Your Directors have pleasure in presenting the 30th Annual Report and Audited Accountsof the Company for the year ended 31st March 2020.
The highlights of the performance of your Company during the financial year 2019-20 aregiven hereunder;
| || ||(Rs. in Lakhs) |
|For the Financial year ended ||31.03.2020 ||31.03.2019 |
|Total Revenue ||9847.19 ||12587.59 |
|Gross Profit before interest depreciation exceptional extraordinary items and income tax ||1298.13 ||2073.93 |
|Finance Cost ||11.58 ||29.03 |
|Depreciation ||436.45 ||543.22 |
|Profit before Exceptional & Extra-ordinary items ||850.10 ||1501.68 |
|Exceptional Items(Income) ||- ||- |
|Profit before tax ||850.10 ||1501.68 |
|Provision for Income tax ||207.68 ||374.17 |
|for Deferred tax ||(26.24) ||(12.21) |
|Profit for the period ||668.66 ||1139.72 |
IMPACT OF PANDEMIC CORONA VIRUS- COVID 19 AND OUTLOOK FOR THE YEAR 2020-21:
As you are aware the entire world was affected by the deadly novel corona viruscommonly known as COVID 19. This virus attack has crippled the entire global economy apartfrom leading to several loss of lives throughout the world. This had an impact on ourCountry also resulting in lock down of entire operations for nearly 2 months.
The normal operating activities of the Company were affected from the second half ofthe March 2020 and the entire operations were suspended w.e.f. 25th March 2020. Thisaffected both the turnover and profitability targeted for the month of March 2020 and theprojected targets for the financial year ended 2020 were not met.
The Company commenced its partial operations w.e.f. 6th May 2020 after the lockdownmeasures were liberalized and after obtaining necessary approvals from the authoritiesconcerned. This will have a major impact on the financials for the financial year 2020-21as there was no manufacturing/sales during the month of April 2020.
There is a lot of uncertainty in the market served by the Company especially in theAuto Oil & gas Off Highway and General Engineering sectors. Our Customers are notable to predict their requirements for the year 2020-21. We are operating on a month tomonth basis based on the immediate requirements of the Customers. Further the exodus ofmigrant labourers has resulted in the Company not being able to utilize its capacity.Further new labourers when recruited will entail additional costs like increase labourcost training lower productivity and higher rejections. The combination of uncertainmarket conditions coupled with unproven labour capability will result in subduedperformance for the financial year 2020-21.
After the commencement of partial operations the Company has put in place StandardOperating Procedures based on the guidelines issued by the Government to be followed bythe employees and the Industry.
The financial summary /highlights for the last five years is furnished vide AnnexureA to this Report.
The Operating Revenue of the Company has reduced by about 22% from Rs. 12292.39 Lakhsto Rs. 9632.13 Lakhs. Consequent upon the reduction the Profit Before Tax has alsoreduced from Rs. 1501.68 Lakhs in the previous year to Rs. 850.10 Lakhs in the currentyear.
The above decline in operating revenue and profitability is because of the weak demandfor castings from both the export and domestic market during the year coupled with theimpact of COVID 19 in March 2020 the details of which have been dealt with separately inthis report elsewhere.
Further the increase in prices of key raw materials and other input costs affected theprofitability of the Company.
The Wind Energy Division generated a revenue of Rs. 454.13 Lakhs during the year asagainst Rs. 520.79 Lakhs in the previous year. The reduced revenue is because of the lowwind velocity during the year.
There has been no change in the nature of business of the Company.
NEW PROJECTS IMPLEMENTED DURING THE YEAR
During the year under review the Company is implementing a project for reclamation ofGreen Sand in foundry process. This will enable the Company to conserve precious naturalresources apart from being environment friendly and cost effective. The Company is alsoplanning to install a new furnace Hood so that alternate cheaper raw materials can beused.
The Company for the immediate future plans to judiciously invest in small facilitieswhich will help in the use of alternate raw materials increased productivity and improvedquality.
Though the Company is evaluating various new technologies it believes the presentsituation calls for a carefully calibrated actions and situation will be reviewedperiodically.
The Company has received certification for ISO/TS 16949:2016 standards PressureEquipment Directive and the existing standards 97/23/EC has improved to 2014/68/EU andMarine Certificate under DNV GL Rules for Classification- Ships. Further the Companyobtained ISO 14001:2015 Certification during the year.
