Your Directors have pleasure in presenting the 28 th Annual Report and Audited Accountsof the Company for the year ended 31 st March 2018.
The highlights of the performance of your Company during the fiscal are givenhereunder;
|For the Financial year ended ||31.03.2018 ||31.03.2017 |
|Total Revenue ||9462.99 ||8376.08 |
|Gross Profit before interest depreciation exceptional extraordinary items and income tax ||1273.18 ||1466.55 |
|Interest ||31.56 ||54.23 |
|Depreciation ||454.08 ||521.35 |
|Profit before Exceptional & Extra-ordinary items ||787.54 ||890.97 |
|Exceptional Items(Income) ||- ||11.64 |
|Profit before tax ||787.54 ||902.61 |
|Provision for Income tax ||158.61 ||213.04 |
|for Deferred tax ||(57.25) ||(42.14) |
|Profit for the period ||686.18 ||731.71 |
TRANSITION TO INDIAN ACCOUNTING STANDARDS ( IND AS)
The Ministry of Corporate Affairs (MCA) vide its notification in the Official Gazettedated February 16 2015 notified the Indian Accounting Standards (Ind AS) applicable tocertain classes of Companies. Ind AS has replaced the existing Indian GAAP prescribedunder Section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts)Rules 2014. For the Company Ind AS is applicable from April 1 2017 with a transitiondate of April 1 2016.
The following are the areas which had an impact on account of transition to Ind AS:
Employee costs pertaining to defined benefit obligations
Recognition of dividend liability and related taxes
Deferred taxes l Classification of Fixed Assets
The reconciliations and descriptions of the effect of the transition from IGAAP to IndAS have been provided in the notes to accounts in the financial statements.
The financial summary /highlights for the last five years is furnished vide Annexure Ato this Report.
The total revenue of the Company has increased by about 13% from Rs8376.08 Lakhs toRs9462.99 Lakhs. The local market was vibrant and the market pick up steadily increased.The Export market was however subdued and the demand in the overseas market waslacklustre.
Inspite of an increase in turnover the margins were under severe pressure throughoutthe year because of sharp increase in the prices of all raw materials. This has resultedin a sharp decline in the Profit before Tax at Rs787.54 Lakhs as against Rs902.61 Lakhsand a Net Profit (after Tax) of Rs686.18 Lakhs as against Rs731.71 Lakhs in the previousyear.
The Wind Energy Division generated a revenue of Rs507.89 Lakhs as against Rs559.51Lakhs that is a decrease in 9%. This was mainly because of fact that one of the WindEnergy Generators was not in operation for about a month during the peak wind season dueto maintenance work which had to be carried out. Hence the reason for short fall in WindGeneration. Apart from this the wind velocity as well as evacuation by TANGEDCO wasnormal.
There has been no change in the nature of business of the Company.
OUTLOOK FOR CURRENT YEAR
We expect the market both domestic and the export market to grow during this financialyear. We are hopeful of a good growth consequent upon the various initiatives taken by theGovernment. The role of the Indian Foundry industry is expected to be vital since theengineering and other sectors use metal castings in manufacture. The business sentimentshave improved substantially during the last 3 months and if such growth momentum sustainswe should be in a position to post a decent growth rate in the current financial year.
NEW PROJECTS IMPLEMENTED DURING THE YEAR
The Core shop was upgraded during the year utilizing Industry 4.0 Techinques andenabled process. This will enable the Company to produce quality cores and effectivelydeploy the existing Personnel of the Core Shop in other areas.
FUTURE EXPANSION PLANS
We are positive on the growth momentum during the current financial year. Consequentupon this we are evaluating the proposals for increasing the scope of the moulding line inorder to augment the moulding capacity. This project however will be taken up depending onthe capacity utilization and the market trends during the financial year.
