To : The Members
Murudeshwar Ceramics Limited
The Board of Directors of your company have pleasure in presenting 36th(Thirty Sixth) Annual Report on the business and operations of the Company along withthe audited financial statements for the financial year ended March 31 2019.
FINANCIAL SUMMARY OR HIGHLIGHTS / PERFORMANCE OF THE COMPANY
The Board's Report shall be prepared based on the standalone financial statements ofthe company.
| || ||(Rs. In lakhs) |
|Particulars ||Current Financial ||Previous Financial |
| ||Year 2018-19 ||Year 2017-18 |
|Revenue from Operations ||12577.95 ||11938.86 |
|Other Income ||166.13 ||123.26 |
|Total Income ||12744.08 ||12062.12 |
|Operational Expenditure ||8914.59 ||9295.92 |
|Increase/(Decrease) in stock (WIP) ||790.13 ||(517.57) |
|Profit/loss before Depreciation Finance Costs Exceptional items and Tax Expense ||3039.36 ||3283.77 |
|Less : Depreciation/ Amortisation/ Impairment ||896.01 ||902.68 |
|Profit / loss before Finance Costs Exceptional items and Tax Expense ||2143.35 ||2381.09 |
|Less : Finance Costs ||1618.05 ||1871.00 |
|Profit /loss before Exceptional items and Tax Expense ||525.30 ||510.09 |
|Add/(less) : Exceptional items ||- ||- |
|Profit /loss before Tax Expense ||525.30 ||510.09 |
|Less : Tax Expense - || || |
| Current Tax ||102.01 ||107.51 |
| Prior Period Tax ||(17.92) ||- |
| Deferred ||54.46 ||9.37 |
| MAT Credit Entitlement ||(92.59) ||(99.00) |
|Profit /loss for the year (1) ||479.34 ||492.21 |
|Total Comprehensive Income/loss (2) ||9.99 ||16.75 |
|Total (1+2) ||489.33 ||508.96 |
|Balance of profit /loss for earlier years ||854.90 ||345.94 |
|Less : Transfer to Debenture Redemption Reserve ||- ||- |
|Less : Transfer to Reserves ||- ||- |
|Less : Dividend paid on Equity Shares ||- ||- |
|Less : Dividend paid on Preference Shares ||- ||- |
|Less : Dividend Distribution Tax ||- ||- |
|Balance carried forward ||1344.23 ||854.90 |
OPERATIONAL PERFORMANCE IN SEGMENTS
During the year under review the sales of products has increased by 10.04% at`8309.33 lakhs in compared to `7551.30 lakhs of the previous year and sale of serviceshas reduced by 2.71% at `4268.62 lakhs in compared to `4387.56 lakhs of the previousyear. However the Company has increased its overall sale by 5.35% at `12577.95 lakhs incompared to `11938.56 lakhs of previous year.
In spite of the above increase and decrease in sales of the products and services theCompany has managed to earn a profit of `489.33 lakhs (Previous year `508.96 lakhs) whichleads to decrease of 3.86% as compared to previous year 2017-18.
CAPITAL EXPENDITURE ON PROPERTY PLANT & EQUIPMENT AND OTHER TANGIBLE ASSETS
In the financial year 2018-19 we incurred a capital expenditure of `871.00 lakhs whichcomprises of `451.91 lakhs in Building `392.56 lakhs in Plant and Equipment `2.85 lakhsin Computers `5.21 lakhs in Office Equipment `3.65 lakhs in Furniture & Fixtures and`14.82 lakhs in Vehicles.
The principal sources of liquidity of your Company consist of cash and cashequivalents others (Balance in Current account) and the cash flow that we generate fromour Business operations. We maintain sufficient cash to meet our strategic and operationalrequirements. We understand that liquidity in the Balance Sheet has to balance betweenearning adequate returns and the need to cover financial and business requirements.Liquidity enables us to be agile and ready for meeting unforeseen strategic and businessneeds. We believe that our working capital is sufficient to meet our current requirements.For the financial year ended March 31 2019 your company has `303.15 lakhs in account ofcash and cash equivalents.
The Basic Earnings per Share has decreased by 6.90% i.e. to `0.81 as compared to `0.87of previous year 2017-18.
The Board of Directors of your company after considering holistically the relevantcircumstances and keeping in view the company's dividend distribution policy if any hasdecided that it would be prudent not to recommend any Dividend for the year under review.Therefore your Directors have decided to skip the dividend for the financial year2018-19. Your Directors are working towards achieving higher results during the fourthcoming years and also your Directors intent to reduce the finance cost as early aspossible.