We are pleased to inform the Members that the Company continues to be debt free as atthe reporting date.
TRANSFER TO RESERVES
The Company has transferred Rs. 200 Lakhs to General Reserves during the year and anamount of Rs. 3491.59 lakhs is retained in the Statement of Profit & Loss.
For the financial year 2019-20 the Board of Directors at their meeting held on 13thFebruary 2020 had declared an interim dividend of Rs. 2.50/- per share (25%) on thepaid-up share capital of 4582200 equity shares. An amount of Rs. 114.56 Lakhs has beenpaid as interim dividend on March 2020. The Board of Directors have recommended that theinterim dividend be considered as final dividend for the financial year ended 31st March2020.
The paid-up capital of the Company as at 31.03.2020 stood at Rs. 45822000/- dividedinto 4582200 equity shares of Rs. 10/- each. During the year under review the Companyhas not made any fresh issue of shares.
TRANSFER OF UNCLAIMED DIVIDEND TO EDUCATION AND PROTECTION FUND:
In terms of Section 124 & 125 of the Companies Act 2013 any unclaimed or unpaidDividend relating to the Financial Year 2012-13 is due for remittance on 1st November2020 to the Investor and Education and Protection Fund established by the CentralGovernment.
Further pursuant to Section 124(6) of the Companies Act 2013 read with InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 7900 Equity Shares of Rs. 10/- 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 forms part of 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. The directors have devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards and that such systems are adequate andoperating effectively. The Company has duly complied with Secretarial Standards issued bythe Institute of Company Secretaries of India on meeting of the Board of Directors (SS-1)and General Meetings (SS-2).
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 ofthe annual accounts the applicable accounting standards have been followed and there areno material departure from those standards; b) The Directors have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit of the Company for that period;c) The Directors have taken proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of the Companies Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;d) The Directors have prepared the annual accounts on a going concern basis; e) TheDirectors have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and f)The Directors have devised proper system to ensure compliance with the provisions of allthe applicable laws and such systems were adequate and operating effectively;
COMPLIANCE WITH REQUIREMENT UNDER SECTION 143(12) OF THE COMPANIES ACT 2013:
There were no instances of frauds identified or reported by the Statutory Auditorsduring the course of their audit.
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.
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 appointed/ re-appointedduring the year 2019-20 and opined that the integrity expertise and experience (includingproficiency) of the Independent Directors is satisfactory.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT 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 detailedRemuneration Policy can be accessed on the Company's website at the linkhttps://www.magnacast.com/uploads/invsubpdf/invsubpdf2020-01-29-5b8n5e315cdee65eb.pdf andthe Salient features of Remuneration policy of the Company:
i. Formulate the criteria for determining qualifications positive attributes andindependence of a director and recommend to the Board a policy relating to theremuneration of Directors key managerial personnel and other employees.
ii. Formulation of criteria for evaluation of performance of Independent Director andthe Board
iii. Devising a policy on Board diversity and succession plan
iv. Identify persons who are qualified to become Director and persons who may beappointed in Key Managerial and Senior Management positions in accordance with thecriteria laid down in this policy.
v. Recommend to the Board appointment and removal of Director KMP and SeniorManagement Personnel.
vi. Identify whether to extend or continue the term of appointment of the IndependentDirector on the basis of the report of their performance evaluation.
vii. To formulate any other policies and or schemes for the benefit of employees of theCompany.
COMMENTS ON AUDITORS' REPORT:
There are no qualifications reservations or adverse remarks or disclaimers made byM/s. Srikishen & Co Statutory Auditors and M/s.MDS & Associates SecretarialAuditors 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 2019-20 were in the ordinary course ofbusiness and on an arm's length basis. The particulars of material related partytransactions is provided in the Form AOC-2 and annexed to the Board's Report as Annexure-C.
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 athttps://www.magnacast.com/uploads/invsubpdf/invsubpdf2020-01-29-mfgw5e315d14263f1.pdf
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 31st March 2020 relate and the date of thereport except COVID-19 impact as stated above in this report and also explained inManagement Discussion and Analysis Report.
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 AnnexureD and is attached to this report.
