The Board of Directors have pleasure in presenting the 15th annual report ofthe company and the audited financial statements for the year ended March 31 2021
| ||2020-21 ||2019-20 |
|Profit before exceptional items depreciation and tax ||178.01 ||59.84 |
|Less: Depreciation ||70.98 ||76.54 |
|Add : Exceptional items ||11.78 ||78.09 |
|Profit before taxation ||118.81 ||61.39 |
|Less: Provision for taxation ||13.74 ||4.41 |
|(Add) / Less: Provision for deferred tax ||4.69 ||(0.98) |
|Profit after tax ||100.38 ||57.96 |
|Add : Opening surplus ||1151.46 ||1098.41 |
|Less: Dividend & Dividend distribution tax paid during the year ||- ||9.66 |
|Add : Transfer from Other Comprehensive Income ||0.42 ||5.14 |
|Less : Impact on adoption of Ind AS 116 on retained earnings ||- ||0.39 |
|Profit available for appropriation ||1252.26 ||1151.46 |
Review of Business Operations and Future Outlook
The company recorded a revenue of Rs.1510.49 million for the year against Rs.1858.74million in the previous year. The net profit was
Rs.100.38 million against Rs. 57.96 million in the previous year.
Though the revenue has come down by 19 % mainly on account the pandemic and due tosluggish economic conditions the profitability of the company has improved with sustainedcost reduction measures. The company is continuously taking steps to reduce operatingcosts and to bring in higher efficiencies.
Change in the nature of Business
There was no change in the nature of business of the company during the financial yearended March 31 2021.
Transfer to Reserves
During the year under review the company has not transferred any amount to the generalreserves and the amount of Rs.1252.26 million (including the comprehensive income andprevious year closing balance of Rs.1151.46 million) has been retained under surplus inthe Statement of Profit and Loss.
Considering the drop in revenue by 19% and the prolonged and continued distruptionsthat is being caused by the pandemic it is considered prudent to conserve reserves toovercome disruptions present and future being caused by the COVID pandemic andaccordingly the Board of Directors do not recommend any dividend for the financial year2020-21.
Transfer of Unclaimed Dividend to Investor Education and Protection Fund
The company had transferred the unclaimed dividend of Rs. 0.72 million and 100799equity shares to Investor Education and Protection Fund during the financial year 2020-21in terms of section 124 and 125 of the Companies Act 2013. As stipulated under the Actthe unclaimed dividend relating to the financial year 2013-14 will be remitted to theInvestor Education and Protection Fund established by the Central Government within thedue date. The shares in respect of such unclaimed dividend will also be transferred to theInvestor Education and Protection Fund Authority Ministry of Corporate Affairs DematAccount within the due date in accordance with the provisions of Section 124(6) of theCompanies Act 2013 read with Rule 6 of the Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016.
The paid-up capital of the company as at March 31 2021 stood at Rs. 50.05 million.During the year under review the company had not made any fresh issue of shares.
Copy of Annual Return
As per the requirements of Section 92(3) and Rule 12(1) of the Companies (Managementand Administration) Rules 2014 (as amended) the copy of the Annual Return in theprescribed Form MGT-7 for the financial year ended March 31 2021 is placed on thecompany's website www.elgirubber.com.
Board and Committee meetings conducted during the period under review
During the year under review 5 meetings of the Board of Directors 4 meetings of theAudit Committee 4 meetings of the Nomination and Remuneration Committee 4 meetings ofthe Corporate Social Responsibility Committee 14 meetings of the StakeholdersRelationship Committee and 4 meetings of the Finance and Administrative Committee wereheld. Further details of the same have been enumerated in the Corporate Governance Reportannexed herewith.
Statement on Compliance of applicable Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively. The Company has duly complied with Secretarial Standards issued by theInstitute of Company Secretaries of India on the meeting of the Board of Directors (SS-1)and General Meetings (SS-2).