The Company received during the year the re-certification from the Performance ReviewInstitute USA as an Accredited Manufacturer of Ductile and Gray Iron Castings which ismandatory for supply of castings for applications in locomotives railway engines etc inthe USA. The Company also received re-certification for ISO/TS 16949:2009 standardsPressure Equipment Directive standards and Marine Certificate under DNV GL Rules forClassification- Ships. Further the Company is in the process of obtaining newCertifications of ISO 9001:2015 & IATF 16949:2016.
The Company has repaid during the financial year all the Long Term Loans and as at theBalance Sheet date there is no Term Loan outstanding. We are pleased to inform the Membersthat the Company is debt free as at the reporting date.
TRANSFER TO RESERVES
The Company has transferred Rs200 Lakhs to General Reserves during the year and anamount of Rs2605.90 lakhs is retained in the Statement of Profit & Loss.
Your Directors are pleased to recommend subject to the approval of the shareholders adividend at the rate of Rs2.00 per share i.e. at the rate of 20% for the year on thepaid-up equity share capital of the Company the same as in the immediate proceeding year.The dividend if approved will absorb an amount of Rs110.48 Lakhs inclusive of Corporatetax on Distribution of dividends.
The paid-up capital of the Company as at 31.03.2018 stood at Rs45822000/- dividedinto 4582200 equity shares of Rs10/- each. During the year under review the Company hasnot made any fresh issue of shares.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
In terms of Section 124 & 125 of the Companies Act 2013 any unclaimed or unpaidDividend relating to
the Financial Year 2010-11 is due for remittance on 23 rd September 2018 to theInvestor Education and Protection Fund established by the Central Government.
Further pursuant to Section 124(6) of the Companies Act 2013 read with InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 8624 equity shares of Rs10/- each on which dividend had remained unclaimed for aperiod of 7 years have been transferred to the credit of demat Account identified by theIEPF Authority during the year under review.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 of the CompaniesAct 2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014in Form MGT-9 is furnished in Annexure B and is attached to this report.
BOARD MEETINGS CONDUCTED DURING THE PERIOD UNDER REVIEW
The details of meetings of Board of Directors and Committees thereof and the attendanceof the Directors in such meetings have been enumerated in the Corporate Governance Report.
STATEMENT ON COMPLIANCE WITH 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.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to requirement of Section 134(3)(c) of the Companies Act 2013 with respect toDirectors' Responsibility Statement it is hereby confirmed that -
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departure from those standards; b) The Directorshave selected such accounting policies and applied them 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 at the end of the financial year and of the profit of theCompany for that period; c) The Directors have taken proper and sufficient care has beentaken for maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) The Directors have prepared the annualaccounts on a going concern basis; e) The Directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; and f) The Directors had devised proper system toensure compliance with the provisions of all the applicable laws and such systems wereadequate and operating effectively;
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OTHER THANTHOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
There were no instances of frauds identified or reported by the Statutory Auditorsduring the course of their audit pursuant to Section 143(12) of the Companies Act 2013.
DECLARATION OF INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENTPAYMENT OF REMUNERATION AND OTHERMATTERS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT 2013
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for fixing and revising remuneration of Directors Key ManagerialPersonnel Senior Management Personnel and employees of the Company. The Salient featuresof Remuneration policy of the Company is annexed herewith as Annexure C and the detailedRemuneration Policy can be accessed on the Company's website at the linkhttp://www.magnacast.com/financial/229.pdf.
COMMENTS ON AUDITORS' REPORT
There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Srikishen & Co Statutory Auditor and Mr.M.D.Selvaraj proprietor of MDS &Associates Secretarial Auditor in their respective reports.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013
There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the said provisions are notapplicable.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered into with related parties as defined under the Companies Act2013 and Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 during the financial year 2017-18 were in the ordinary course ofbusiness and on an arm's length basis. Since there are no transactions which are not onarm's length basis and material in nature Form AOC-2 is not being annexed.