BRIEF DESCRIPTION OF THE COMPANY'S WORKING DURING THE YEAR / STATE OF COMPANY'S AFFAIRPROSPECTS/ MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE ENDOF THE FINANCIAL YEAR AND DATE OF THE REPORT
Our clients and prospective clients are faced with transformative businessopportunities due to quality and modernization. The Company focused on strengthening itscapacity and capability to meet customer aspiration. There is increasing penetration ofVitrified and Ceramic tile as a preferred option in rural areas. Various governmentinitiatives for infrastructure development like Swachh Bharat Abhiyan Development of 100smart cities Housing for all by 2022 Rural Housing Fund under National Housing Board andfavorable demographics expected to drive ceramics sanitary ware and bathroom fittingsindustry in future. India's domestic consumer market increase in working-age populationand urbanization is envisaged to augur well for the aesthetically and technically superiorhigh-end Ceramic tiles in the urban segment in the past. All the Vitrified and CeramicTiles are value-added products in the urban areas. In view of the above Govrnment Projectsand customers demand our Company has started producing the Vitrified tiles of double andmulti charge tiles in its unit at Karaikal which is functioning with improved gasallocation. Our other new unit at Sira Taluk Tumkur District is also fetching bettermarket for quality products. The Company is expecting a better growth in the near future.
During the year under review there have been no any material changes and commitmentsaffecting the financial position of the Company which have occurred between the end of thefinancial year to which the financial statements relate and the date of this Report andalso no change in the nature of business of the Company.
The Government's efforts to improve lives and livelihood through employment generatinginitiatives coupled with an estimate for normal monsoon augurs well for uplifting consumersentiment for discretionary purchases. India is one of the shining economies in theAsia-Pacific region with a marked uptrend in economic growth that contrasts sharply withthe economic reality. Rising awareness towards personal hygiene along with massive schemeslaunched by the Government of India the industry is expecting a positive growth in thenear future due to versatile architectural resource with multiple inherent benefits likelow maintenance high durability affordability and an array of options to choose fromVitrified and Ceramic tiles have gained popularity and is slowly dominating the floortiles segment globally. Now with the technological advancements the Global Ceramic Tileindustry has not only scaled up but also launched multiple value-added products likeGlazed Vitrified Tiles Polished Glazed Vitrified Tiles large-size slabs Wall CeramicTiles etc.
Our strategic objective is to build a sustainable organization that remains relevant tothe agenda of our clients while creating growth opportunities for our employees andgenerating profitable growth for our investors. Governments focus on infrastructuredevelopment expected to result in driving demand for Indian ceramics sanitary ware andbathroom fittings industry and the Company is accordingly focusing on Brand building andaccordingly advertisements are given on regular basis to increase the sales. India isforging ahead as the world's fastest growing and shining major economy. Urban clusters aredriving this growth more consumers and more purchasing power is emerging beyond themetros and other big cities. The company primarily focuses on local market where it cangain and the company has opened various showrooms. The Showroom sales is yieldingsatisfactory return in major urban and rural areas. The Company continues the strategy ofboth project and retail marketing. The company is continuously penetrating new markets anddeveloping new products. The places where showrooms are not feasible the Company hasexpanded the dealership network. Depots located at various parts of the Country areproviding quick services to the customers. The incentive based payment to the marketingstaff are fetching better returns to the company. Advertisements in newspapers and onhoardings are given on regular basis.
The following sales promotional activities have been adopted by your company:
1. Appointing new sales dealers and distributors in potential area of Karnataka andother parts of South India.
2. Appointing new sales personals in the state of Kerala.
3. Introducing quantity based incentives to the sales staffs to boost sales.
4. Arranging Builders and Architect meet regularly to present our new products.
Your Directors are hopeful of achieving better results in the year 2019-20.
RESEARCH AND DEVELOPMENT
Boasts of highly accurate measurements and safe and suitable sample preparation;perfect for qualitative and quantitative analysis due to its wide dynamic concentrationrange and support for wide range of elements. The R&D facility has the best setup forconducting rigorous testing on its products to meet valued customers demand and to meetinternational standards and certification requirements. The R&D facility providesimmense benefits in terms of improved economies of scale quick identification of productflaws and quicker lead time to market with modified or new products.an active team ofceramist to challenge customer demand & device cost effective input recipe solutionsThe R & D wing of the Company is always trying to give new look and design ofcompany's products and has successfully developed new varieties of tiles with improvedbody matrix quality and cost effective product range. Efforts to upgrade variety bodymatrix shades and designs to suit market sentiments is being consistently pursued.R&D wing is also exploring ways and means to improve operating efficiency.