Directors' Responsibility Statement
Pursuant to the requirement of section 134(3)(c) of the Companies Act 2013 withrespect to Directors Responsibility Statement the Board hereby confirms that:
i. in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there were no material departures from those standards
ii. the Directors had selected such accounting policies applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end of the financial year and of theprofit of the company for that period
iii. 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
iv. the Directors had prepared the annual accounts on a going concern basis
v. the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively and
vi. the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Details in respect of frauds reported by Auditors under Section 143(12) of theCompanies Act 2013 other than those which are reportable to the Central Government
There had been no frauds reported by the auditors pursuant to section 143(12) of theCompanies Act 2013.
Declaration of Independent Directors
The company has received declarations from all the Independent Directors of the companyconfirming that they meet the criteria of independence as prescribed both under section149(6) of the Companies Act 2013 and regulation 16(1)(b) of SEBI (Listing Obligations and
Disclosure Requirements) Regulations 2015 and declarations under Rule 6(3) of theCompanies (Appointment and Qualification of Directors)
Rules 2014 from all the Independent Directors.
Statement regarding opinion of the board with regard to integrity expertise andexperience (including the proficiency) of the Independent Directors appointed during theyear
The Board of Directors have evaluated the Independent Directors during the year 2020-21and opined that the integrity expertise and experience (including proficiency) of theIndependent Directors is satisfactory.
There was no appointment of Independent Directors made during the year under review.
Company's policy relating to Directors' appointment payment of remuneration and othermatters provided under Section 178(3) of the Companies Act 2013
The Board on the recommendation of the Nomination and Remuneration Committee hadframed a policy which inter alia provides the criteria for selection and appointment ofDirectors Key Managerial Personnel Senior Management evaluation of their performanceand the remuneration payable to them. The criteria for determining qualificationspositive attributes and independence of Directors have been stated in Annexure I tothis report. The nomination and remuneration policy of the company is annexed herewith as AnnexureII and can also be accessed on the company's website www.elgirubber.com.
Comments on Audit Report
There are no qualifications reservations or adverse remarks or disclaimers made byM.S.Jagannathan& Visvanathan Statutory Auditors and by CN Paramasivam SecretarialAuditor in their reports.
Particulars of loans guarantees or investments made under Section 186 of the CompaniesAct 2013
Details of loans given investments made guarantees given and securities providedpursuant to the provisions of section 186 of the Companies Act 2013 have been given inthe notes to the financial statements.
Particulars of contracts or arrangements made with related parties
All transactions entered into with related parties as defined under the Companies Act2013 and Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 during the financial year 2020-21 were in the ordinary course ofbusiness and on arm's length pricing basis. Since there are no transactions which arematerial in nature the Form AOC-2 is not being annexed.
The policy on related party transactions as approved by the Board of Directors of thecompany is available on the company's website www.elgirubber.com.
Material changes and commitment if any affecting the financial position of the companyoccurred between the end of the financial year to which this financial statements relateand the date of the report
The impact of COVID 19 started coming down during October 2020 and the entire industrywas seemingly coming back to near normalcy. The second wave of COVID 19 started in variousstages from March 2021 and has started impacting operations with State Governmentsdeclaring lockdowns.
Many of our customers suspended their operations due to government orders supply chaindisturbances and consideration for employee welfare. Some of the manufacturing operationsof the Company were suspended from May 25 2021 and will resume based on permittingconditions. This will have a major impact on the revenue and profitability of the Companyduring the current year.
Other than the above there have been no material changes and commitments which affectthe financial position of the Company since the end of the year and till the date ofReport.
Conservation of energy technology absorption foreign exchange earnings and outgo
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under section 134(3)(m) of the Companies Act 2013read with rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in AnnexureIII of this report.
Statement on Risk Management
The Board identifies and reviews the various elements of risk which the company has toface and laid out the procedures and measures for mitigating those risks. The elements ofrisk threatening the company's existence are very minimal.
The company does not face any risks other than those that are prevalent in the industryand has taken all possible steps to overcome such risks. The main concerns are volatilityin raw material prices and fluctuations in foreign exchange rates. Effective planning inraw material purchasing and the ability to pass on raw material price increases haveminimised the risk relating to the volatility in raw material prices. Foreign exchangefluctuation risk is minimised through proper planning and natural hedging. As a part ofthe overall risk management strategy all assets are appropriately insured.
