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National Fittings Ltd.

BSE: 531289 Sector: Engineering
NSE: N.A. ISIN Code: INE643C01015
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NSE 05:30 | 01 Jan National Fittings Ltd
OPEN 53.80
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VOLUME 5002
52-Week high 81.90
52-Week low 45.45
P/E 35.81
Mkt Cap.(Rs cr) 48
Buy Price 51.55
Buy Qty 100.00
Sell Price 52.95
Sell Qty 30.00
OPEN 53.80
CLOSE 53.00
VOLUME 5002
52-Week high 81.90
52-Week low 45.45
P/E 35.81
Mkt Cap.(Rs cr) 48
Buy Price 51.55
Buy Qty 100.00
Sell Price 52.95
Sell Qty 30.00

National Fittings Ltd. (NATIONALFITTING) - Director Report

Company director report

Your Directors have pleasure in presenting the Twenty Eighth Annual Report togetherwith the Audited Balance Sheet & Profit and Loss Account for the year ended 31.03.2021

FINANCIAL RESULTS

The operating results for the year 2020-2021 are given below :
Profit before Interest and Depreciation and Other adjustments 594.89
Less : Interest 98.33
Depreciation 261.61 359.94
Net Profit before Tax 234.95
Provision for Tax :
Current Tax 36.28
MAT Credit (3.92)
Deferred Tax (income) / expenses 38.45
70.81
Net Profit after Tax 164.14
Amount brought forward from previous year 2788.25
Amount available for appropriation 2952.39
Appropriations
Add : Transfer to Capital Redemption Reserve 200.00
Surplus carried over to Balance Sheet 2752.39

FINANCIAL PERFORMANCE:

The Company's gross income for the financial year ended 31st March 2021 was Rs.5235.78 lacs compared to Rs. 5791.47 lacs in the previous year. The profit before taxfor the Company is Rs. 234.95 lacs as against Rs. 150.16 lacs in the previous year. Thedepreciation for the year is Rs.261.61 lacs compared to Rs. 243.25 lacs in the previousyear. After providing Taxation the Company's net profit stands at Rs.164.14 lacs againstRs. 133.53 lacs in the previous year.

An amount of Rs 2752.39 lacs is to be carried over to Balance Sheet.

The Net worth of the company is at Rs. 5134.65 lacs as on 31.03.2021 as against Rs.4970.51 lacs in the previous year.

DIVIDEND

The Board of Directors has recommended a dividend of Rs 9.00 per Preference shares on200000 9% Redeemable Non-Convertible Non-Cumulative Preference Shares of Rs 100/- eachaggregating to Rs 18.00 lacs for the financial year ended 31.03.2021 which if approved bythe shareholders in the ensuing Annual General Meeting will be paid to the preferenceshareholders whose name appear in the Register of Members as on 15th September 2021.

The Board of Directors has recommended a dividend of Re 1.00 per Equity shares on9083182 Equity shares of Rs 10/- each aggregating to Rs 90.83 lacs for the financialyear ended 31.03.2021 which if approved by the shareholders in the ensuing Annual GeneralMeeting will be paid to all the equity shareholders whose name appear in the Register ofMembers as on 15th September 2021.

PERFORMANCE:

Manufacturing units of the Company was under total lock down for nearly 6 week andoperated with reduced capacity due to the absence of migrated labor. Company has managedto increase prices marginally and reduce costs due to re-organization of manufacturingunits. Domestic market shares of sales were increased with better margin.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT TRENDS & DEVELOPMENT

Company developed additional areas in the Pump and Screwed Fitting product line andwill take up production when market conditions improve after the impact of Covid-19.

DIRECTORS

Mr Jayaram Govindarajan Director who retires by rotation and being eligibleoffered himself for reappointment.

