr. Thiruvengadam P as an Independent Director ofthe Company at this Annual General Meeting.

The Notice convening the Annual General Meeting includes the proposals for theappointment of the Directors. Brief resume of the Directors proposed to be re-appointednature 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 Eighth 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 Officer and Mr. Nagaraj K V Company Secretary & Compliance Officer are theKey Managerial Personnel in accordance with the provisions of Section 203 of the CompaniesAct 2013.

a. Board Meetings:

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

During the year the Company has convened 6 (Six) Meetings of the Board of Directorsand 4 (four) Meetings of the Audit Committee. The details of which are given in theCorporate Governance Report. The Intervening gap between the Meetings was within theperiod 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 ofindependence as laid down under Section 149 (6) of the Act and Regulation 25 of the SEBI(Listing Obligations 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 fiscalyear.

d. Annual evaluation of Board its Committees and Individual Directors:

The Board of Directors has carried out an annual evaluation of its own performance itsCommittees and individual Directors pursuant to the requirements of the Companies Act2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Further Independent Directors have reviewed the performance of the Board its Chairmanand Non-Executive Directors and other items as stipulated under the SEBI (ListingObligations 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 2021 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 2021 and of the profit of the Company for year ended onthat date;

iii. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and 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 financialcontrols were adequate and operating 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 confirms that the Company has complied with theSecretarial Standards on the Board and General Meetings issued by the Institute of CompanySecretaries of India as applicable to the Company during the financial year ended March31 2021.

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 forming part of the standalone financial statements.

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 websitehttps://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 theCompany to hold office for a period of five years from the conclusion of 24thAnnual General Meeting till the conclusion of the 29th Annual General Meeting.

The Report of the Statutory Auditors for the financial year 2020-21 does not containany qualification on the financial statements of the Company.

b. Secretarial Audit

The Board has appointed Ms. Aarthi G Krishna Practicing Company Secretary (CPNo.5645) to conduct Secretarial Audit for the financial year 2020-21. The SecretarialAudit Report for the financial year ended March 31 2021 is enclosed as Annexure-2 tothis 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 thefinancial year 2020-21 at a fee of Rs. 100000/- plus applicable taxes and out of pocketexpenses. The remuneration payable to Cost Auditors has been ratified by the Shareholdersat the Twenty Seventh 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 Company Secretaryconfirming the compliance for the year ended March 31 2021 as required under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is forming part ofthis Annual Report.

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

The particulars prescribed under sub-section (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 educationliteracy and healthcare for children. It has also funded and participated in projects thatsupport and aid children with disabilities.

The disclosures as required under Section 135 of the Companies Act 2013 read with Rule8(1) of the Companies (Corporate Social Responsibility Policy) Rules 2014 is enclosed as Annexure-4to 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 Companies Act 2013 read with Rule 5(1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended is enclosed as Annexure-5to this report.

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 and the Rules made thereunderthe Annual Report is being sent to the Shareholders and others entitled thereto excludingthe information on employees' particulars. The same is available for inspection by theShareholders at the Registered Office of the Company during business hours on working daysof the Company up to the date of ensuing Annual General Meeting. If any Member isinterested in obtaining a copy thereof such Member may write to the Company Secretary inthis 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 (PreventionProhibition and Redressal) Act 2013 and the Rules there under. The Policy aims to provideprotection to employees at the workplace and prevent and redress complaints of sexualharassment 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 2020-21.

23. Annual Return:

In terms of Section 92 (3) of the Companies Act 2013 read with the Rules framedthereunder the extract of the Annual Return of the Company for the financial year 2020-21is available on the Company's website https://www.centumelectronics.com/ annual-return/.

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. Business Responsibility Report:

As required under Regulation 34 of SEBI (LODR) Regulations 2015 the BusinessResponsibility Report is provided in a separate section and forms part of the AnnualReport.

26. 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-6 tothis report.

27. Awards and Recognitions:

During the year under review your Company and its Top Management has received thefollowing awards and recognitions:

i. Centum Electronics Limited was awarded the prestigious Defense Technology AbsorptionAward 2018 by the Defense Research and Development Organization (DRDO) India's premierresearch and development organization for military and defense technology. HonTble RakshaMantri Shri Rajnath Singh has handed over the award to Mr. Apparao V Mallavarapu Chairmanand Managing Director of the Company at a ceremony hosted at DRDO HQ on 18thDecember 2020. The award was conferred on Centum in recognition of the outstandingcontribution towards the absorption of critical technology in defense space systems andpioneering in the development of Space Grade Hardware of onboard Satellite basedElectronic Warfare Payload for Kautilya.

ii. The Company has received the Certificate of appreciation and acknowledgement forthe financial support extended towards establishing Modular and Mobile Intensive Care Unitat the Government K C General Hospital Malleswaram Bengaluru. On behalf of the CompanyMr. Nikhil Mallavarapu Executive Director has received the Memento from Hon'ble ChiefMinister of Karnataka Shri B. S. Yediyurappa on February 8 2021.

iii. The Company has received the grant of the first patent for Centum in India. Thisis a journey Centum embarked upon about 5 years ago and decided to focus on the creationof Intellectual Properties which in today's world is the most important form of valuecreation for the Company. The Company's business unit Strategic Electronics Business Unithas already moved ahead and filed almost 10 plus patents in the last 4 years. The firstone got granted on September 30 2020.

28. 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.

29. 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 the support received from theElectronic Hardware Technology Park the Customs and GST Departments the Reserve Bank ofIndia the Department of Industries and Commerce Karnataka the Karnataka Udyog Mitra andall the other Central and State Governmental agencies.

By order of the Board
For Centum Electronics Limited
Place: Bengaluru Apparao V Mallavarapu S. Krishnan
Date: June 15 2021 Chairman & Managing Director Director

.