Details about the policy developed and implemented by the company on Corporate SocialResponsibility initiatives
The Board has reconstituted the Corporate Social Responsibility (CSR) Committeecomprising Sudarsan Varadaraj MD Selvaraj and Harsha Varadaraj consequent upon theresignation of Suresh Jagannathan (DIN: 00011326) Director of the Company with effectfrom November 6 2020. The CSR policy deals with allocation of funds activitiesidentification of programmes approval implementation monitoring and reportingmechanisms for CSR activities.
As a part of its initiatives under its CSR Policy the company has undertaken projectsin the areas of education including support to the education of differently abledchildren conservation of natural resources and contributing to Public welfare funds forcombating and containment and relief efforts against the coronavirus outbreak. The saidprojects are by and large in accordance with Schedule VII of the Companies Act 2013 andthe CSR Policy of the Company. The CSR Policy of the Company is available on the websiteof the Company viz. www.elgirubber.com. The CSR spend was predominantly directed throughregistered trust. The trust expends the sums contributed by the company towards Publicwelfare for combating against the corona virus outbreak. The annual report on CSRactivities is annexed herewith as Annexure IV
Annual evaluation of the Board on its own performance and of the individual directors
On the advice of the Board of Directors the Nomination and Remuneration Committee hasformulated the criteria for evaluating the performance of the Board of Directors & itscommittees Independent Directors Non-Independent Directors and the Chairman &Managing
Based on that performance evaluation of the Board Committees of the Board and everyIndividual Directors including the Independent Directors of the Company has beenundertaken. The Independent Directors of the company have also convened a separate meetingfor this purpose. The results of the performance evaluation has been communicated to theconcerned.
Directors and Key Managerial Personnel
As per the provisions of section 152 of the Companies Act 2013 and the Articles ofAssociation of the Company Harsha Varadaraj (DIN: 06856957) Whole-time Directorof the company retires by rotation at this annual general meeting. Being eligible heoffers himself for re-appointment. Your Directors recommend his re-appointment.
Based on the recommendation of the Nomination and Remuneration Committee and theapproval of the Audit Committee the Board of Directors and the Shareholders vide OrdinaryResolution passed at Annual General Meeting held on August 28 2020 Sudarsan Varadaraj(DIN: 00133533) was re-appointed as Chairman & Managing Director for a term of 3 yearswith effect from January 1 2021 subject to retirement by rotation.
Based on the recommendation of the Nomination and Remuneration Committee and theapproval of the Audit Committee and the Board of Directors and the Shareholders videSpecial Resolution passed through postal ballot process on December 11 2020 HarshaVaradaraj (DIN: 06856957) was appointed as Whole-time Director of the company for a periodof 3 years with effect from November 6 2020 subject to retirement by rotation.
Suresh Jagannathan (DIN: 00011326) Non-Executive Director resigned from the boardwith effect from November 6 2020 due to his other business and personnel pre-occupations.The Board wishes to place on record its appreciation for the invaluable services renderedby Suresh Jagannathan (DIN: 00011326) during his tenure as a Non-Executive Director of thecompany.
Other than the above there were no changes in the composition of the Board ofDirectors and the Key Managerial Personnel of the Company. The following are the KeyManagerial Personnel of the Company:
|Sudarsan Varadaraj ||- Chairman and Managing Director |
|Harsha Varadaraj ||- Whole-time Director |
|S R Venkatachalam ||- Chief Financial Officer |
|V Santhanakrishnan ||- Company Secretary (resigned w.e.f. June 10 2021) |
|G Sasikumar ||- Company Secretary (appointed w.e.f. June 11 2021) |
Subsidiaries Joint Ventures and Associate Companies
The company has 7 wholly-owned subsidiaries 2 step-down subsidiaries. The statementpursuant to section 129(3) of the Companies Act 2013 containing the salient features ofthe financial statements of subsidiary companies forms part of this annual report.
The Registrar of Companies-Coimbatore vide his notice dated November 27 2020 hasinformed the strike off of the name of Titan Tyrecare Products LLP a wholly owned LLP ofthe Company and was dissolved.