The Policy on Related Party Transactions as approved by the Board of Directors of theCompany has been uploaded on the Company's website and may be accessed through the link athttp:/www.magnacast.com/financial/224.pdf.
The Company's transaction with one of the related parties M/s. Samrajyaa & Companyduring the financial year 2018-19 is likely to exceed the 10% of aggregate turnover of theCompany as set out in the SEBI ( Listing Obligations and Disclosure Requirements)Regulations 2015 and Section 188 of the Companies Act 2013 and rules made thereunder inview of the increased demand for Machined Castings from Customers. Necessary resolution isincluded in the Notice of AGM for the approval of Members to enter into transactionsexceeding the limit set out in the SEBI(LODR) Regulations 2015 and the Companies Act2013.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial year ended 31 March 2018 relate and the date of thereport.st
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 Annexure D andis attached to this report.
The Company continues to focus on the Risks areas identified by the Company. These canbe classified under (a) Economic risks (b) Marketing risks and (c) Financial risks. TheCompany continues to focus attention on the risk areas identified and in case of anyadverse situation suitable mitigation steps are taken. The Company also established riskmanagement plan and assessment and the same has been reviewed by the Audit Committee andthe Board on periodical basis.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Board had formed a Corporate Social Responsibility Committee comprising ofSri.C.R.Swaminathan Dr.R.Nandini and Sri.N.Krishna Samaraj. The CSR policy of the Companydeals with allocation of funds activities identification of programs approvalimplementation monitoring and reporting mechanisms under the policy.
As part of the initiatives under CSR for the year 2017-18 the Company has undertakenprojects in the areas of Healthcare Environment Education and Women Welfare etc. Theseprojects are by and large in accordance with Schedule VII of the Companies Act 2013.
The details of CSR activities for the year are furnished separately vide Annexure E tothis Report. The policy relating to CSR has been displayed on the Company's website andcan be accessed at http://www.magnacast.com/financial/223.pdf.
ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Companies Act 2013 the Board of Directors evaluatedthe annual performance of the members of the Board and its Committees vis a vis the natureof business of the Company its performance during the year and the contribution of eachof the Directors based on the criteria laid down by the Nomination and RemunerationCommittee.
The Independent Directors held a meeting during the year and inter-alia reviewed theperformance of the Non-Independent Directors and the Board as a whole and assessed thequality quantity and timeliness of flow of information between the Company and the Board.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Sri.J.Vijayakumar Director retires by rotation at the Annual General Meeting andbeing eligible offers himself for reappointment. Your Directors recommend hisre-appointment.
Key Managerial Personnel of the Company as required pursuant to Section 2 (51) and 203of the Companies Act 2013 are Sri. N. Krishna Samaraj- Managing Director Sri. R. Ravi-Chief Financial Officer and Smt. Sangeetha. C- Company Secretary.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiaries Joint ventures or Associate Companies.
During the year the Company did not accept or renew any fixed deposits and no fixeddeposits remained unclaimed with the Company as on 31 March 2018 st
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 and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operation in future.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has an adequate Internal Control System commensurate with the size scaleand complexity of its operations. The Audit Committee of the Board periodically reviewsthe Internal Financial Control Systems and their adequacy and recommends corrective actionas and when necessary to ensure that an effective internal control mechanism is in place.
The directors confirm that the Internal Financial Control (IFC) are adequate withrespect 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 Financial Controlis annexed with the Auditors Report.
M/s. Srikishen & Co Chartered Accountants (FRN 004009S) Coimbatore were appointedas the Statutory Auditors of the company for a period of five years at the 26th AnnualGeneral Meeting of the company held on th 15 September 2016. Pursuant to the amendment ofSection 139 of the Companies Act 2013 the Company is no longer required to seek theratification of the appointment of the Auditor at every Annual General Meeting.