DISCLOSURES RELATING TO SUBSIDIARIES ASSOCIATES AND JOINT VENTURES
During the year under review the Company does not have any Subsidiary Joint venturesand Associates Companies and neither company has become or ceased to be subsidiariesassociates and joint ventures during the financial year 2018-19.
The Board of Directors of your company has decided not to transfer any amount to theReserves for the year under review. The particulars of reserves of the Company for FY:2018-19 and the previous year are as follows :
| || ||(Rs. In lakhs) |
|Particulars ||FY19 ||FY18 |
|Capital Reserve ||15.02 ||15.02 |
|Capital Redemption reserve ||1600.00 ||1600.00 |
|Securities premium account ||12739.33 ||12194.23 |
|General Reserve ||12795.85 ||12795.85 |
|Profit and Loss Account ||1344.23 ||854.90 |
CHANGE IN THE NATURE OF BUSINESS IF ANY
During the year under review there is no any changes in the nature of the business ofthe Company.
Risk Management Policy in terms of provisions of Section 134(3) (n) of the CompaniesAct 2013 is in place and is uploaded on the website of the Company. The Management of theCompany understands the importance of various risks faced by it and various risks exist inthe market and has adopted a Risk Management Policy which establishes various levels ofaccountability within the Company and which ensures that the Company has appropriate andeffective risk management systems which carries out risk identification assessment andensures that risk mitigation plans are in place. The Risk Management Policy has identifiedvarious risks to which the Company is subject to and has accordingly aligned the concerneddepartments to take the necessary mitigating steps. Risk management has been interlinkedwith the annual planning exercise where each function and business carries out fresh riskidentification assessment and draws up treatment plans.
Your Company believes that a diversified board will bring differences in thoughtperspective knowledge skill regional and industry experience cultural and geographicalbackgrounds age ethnicity race and gender that will help us retain our competitiveadvantage. The Board Diversity Policy adopted by the Board sets out its approach todiversity.
At present your company have an appropriate mix of executive non-executive andindependent directors to maintain the independence of the Board and separate itsfunctions of governance and management. As of March 31 2019 the Board had ten memberstwo of whom are executive directors three of whom are non-executive and non-independentdirectors and five are independent directors. One of the independent director of the Boardis women.
APPOINTMENT OR RE-APPOINTMENT OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri Satish Rama Shetty Managing Director of the Company who is liable to retire byrotation based on his appointment terms offered themselves for re-appointment at theensuing Annual General Meeting (AGM'). The Board recommends for theirre-appointments in the ensuing Annual General Meeting.
In terms of Section 149 of the Companies Act 2013 the Members at their meeting heldon 27th September 2014 appointed the following as an Independent Directors of theCompany:
Dr. Shivabasayya Siddaramayya Hiremath l Shri Annappayya l Shri Sankappa KeremaneShetty l Smt Sarvani Alva
The above Independent Directors have completed their first term of five years on 30thJuly 2019 and The Board of Directors at its meeting held on 29th May 2019 hasrecommended based on recommendation made by Nomination and Remuneration Committee to themembers by special resolution as stipulated in the Notice of AGM for re-appointment of theabove Independent Directors for second term of five consecutive years.
Moreover Shri Sathya Murthy Padaki having DIN: 08276537 has been appointed by theBoard of Directors on 12th November 2018 on the Board of the Company as anAdditional Director (Independent Director) and the same has been approved by the membersof the company on 28th March 2019 through Postal Ballot for appointment of himas an Independent Director of the Company for a period of five years w.e.f. 12.11.2018.
Dr. Rama Nagappa Shetty Shri Sunil Rama Shetty and Shri Naveen Rama Shetty arecontinue to the Non-Executive and Non-Independent Directors of the Company.
In terms of Section 203 of the said Act the following were designated as KeyManagerial Personnel of your Company by the Board:
Shri Satish Rama Shetty Managing Director l Shri Karan Satish Shetty Whole TimeDirector l Shri N M Hegde Chief Financial Officer l Shri Ashok Kumar Company Secretary
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the Act and Regulations 25of the SEBI (LODR) Regulation 2015 and the Company has received Disclosure of Interest inform MBP-1 as per section 184 of the act and intimation by Directors for qualification tocontinue directorship in form DIR-8 Pursuant to Section 164(2) and rule 14(1) of Companies(Appointment and Qualification of Directors) Rules 2014. The Board also confirms that Allthe Independent Directors fulfill the Conditions as specified in the above regulation andthe companies Act 2013 and rule made thereunder.