Assets of the step-down subsidiary Rubber Compounding Holland B.V. (RCH BV) havebeen sold to QEW Specialty Compounding B.V. the Netherlands. Being inoperative necessaryapplication has been submitted with the Statutory Authorities in the Netherlands forliquidation of RCH BV.
The Board has approved a policy for determining material subsidiaries which isavailable on the company's website www.elgirubber.com. The annual accounts of thesubsidiary companies are available on the website of the company www.elgirubber.com andkept for inspection by the shareholders at the registered office during normal businesshours of the company. The company shall provide the copy of the annual accounts ofsubsidiary companies to the shareholders upon their request.
The Company had obtained approval to invite accept and renew deposits from public and/ or members within the limits as per the provisions of Sections 73 and 76 of theCompanies Act 2013 read together with the Companies (Acceptance of Deposits) Rules 2014(as amended) by special resolution passed in the 14th Annual General Meetingheld on August 28 2020. The Board of Directors vide their resolution dated September 72020 had accepted the scheme for accepting deposits from members of the company.
Accordingly the Company has accepted deposits from its members during the year endedMarch 31 2021. The details relating to the deposits accepted from the members of theCompany as covered under Chapter V of the 2013 Act are given hereunder:
|Amount of deposits as on 01.04.2020 ||Nil |
|Deposits accepted during the year ||71.25 |
|Deposits repaid during the year ||Nil |
|Amount of deposits as on 31.03.2021 ||71.25 |
|Deposits remaining unpaid or unclaimed as at the end of the year ||Nil |
|Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if || |
|so number of such cases and the total amount involved || |
|a. At the beginning of the year ||Nil |
|b. Maximum during the year ||Nil |
|c. At the end of the year ||Nil |
|The details of deposits which are not in compliance with the requirements of Chapter V of the Act ||Nil |
There were no default in the payment of interest to the deposit holders during the yearunder review. The Company has obtained Credit Rating on the fixed deposits [MB+ (stable)]as assigned by ICRA Limited.
In accordance with the Companies (Acceptance of Deposits) Rules 2014 (as amended) themonies received from the Directors if any has been disclosed under relevant notes to thefinancial statements.
Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operation in future
There were no significant or material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future.
Details of application made or any proceeding pending under the insolvency andbankruptcy code 2016 during the year
No applications have been made and no proceedings are pending against the Company underthe Insolvency and Bankruptcy Code 2016 during the year under review.
Details of difference between amount of the valuation done at the time of one timesettlement and the valuation done while taking loan from the banks or financialinstitutions along with the reasons thereof
The disclosure under this clause is not applicable as the Company has not undertakenany one-time settlement with the banks or financial institutions during the year underreview.
Adequacy of internal financial controls with reference to the financial statements
The company has implemented and evaluated the internal financial controls which providea reasonable assurance in respect of providing financial and operational informationcomplying with applicable statutes and policies safeguarding of assets prevention anddetection of frauds accuracy and completeness of accounting records. The company hasappointed internal auditors with a dedicated internal audit team. The internal auditreports were reviewed periodically by the Board. Further the Board annually reviews theeffectiveness of the company's internal control system.
The Directors and management confirm that the internal financial controls are adequatewith respect to the operations of the company. A report of auditors pursuant to Section143(3)(i) of the Companies Act 2013 certifying the adequacy of internal financialcontrols is annexed with the Auditors report.
M.S. Jagannathan & Visvanathan (FRN:001209S) Chartered Accountants Coimbatorewere appointed as statutory auditors for a period of 5 consecutive years at the 11thannual general meeting of the Company held on August 26 2017 subject to ratification bythe shareholders at every annual general meeting. Consequent to the amendments made in theprovisions of Section 139 of the Companies Act 2013 the members at their 12thAnnual General Meeting has approved to continue the appointment of M.S. Jagannathan &Visvanathan (FRN:001209S) Chartered Accountants Coimbatore as statutory auditors for aperiod of 5 consecutive years till the conclusion of the 16th Annual GeneralMeeting to be held in the year 2022 without ratification. Hence no resolution forratification of appointment of statutory auditors is included in the Notice convening the15th Annual General Meeting. The Company has received a certificate from thestatutory auditors to the effect that their appointment would be in accordance with theprovisions of section 141 of the Companies Act 2013.