RISK MANAGEMENT :
The Company continues to focus attention on the risk areas identified and in case ofany adverse situation suitable mitigation steps are taken. The Company is taking onnecessary steps to safeguard the health hazards post by the Corona Virus ad has put inplace necessary measures. The Company also established risk management plan and assessmentand the same has been reviewed by the Audit Committee and the Board on periodical basis.
The COVID-19 situation has brought a lot of uncertainties and the indications are thatthere will be shrinkage of volumes. The Company therefore is taking necessary actions tocontrol variables and fixed costs thereby increasing margins and lowering Break EvenPoint.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Board had formed a Corporate Social Responsibility Committee of Board of Directorscomprising of Sri.C.R.Swaminathan Dr.R.Nandini and Sri.N.Krishna Samaraj. The CSR policyof the Company deals with allocation of funds activities identification of programsapproval implementation monitoring and reporting mechanisms under the policy.
As part of the initiatives under CSR for the year 2019-20 the Company has undertakenprojects in the areas of Healthcare EducationEnvironment and Women/Children Welfareetc. These projects are by and large in accordance with Schedule VII of the CompaniesAct 2013.
As part of its CSR activities the Company had laid Pavered Blocks at the GovernmentHigher Secondary School Kinathukadavu manufactured by the Company out of residual sandfrom foundry process. The total value of such Pavered Block laid was Rs. 5.00 Lakhs.
The details of CSR activities for the year are furnished separately vide Annexure Eto this Report. The policy relating to CSR has been displayed on the Company's website andcan be accessed athttps://www.magnacast.com/uploads/invsubpdf/invsubpdf2020-01-29-q6y15e315c4861a78.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. Further the Members at the AnnualGeneral Meeting held on 19th August 2019 re-appointed Sri. C. R. Swaminathan (DIN:00002169) Sri. K. Gnanasekaran (DIN: 00133645) Dr. R. Nandini (DIN: 00002223) & Dr.Jairam Varadaraj (DIN: 00003361) as Independent Directors of the Company for a second termof 5 years with effect from 19th August 2019.
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. M. Malmarugan ||- Chief Executive Officer |
|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 31st March 2020.
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) systems are adequatewith respect to the operations of the Company. The 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 (FRN 004009S) Chartered Accountants 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 15th September 2016. The Company has received acertificate from the Statutory Auditors to the effect that their appointment as theStatutory Auditors of the Company would be within the limits prescribed under section 139of the Companies Act 2013.
The Board has appointed M/s. MDS & Associates Company Secretaries in PracticeCoimbatore as the Secretarial Auditors of the Company for the year 2020-21 to carry outthe Secretarial Audit pursuant to the provisions of Section 204 of the Companies Act2013.
The report of the Auditors for the financial year 2019-20 is annexed as AnnexureF to this Report.
The Board of Directors on the recommendation of the Audit Committee has appointedM/s.SBK & Associates Cost Accountants as the Cost Auditors of the Company for thefinancial year 2020-21. Pursuant to Section 148 of the Companies Act 2013 read with Rule14 of the Companies (Accounts) Rules 2014 the remuneration payable for the year 2020-21to the Cost Auditors of the Company is subject to ratification by the Shareholders at theensuing Annual General Meeting. The Board recommends their remuneration.
DISCLOSURE ON MAINTENANCE OF COST RECORDS:
The maintenance of cost record as specified by the Central Government under Section148(1) of the Companies Act 2013 is applicable to the Company and accordingly the costaccounts and records are made and maintained.
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 complied with the provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Complaints Committee has been set up to define thepolicy and redress complaints received. All employees (permanent contractual temporarytrainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed ofduring the year 2019-20:
|i. Number of complaints received ||- Nil |
|ii. Number of complaints disposed of ||- NA |
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 athttps://www.magnacast.com/uploads/invsubpdf/ invsubpdf2020-02-10-9q3i5e4127030df7c.pdf
The Directors wish to place on record their appreciation of the support andco-operation extended by the Company's Bankers M/s. Corporation Bank and M/s. Indian Bankthe various Government Agencies and in particular the Tamil Nadu Electricity Board and theemployees of the Company at all levels. The Directors would also like to thank all thestakeholders for continuing to repose faith in the Company and its future.
We pray for the grace of the Almighty for further growth of the Company.