EVALUATION OF THE BOARD'S PERFORMANCE
The Board has carried out an annual performance evaluation of its own performance itsCommittees and the Directors including Chairman which include criteria for performanceevaluation of the Non-Executive Directors and Executive Director. Pursuant to theprovisions of Companies Act 2013 and Regulation 25 of the Listing Regulations the Boardand the Nomination and Remuneration Committee have carried out annual performanceevaluation of its own performance the directors individually as well the evaluation ofthe working of its Audit Nomination & Remuneration and Stakeholder Committee. EachBoard member completed a questionnaire providing feedback on the functioning and overallengagement of the Board and its committees on various parameters such as the compositionexecution of specific duties quality quantity and timelines of flow of informationdeliberations at the meeting etc. Besides this one meeting of the individual directorswith the Chairman of the Board was also conducted as a part of self-appraisal and peergroup evaluation. The Directors were also asked to provide their valuable feedback andsuggestions about the overall functioning of the Board and its committees. In a separatemeeting of independent Directors performance of non-independent Directors and the boardas a whole was evaluated. Performance evaluation of Independent Directors was done by theentire Board excluding the independent Director being evaluated.
HUMAN RESOURCES MANAGEMENT
The Company is providing appropriate training and guidance to its employees from timeto time for reskill them and making them more valuable for the Company. At your CompanyManagement focus retain the talent and also focus on the workplace of tomorrow thatpromotes a collaborative transparent and participative organization culture encouragesinnovation and rewards individual contribution. The focus of human resources managementat your company is to ensure that we enable each and every employee to navigate the nextnot just for clients but also for themselves. We have reimagined our employee valueproposition to make it more meaningful to our employees.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under Section 197(12) of the Act read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is appendedhereto and forms part of this Report as Annexure-1. The information required underRule 5 (2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is provided in the Annexure forming part of this Report. None of theCompany's employees were covered by the disclosure requirement. In terms of the firstproviso to Section 136 of the Act the Report and Accounts are being sent to the membersexcluding the aforesaid Annexure. Any member interested in obtaining the same may write tothe Company Secretary at the Registered Office of the Company. None of the employeeslisted in the said Annexure is related to any Director of the Company.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
During the year under review Five Board Meetings were held during the year. Forfurther details please refer Report on Corporate Governance.
COMMITTEES OF THE BOARD
The Committees of the Board focus on certain specific areas and make informed decisionsin line with the delegated authority. The following substantive Committees constituted bythe Board function according to their respective roles and defined scopes: l AuditCommittee of Directors l Nomination and Remuneration Committee l Stakeholders GrievanceCommittee l CSR Committee l Executive Committee of the Board
Details of composition terms of reference and number of meetings held for respectivecommittees are given in the Report on Corporate Governance.
The familiarization programs for Independent Directors were conducted by the competentprofessionals and other Company's key managerial personnel during the year.
The Board has laid down separate Code of Conduct for Non-Executive Directors and SeniorManagement personnel of the Company and the same are posted on the Company's website. AllBoard Members and Senior Management personnel have affirmed compliance with the Code ofConduct. The Managing Director has also confirmed and certified the same. Thecertification is enclosed at the end of the Report on Corporate Governance.
THE DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO ARE AS FOLLOWS:
The information required to be furnished pursuant to Section 134(3) (m) of theCompanies Act 2013 is appended hereto and forms part of this Report as Annexure-2.
REMUNERATION POLICY FOR THE DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
In terms of the provisions of Section 178(3) of the Companies Act 2013 and SEBI (LODR)Regulation 2015 the Nomination and Remuneration Committee (NRC) is responsible forformulating the criteria for determining qualification positive attributes andindependence of a Director. The NRC is also responsible for recommending to the Board apolicy relating to the remuneration of the Directors Key Managerial Personnel and otheremployees.