Pursuant to the provisions of section 204 of the Companies Act 2013 read withcorresponding rules framed thereunder CN Paramasivam (FCS No : 4654 CP No : 3687)Company Secretary in Practice was appointed as the secretarial auditor of the company tocarry out the secretarial audit for the year ended March 31 2021. A secretarial auditreport given by the secretarial auditor in Form No. MR-3 is enclosed with this report as AnnexureV.
The Company has made and maintained cost records as specified by the Central Governmentunder Section 148(1) of the Companies Act 2013. The Board of Directors at their meetingheld on June 10 2021 have appointed M/s. P. Mohan Kumar & Co. (Firm RegistrationNo.100490) Cost Accountants as the Cost Auditors of the company for the financial year2021-22. Pursuant to Section 148 of the Companies Act 2013 read with Rule 14 of theCompanies (Accounts) Rules 2014 the remuneration payable to the Cost Auditors of thecompany is subject to the ratification by the shareholders at the annual general meeting.Necessary resolution has been included in the notice of the ensuing annual general meetingfor the approval of the members. The Board recommends the ratification of theirremuneration.
The Cost Audit Report for the financial year 2020-21 will be filed with the CentralGovernment within the period stipulated under the Companies Act 2013.
Particulars of employees
There are no employees who are in receipt of remuneration in excess of the prescribedlimits for the whole financial year 2020-21 or a part thereof during the year. Particularspursuant to Rule 5 of Companies (Appointment and Remuneration of Managerial personal)Rules 2014 is enclosed as Annexure VI.
Human Resources and Industrial Relations
The company continues to enjoy a cordial relationship with all its employees. Theemployee count as on March 31 2021 is 454.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The company has put in place a policy for 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. An internal complaints committee hasbeen set up to redress complaints received if any. All employees (permanent contractualtemporary and trainees) are covered under this policy. However there were no complaintsreceived from any person or employee during the financial year 2020-21.
A report on corporate governance along with Management Discussion & Analysis Report(M & DA) as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 is annexed as Annexure VII andforms part of this report. The company has complied with the conditions relating tocorporate governance as stipulated in clause C of Schedule V of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015
Audit committee is in existence in accordance with the provisions of Section 177 of theCompanies Act 2013 and Regulation 18 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The particulars relating to the composition meetings andfunctions of the committee has been disclosed in the Report on Corporate Governance underthe head Audit committee'. The Board has accepted the Audit committeerecommendations during the year whenever required and hence no disclosure is requiredunder Section 177(8) of the Companies Act 2013 with respect to rejection of anyrecommendations of Audit committee by Board.
Whistle Blower Policy
The company has a whistle blower policy to deal with unethical or improper practice orviolation of company's code of business conduct or any complaints regarding accountingauditing internal controls or disclosure practices of the company. The policy gives aplatform to the whistle blower to report the complaints on the above mentioned practicesto the chairman of the audit committee. Although the complainant is not expected to provethe truth of an allegation the complainant aims to demonstrate that there are sufficientgrounds for concern and is not done as a malicious act against an individual. The auditcommittee reviews the complaints received redressed objected withdrawn and dismissedif any for every quarter in their meeting. The whistle blower policy is available on thecompany's website www.elgirubber.com.
Statements in this report especially those relating to MD&A giving details ofcompany's objectives projections estimates and expectations may be construed as"forward looking statements" within the realm of applicable laws andregulations. Actual results are liable to differ materially from those either expressed orimplied.
The Directors thank the company's customers vendors investors business associatesand bankers for their support to the company. The Directors also wish to place on recordtheir appreciation of the contributions made by all the employees towards the growth ofthe Company.
| ||By and on behalf of the Board |
| ||For Elgi Rubber Company Limited |
| ||Sudarsan Varadaraj |
|Place : Coimbatore ||Chairman & Managing Director |
|Date : June 10 2021 ||DIN: 00133533 |