KEY MANAGEMENT PERSONNEL

Mr. A.V. Palaniswamy Managing Director Mrs Panath Anitha Whole Time Director MrJayaram Govindarajan Whole Time Director Mr. J. Saravanan Chief Financial Officer andMr. S. Aravinthan Company Secretary of the Company are the Key Management Personnel asper the provisions of the Companies Act and rules made there under.

Mrs A Panath Anitha was re-appointed as the Whole TimeDirectorwitheffectfrom01.04.2021.

The remuneration of Mr Jayaram Govindarajan was revised and details of the same havebeen given in the explanatory statement.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

The company does not have any Subsidiary Joint Venture or Associate Company.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the Financial Statements of your Company's SubsidiariesAssociates and Joint Ventures in Form AOC-1 is attached to the Financial Statements ofyour Company as Annexure 1.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors further report that

(i) in the preparation of annual accounts the applicable accounting standards have beenfollowed and there were no material departures;

(ii) the accounting policies selected have been applied consistently prudent judgmentsand estimates have been made to give a true and fair view of the state of affairs of thecompany as at 31st March 2021 and of the Profit of the company and the cash flow statementfor the year ended 31.03.2021.

(iii) they have taken proper and sufficient care for the in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the company and forpreventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared 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 areadequateandwereoperatingeffectively.Internal financial control means the policies and procedures adopted by the Company forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.

(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.

CODE OF CONDUCT

All Directors and Senior Management of the Company have affirmed Compliance with theCode of Conduct of National Fittings Limited for the financial Year ended 31st March 2021.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that theyfulfill all the as stipulated in Section 149(6) of the Companies Act 2013 so as toqualify themselves to be appointed as Independent Directors under the provisions of theCompanies Act 2013 and the relevant rules.

NUMBER OF BOARD MEETINGS

During the year 5 (Five) Board Meetings were convened and held the details of whichare given in Corporate Governance Report.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR

DETERMINING QUALIFICATIONS POSITIVE ATTRIBUTES INDEPENDENCE OF A DIRECTOR KEYMANAGEMENT PERSONNEL AND OTHER EMPLOYEES

The Company shall have such person on the Board who complies with the requirements ofthe Companies Act 2013. Directors/KMPs shall be persons of sound integrity and honestyapart from knowledge experience etc in the respective fields. Composition of the Boardshall be in compliance with the requirements of the Companies Act 2013. No person lessthan the age of 21 years shall be appointed as the director of the Board.

Managing Director Whole Time Director Company SecretaryandChiefFinancialOfficershallbe the Key Management Personnel (KMPs) of the Company. All persons who are DirectorsKMPs members of Senior Management and all the employees shall be abide by the code ofconduct.

The Executive Directors are paid with remuneration as approved by the members but arenot paid sitting fees. Independent directors are not entitled for ESOPs.

MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWNPERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

1. Nomination and Remuneration Committee of the Board prepared and sent through itsChairman draft feedback form for evaluation of the Board and Independent Directors.

2. Independent Directors at a meeting of themselves considered and evaluated theperformance of the Board performance of the Chairman and other Non-Independent Directors.

3. The Board subsequently evaluated performance of the Board the Committees andIndependent

Directors.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013

Investments made by the Company under Section 186 of the Companies Act 2013 during theyear under review are given in para 2.2 of Notes forming part of the financial statements.

There were no loans guarantees made by the Company under Section 186 of the CompaniesAct 2013 during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

Therewerenomateriallysignificant entered by the Company with its Promoters

Directors Key Management Personnel and other persons which may have a potentialconflict interest of the Company.

All the related party transactions that were entered during the financial year were inthe ordinary course of the business of the Company All the related party transactions areplaced before the Audit Committee for approval. Required disclosures are made to theCommittee on quarterly basis in terms of the approval of the Committee. The Policy onmateriality of related party transactions and also on dealing with the related partytransactions as approved by the Audit Committee and Board of Directors is uploaded on theCompany's web-site and the link for the same is https://www.nationalfitting.com.