In line with this requirement the Board has adopted the Policy on Board Diversity andRemuneration Policy for Directors Key Managerial Personnel and other employees of theCompany. The copy of the policy is available on the company website www.naveentile.com
RELATED PARTY TRANSACTIONS
For all related party transactions prior omnibus approvals of the Audit Committee andthe Board of Directors are obtained on a yearly basis for the transactions which are of aforeseen and repetitive nature and such approval is in the interest of the Company. Thetransactions entered into pursuant to the omnibus approvals so granted are audited and astatement giving details of all related party transactions is also placed before the AuditCommittee for their review. All related party transactions that were entered into duringthe financial year were on arm's length basis and were in the ordinary course of business.Further there are no significant related party transactions during the year under reviewmade by the Company with promoters Directors Key Managerial Personnel or designatedpersons which may have a potential conflict with the interest of the Company at a large.The details of which is given as AOC-2 in Annexure-3.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of Section 135 of the Companies Act 2013 and the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has constituted aCorporate Social Responsibility (CSR) Committee of the Board of Directors on 10thAugust 2018 as the profit of the Company has crossed the limit as specified in thesection and also formulated a CSR Policy indicating the activities to be undertaken by theCompany. The constitution of CSR Committee is disclosed in Corporate Governance Report.The CSR policy may be accessed on the Company's website at www.naveentile.com. YourCompany strives to make a difference in the lives of people with a special focus onneighboring and local areas of the Company's manufacturing locations. The Contributionagainst CSR has been made by the company for the financial year 2018-19 based on theaverage net profit of last three year of the Company. Details has been appended hereto andforms part of this Report as Annexure-4.
During the year under review your Company has not accepted any deposits within themeaning of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014.
LOANS SECURITIES OR INVESTMENTS
During the year under review the Company has not provided any Loans guarantees andsecurities under section 186 of the Companies Act 2013. The details of investments areprovided in the schedules to the financial statements.
During the year under review ratings on the Bank facilities including Long Term andShort Term Loans of your Company by CRISIL is as under:
|Total Bank Loan Facilities Rated ||`117.85 Crore |
|Long Term Rating ||CRISIL B+/ Stable (Reaffirmed) |
|Short Term Rating ||CRISIL A4 (Reaffirmed) |
EXTRACT OF THE ANNUAL RETURN
Pursuant to Section 92 of the Companies Act 2013 and Rule 12 of The Companies(Management and Administration) Rules 2014 the extract of Annual Return in Form MGT-9is appended hereto and also available on the website of the Company at www.naveentile.comand forms part of this Report as Annexure-5.
The Board of Directors of your company at their meeting held on August 13 2019recommended by the Notice of 36th Annual General Meeting to the members of the company forappointment of Mr. Krishnaraj K (M No. 217422) Chartered Accountants partner of M/s.K.G. Rao & Co. (Firm Registration No. 010463S) having office at No.#15 First Floor3rd Cross Sampige Road Malleshwaram Bangalore - 560 003 as the statutory Auditors ofthe Company for the period of five years w.e.f. September 28 2019.
The previous statutory auditors M/s. K.A. Raghupathy & Co Chartered Accountants(ICAI Registration No. 011573S) No.81 "SRI GURUKRUPA" 2nd Main 3rd A CrossNanjappa Layout Vidyaranyapura Bengaluru - 560 097 has resigned from the StatutoryAuditors of the Company w.e.f. August 13 2019 due to reconstitution of their firm fromPartnership firm to Proprietorship firm and also they are downsizing their firm.
No qualification adverse remarks or disclaimer have been made by the StatutoryAuditors with regard to the financial statements for the financial year 2018-19. TheStatutory Auditors of the Company have not reported any fraud as specified under Section143(12) of the Companies Act 2013.
INDIAN ACCOUNTING STANDARDS
The financial statements have been prepared in accordance with Indian AccountingStandards (Ind AS) the provisions of the Companies Act 2013 (to the extent notified) andguidelines issued by SEBI. The Ind AS are prescribed under Section 133 of the CompaniesAct 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules 2015 andCompanies (Indian Accounting Standards) Amendment Rules 2016. Your Company has beenadopted "Ind AS" since April 01 2017.
SECRETARIAL AUDIT REPORT
Pursuant to the Provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mrs. Swati R Hegde Practicing Company Secretary to undertake the secretarialaudit of the Company. The Secretarial Audit Report is appended hereto and forms part ofthis Report as Annexure-6.
CERTIFICATE PURSUANT TO CLAUSE 10 OF SCHEDULE V OF SEBI (LODR) REG 2015
In pursuance of sub clause (i) of clause 10 of Part C of Schedule V of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Company has obtained certificate from Practicing Company Secretary with respectto disclosure/ declaration/ representation received from the directors and taken on recordby the Board of Directors as on March 31 2019 none of the Directors of the Company hasbeen debarred or disqualified from being appointed or continuing as director of Companiesby the SEBI/ Ministry of Corporate Affairs or any such other statutory authority. Theabove said Certificate is appended hereto and forms part of this report as Annexure-7.
Pursuant to Regulation 27 and other applicable provisions of SEBI (LODR) Regulations2015 and relevant sections of the Companies Act 2013 a Management Discussion andAnalysis Statement Report on Corporate Governance and Auditors' Certificate are includedin the Annual Report. The Compliance certificate from the auditors regarding compliance ofconditions of Corporate Governance as stipulated in SEBI (LODR) Regulation 2015 from theperiod 01.04.2018 to 31.03.2019 is annexed with this report.