The Company has received a certificate from the Statutory Auditors to the effect thattheir continued appointment as the Statutory Auditors of the Company would be within thelimits prescribed under section 139 of the Companies Act 2013. Members are requested togrant their approval for the continuation of the appointment of the Auditors for a periodup to the conclusion of the 31 st Annual General Meeting of the Company which ought to beheld during the year 2021 without ratification at every Annual General Meeting.
The Board has appointed Sri.M.D.Selvaraj of M/s. MDS & Associates CompanySecretaries in Practice Coimbatore as the Secretarial Auditors of the Company for theyear 2018-19 to carry out the Secretarial Audit pursuant to the provisions of Section 204of the Companies Act 2013.
The report of the Auditors for the financial year 2017-18 is annexed as Annexure F tothis Report.
The Board of Directors on the recommendation of the Audit Committee have appointedM/s.SBK & Associates Cost Accountants as the Cost Auditors of the Company for thefinancial year 2018-19. Pursuant to Section 148 of the Companies Act 2013 read with Rule14 of the Companies (Accounts) Rules 2014 the remuneration payable for the year 2018-19to the Cost Auditors of the Company is subject to ratification by the Shareholders at theensuing Annual General Meeting. The Board recommends their remuneration.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company has been continuously focusing its attention on nurturing the talent of itsemployees by recognizing their performance and creating enough opportunities for theirgrowth in the Company. This has ensured to retain talent within the organization.
The relationship between the management and the employees at all levels during the yearunder review has been cordial and productive.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a policy on Sexual Harassment of Women at Workplace in linewith the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. An Internal Complaints Committee has been set up toredress complaints received. All employees (permanent contractual temporary trainees)are covered under this policy. There were no complaints received from any employee orthird parties during the Financial Year 2017-18.
PARTICULARS OF EMPLOYEES
Statement pursuant to Section 134 of the Companies Act 2013 read with the Companies(Particulars of Employees) Rules 1975 and Section 197(12) of the Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed to Annexure G attached to this report.
A report on Corporate Governance is annexed and forms part of this report. The Companyhas complied with the conditions relating to Corporate Governance as stipulated inRegulation 27 of SEBI (Listing Obligation & Disclosure Requirements) Regulations2015.
The Audit Committee of the Board of Directors has been duly constituted in accordancewith the provisions of Section 177 of the Companies Act 2013. Details relating to thecomposition meetings and functions of the Committee are set out in the CorporateGovernance Report forming part of this Annual Report. The Board has accepted the AuditCommittee recommendations during the year whenever required and hence no disclosure isrequired under Section 177(8) of the Companies Act 2013 with respect to rejection of anyrecommendations of Audit Committee by the Board.
As required under Regulation 33 (2) (a) of the SEBI(Listing Obligations and DisclosureRequirements) Regulations 2015 the Managing Director and the Chief Financial Officer ofthe Company have furnished necessary certificate to the Board on the Financial Statementspresented.
VIGIL MECHANISM AND WHISTLE BLOWER POLICY
The Company has provided for adequate safeguards to deal with instances of fraud andmismanagement and to report concerns about unethical behavior or any violation of theCompany's Code of Conduct. During the year under review there were no complaints receivedunder this mechanism. The policy can be accessed on the Company's website athttp://www.magnacast.com/ financial/227.pdf
Your Directors thank the shareholders customers and suppliers for their continuedsupport during the year. The Directors wish to place on record their appreciation of thesupport and co-operation extended by the Company's Bankers M/s. Corporation Bank and M/s.Indian Bank the various Government Agencies and in particular the Tamil Nadu ElectricityBoard and the employees of the Company at all levels.
We pray for the grace of the Almighty for further growth of the Company.
| || ||By Order of the Board |
| || ||For MAGNA ELECTRO CASTINGS LIMITED |
| ||C.R.Swaminathan ||N. Krishna Samaraj |
|Place: Coimbatore ||Director ||Managing Director |
|Date : 30 May 2018 th ||DIN: 00002169 ||DIN: 00048547 |