COST RECORDS AND COST AUDIT
During the year under review the Maintenance of cost records and requirement of costaudit as prescribed under the provisions of Section 148(1) of the Companies Act 2013 arenot applicable for the business activities carried out by the Company.
During the year under review your Company has written policy as require under theCompanies Act 2013 and rules made there under and the Securities Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 as amended from timeto time. At present your Company has the following policeies : (1) Policy on Remunerationof Directors KMP and Senior Employees (2) Policy on Preservation of Documents andArchival of Documents in its website (3) Policy on Prevention of Sexual Harassment atWorkplace (4) Whistle Blower Policy (5) Code of Conduct (6) Policy on Disclosure ofMaterial Events (7) Policy on RTP's (8) Policy on Risk Management (9) Policy on BoardDiversity (10) Policy for payment to NED and Policy for determining the MaterialSubsidiaries (11) Policy on Evaluation of Board (12) Policy on CSR (13) Policy onremuneration to ED and Senior Management (14) "CODE OF FAIR DISCLOSURE AND CODE OFCONDUCT FOR PREVENTION OF INSIDER TRADING" (15) Policy on Document Retention. Theseall Policies can be accessed at www.naveentile.com
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Pursuant to Section 177(9) of the Companies Act 2013 a vigil mechanism wasestablished for directors and employees to report to the management instances of unethicalbehavior actual or suspected fraud or violation of the Company's code of conduct orethics policy. The Company believes in the conduct of the affairs of its constituents in afair and transparent manner by adopting highest standards of professionalism honestyintegrity and ethical behavior. In line with the Code of Conduct any actual or potentialviolation howsoever insignificant or perceived as such would be a matter of seriousconcern for the Company. The role of the employees in pointing out such violations cannotbe undermined. The Vigil Mechanism provides a mechanism for employees of the Company toapproach the Chairman of the Audit Committee of the Company.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company believes that a strong internal control framework is necessary for businessefficiency management effectiveness and safeguarding assets. Pursuant to Sec.134 (5)(c)your Company has a well-defined internal control system in place which is designed toprovide reasonable assurance related to operation and financial control. The Management ofthe Company is responsible for ensuring that Internal Financial Control has been laid downin the Company and that controls are adequate and operating adequately.
The Company has an adequate system of internal financial control in place withreference to financial statements in addition there are operational controls and fraudrisk controls covering the entire spectrum of internal financial control for ensuringproper and efficient conduct of its business the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information.
Internal Audit is carried out by external auditors and periodically covers all areas ofbusiness. The audit scope methodology to be used and the reporting framework The InternalAuditors evaluates the efficacy and adequacy of internal control system its compliancewith operating systems and policies of the Company and accounting procedures at all thelocations of the Company. Based on the report of the Internal Auditors process ownersundertake corrective action in their respective areas and thereby strengthen the controls.Significant audit observations and corrective actions thereon are placed before the AuditCommittee.
Pursuant to regulations 25(7) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with a view to familiarize the Independent Directors withthe company's operations the company has conducted a programmes which inter alia includesvarious presentation by practicing professionals business heads and KMPs of the Company.All new independent Directors inducted into the Board attend an orientation program.
During the year under review the Company has not raised any funds through preferentialallotment or qualified institutional placement as specified under regulation 32(7A) of theSEBI (LODR) Regulations 2015. However the company has allotted 2370000 Equity Shareson conversion of preferential allotment to Promoter/Promoter Group Company MurudeshwarPower Corporation Limited hence the Paid up Equity Share Capital of the Company increasedfrom `4521.17 lakhs to `4758.17 lakhs.
Moreover the details of utilization of Funds during the financial year raised earlierthrough preferential allotment is as under : Building :` 451.91 lakhs Plant andEquipments: `392.56 lakhs Computers: `2.86 lakhs Office Equipments: `5.21 lakhsFurniture and fixtures: `3.65 lakhs Vehicles: `14.82 lakhs. These expenditures have beenincurred at the Sira plant and at the Karaikal plant of the company.
PREVENTION OF INSIDER TRADING
The Securities and Exchange Board of India has introduced new set of regulations inplace of the erstwhile Regulations of 1992 on prohibition of insider trading. The newregulations namely SEBI (Prohibition of Insider Trading) Regulations 2015 (theRegulations') came into force on 15th May 2015 to put in place a framework forprohibition of insider trading in securities and to strengthen the legal frameworkthereof. In view of the foregoing provisions the Company has made a code i.e. CODE OFPRACTICES AND PROCEDURES FOR FAIR DISCLOSURE OF UNPUBLISHED PRICE SENSITIVE INFORMATIONAND PREVENTION OF INSIDER TRADING to prohibit the insider trading to govern the fairdisclosure of unpublished price sensitive information and to attain equality of access tosuch information with a view to regulate trading in securities by the Directors anddesignated employees of the Company. All Directors and the designated employees haveconfirmed compliance with the Code.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of framework of internal financial controls and compliance systems establishedand maintained by the Company work performed by the internal statutory secretarialauditors and external consultants and the reviews performed by Management and the relevantBoard Committees including the Audit Committee the Board is of the opinion that theCompany's Internal financial controls were adequate and effective during the financialyear 2018-19.
In terms of Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that: a. In the preparation of the annualaccounts the applicable accounting standards have been followed and that there are nomaterial departures there from; b. They have in the selection of the accounting policiesconsulted the Statutory Auditors and have applied them consistently and made judgementsand 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. They have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d. They have prepared theannual accounts on a going concern basis; e. They have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; f. They have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively.
Your Directors take this opportunity to extend their deep sense of gratitude to theBanks Central and State Governments and their Departments and the Local Authorities fortheir continued guidance and support.
Your Directors would also like to record their appreciation for the support andco-operation your Company has been receiving from its suppliers dealers businesspartners and others associated with the Company.
Your Directors place on record their sincere appreciation to the employees at alllevels for their hard work dedication and commitment. The enthusiasm and unstintingefforts of the employees have enabled the Company to remain as industry leader and to youour shareholders we are deeply grateful for the confidence and faith that you have alwaysreposed in us.
| ||For and on behalf of the Board of Directors |
| ||Dr. R. N. SHETTY |
|Place : Bengaluru ||Chairman |
|Date : August 13 2019 ||(DIN 00038810) |
ANNEXURE - 1
Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 in respect of employees of the Company is as follows: a)The ratio of the remuneration of each director to the median remuneration of the employeesof the company for the financial year
|Name of the Director ||Ratio of Director's remuneration to the median remuneration of the employees of the Company for the financial year |
|Shri Satish Rama Shetty ||37.91 |
|Shri Karan Satish Shetty ||11.19 |
NOTE : All other Non-Executive Directors are not drawing any remuneration from theCompany. b) The percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear
|Name of KMP ||Percentage increase in remuneration in the financial year |
|Shri Satish Rama Shetty ||0.00% |
|Shri Karan Satish Shetty ||Not Applicable (Appointed during the F.Y. 2018-19) |
|Shri N.M. Hegde ||0.00% |
|Shri Ashok Kumar ||Not Applicable (Appointed during the F.Y. 2018-19) |
c) The percentage increase in the median remuneration of employees in the financialyear : -12.64% d) The number of permanent employees on the rolls of the company : 327 e)The explanation on the relationship between average increase in remuneration and companyperformance
|Sl.No. ||Particulars ||Explanation |
|1. ||Increase in median remuneration of employees has been : -12.64% ||Decrease in median remuneration of employees is due to increase in number of employees on low wages as compare to the previous year . The remuneration was paid to employees on par with other similar Industry. |
|2. ||Company performance of PAT is `489.33 lakhs (2018-19) to `508.96 lakhs (2017-18) || |
f) Comparison of the remuneration of the Key Managerial Personnel against thePerformance of the Company
|Sl.No. ||Particulars of remuneration for Key Managerial Personnel ||Percentage of Standalone Operating Profit |
|1. ||Shri Satish Rama Shetty ||13.71% |
|2. ||Shri Karan Satish Shetty ||4.05% |
|3. ||Shri N.M. Hegde ||2.85% |
|4. ||Shri Ashok Kumar ||0.86% |
g) Market and financial performance related information:
|Particulars ||March 31 2019 ||March 31 2018 ||% Change |
|Market Capitalization (` lakhs) ||9847.80 ||14352.25 ||-31.38 |
|P/E Ratio ||25.56 ||28.10 ||-9.04 |
h) Average percentage increase already made in the salaries of employees other thanthe managerial personnel in the last financial year its comparison with the percentageincrease in the managerial remuneration justification thereof and point out if there areany exceptional circumstances for increase in the managerial remuneration : Notapplicable
i) The key parameters for any variable component of remuneration availed by theDirectors : No such variable component is paid.
j) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year : There is no employee who received remuneration in excess ofhighest paid Director.
k) Affirmation that the remuneration is as per the remuneration policy of theCompany : It is affirmed that the remuneration is as per the 'Remuneration Policy forDirectors Key Managerial Personnel and other employees' adopted by the Company.
ANNEXURE - 2
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
A. CONSERVATION OF ENERGY
(a) Successfully modified the composition of the body to reduce shrinkage whichhelps in reduction of raw material consumption reducing the cost of Raw material and theraw material processing time thereby reducing wastage and conserving power. Re-use ofKiln heat for the drying process which has considerably reduced the consumption of fuel.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy:
1 No. 400 KVA UPS is being installed in Karaikal for uninterrupted power supply to theKiln. This will help us reduce the extra energy consumption after every power outage.
(c) Impact of the measures at (a) and (b) above for reduction of energy consumption andconsequent Impact on the cost of production of goods : Reduction in power cost forbetter sales realization of sales values Vitrified tiles.
(d) Total energy consumption and energy consumption per unit of production : Notapplicable
B. TECHNOLOGY ABSORPTION :
Efforts made in technology absorption as per Form B of the Annexure :
1. Specific areas in which R & D carried out by the company
a. New ball clay raw material processed to remove the inbuilt impurities b. Reductionin imported ball clay consumption
2. Benefits derived as a result of the above R & D
a. Better sales realization on the finished product b. Better utilization of plant andmachinery
3. Future plan of action
a) Procurement of new digital printer to produce larger sizes of tiles at Sira Plant.b) Digital parking tiles production at Karaikal Plant.
TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION
1. Efforts in brief made towards technology absorption adaptation andinnovation :
a) Successful production of PGVT & GVT series Digital Vitrified tile. b) Successfuladaption of Ball Clay processing plant & Feldspar processing plant to remove theinbuilt impurities to enhance the brightness of Vitrified tile production.
2. Benefits derived as a result of above efforts : Reduction in the powercost raw material cost transport cost & improvement tile brightness & qualityconsistency.
3. In case of Imported Technology (imported during the last 5 years reckonedfrom the beginning of the financial year) following information may be furnished :
|a) Technology Imported ||Not done during the year |
|b) Year of Import ||NA |
|c) Has technology been fully absorbed ||NA |
|d) If not absorbed areas where this has not taken place reasons and future plans of action. ||NA |
|C. FOREIGN EXCHANGE EARNINGS AND OUTGO || |
|a) Activities relating to exports initiatives taken to increase exports development of new export markets for products and services and export plans ||Nil |
|b) Total Foreign Exchange used earned. || |
|Foreign Exchange Earnings ||Nil |
|Foreign Exchange Outgo ||Nil |
ANNEXURE - 3
FORM NO. AOC-2
[PURSUANT TO CLAUSE (H) OF SUB-SECTION (3) OF SECTION 134 OF THE ACT
AND RULE 8(2) OF THE COMPANIES (ACCOUNTS) RULES 2014]
Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto.
1. Details of contracts or arrangements or transactions not at arm's length basis :
|Sl. No. ||Particulars ||Details |
|1 ||Name(s) of the related party & nature of relationship ||Nil |
|2 ||Nature of contracts / arrangements / transaction ||Nil |
|3 ||Duration of the contracts / arrangements / transaction ||Nil |
|4 ||Salient terms of the contracts or arrangements or transaction including the value if any ||Nil |
|5 ||Justification for entering into such contracts or arrangements or transactions ||Nil |
|6 ||Date of approval by the Board ||Nil |
|7 ||Amount paid as advance if any ||Nil |
|8 ||Date on which the special resolution was passed in General Meeting as required under first proviso to Section 188 ||Nil |
2. Details of material contracts or arrangement or transactions at arm's length basis :
|Sl. No. ||Particulars ||Details |
|1 ||Name(s) of the related party ||RNS INFRASTRUCTURE LIMITED (refer to Note No.27.2 of Financial Statement) |
|2 ||Nature of Relationship ||Group Company |
|3 ||Nature of contracts / arrangements / transaction ||Earth works |
|4 ||Duration of the contracts / arrangements / transaction ||Not applicable |
|5 ||Salient terms of the contracts or arrangements or transaction including the value if any ||Not applicable |
|6 ||Justification for entering into such contracts or arrangements or transactions ||Nil |
|7 ||Date of approval by the Board ||30.05.2018 |
|8 ||Amount paid as advance if any ||Nil |
All related party transactions that were entered into during the financial year were onarm's length basis and in the ordinary course of business. For all related partytransactions please refer Note No.27.2 of the Financial Statement.