The particulars of Contracts or Arrangements with the related parties made underSection 188 of the Companies Act 2013 are furnished in Annexure 2 and are attachedto this report.

SHARES

There was no issue of fresh Equity Shares during the financial year. No Bonus Shareswere issued. The Company has not issued any Sweat Equity Shares and not provided anyEmployee Stock Option Scheme. The Company has not Bought Back any of its securities duringthe year under review. Company redeemed 200000 9% Redeemable Non-cumulativeNon-convertible Preference Shares of Rs 100/- each amounting to Rs 20000000/- duringthe financial year.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

The Company has implemented adequate procedures and internal controls which providereasonable assurance regarding reliability of financial reporting and preparation offinancial statements. The Company also assures that internal controls are operatingeffectively.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thereport.

RISK MANAGEMENT POLICY

Potential risk for the business of the Company and steps to be adopted by the Companyto handle the risks has been reviewed regularly. Following are the few risks and themethods to be adopted by the

Company to handle them.

1) Raw Material

Increase in input costs due to abnormal price increase in raw-materials will impactmargin. Company is taking steps to improve productivity without increase in the cost ofoperation.

2) Manpower

Potential risk for the future business of the Company will be due to non-availabilityof labor on account of Covid-19 and the Company is taking steps to consolidate productionof most items at one location by relocating its production equipments.

Due to Covid-19 there has been shortage of labor required for production. Moreoperations of the production are being mechanized to reduce dependency on labor.

Company has maintained good relationship with labor and has made the workingenvironment safe and healthy.

3) Market Risk

Company has not been able to increase its market share due to shrinking market onaccount of Covid-19 and continued competition from China.

Company expects to improve sales and margin on the newly developed items to thedomestic market.

4) Exchange Risk

Company has not imported directly any of its inputs and exchange rate fluctuations hasnot impacted margin on exports.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

CSR shall remain a priority along with business activities. The Company shall takesteps to ensure development of people and communities. The Company's CSR projects focusedon environmental care needs of the local community energy and water conservationpromotion of education and employment opportunities primary and preventive health care.

The company spent Rs 13.02 lacs in this financial year as CSR activities. Amountunspent Rs. 18.64 lacs. Amount deposited in unspent CSR account Rs 14.51 lacs. Details areattached separately to this report in Annexure 3

Amount prescribed for CSR Expenditure during 2021-22 is Nil

Company has also committed to contribute towards tackling the unprecedented health andhumanitarian crisis arising from the COVID-19 pandemic outbreak.

EXTRACTS OF ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act 2013 read withcorresponding rules the extract of the Annual Return as at March 2021 in Form MGT 9 ishosted on the website www.nationalfitting.com

LEGAL COMPLIANCE

There were no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and company's operations in future.

CORPORATE GOVERNANCE

Your Company is in compliance with the Corporate Governance guidelines as laid out inthe Securities Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (SEBI Listing Regulations).

All the Directors and the Senior Management personnel have affirmed in writing theircompliance with and adherence to the Code of Conduct adopted by the Company. A certificatewas received from the Managing Director in terms of SEBI Listing Regulations on thecompliance declarations received from the Directors and the Senior Management personnel.

The Statutory Auditors of the Company have examined the requirements of CorporateGovernance with reference to SEBI Listing Regulations and have certified the complianceas required under Regulations. The Certificate in this regard is attached as Annexure 4to this Report.

The Chief Executive Officer and Chief Financial officer (CEO/CFO) certification asListing Regulations is attached as Annexure 5 to this Report.

Related Party disclosures/transactions are detailed in Note 2.27 of the Notes to thefinancial statement.

SEXUAL HARASSMENT

Company has a policy on prohibition prevention and redressal of sexual harassment ofwomen at work place and matters connected therewith.

Company has constituted an Internal Control Committee for prevention of sexualharassment of women at work place.

During the year ended 31st March 2021 no complaint was received under the policy.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has unclaimed dividend amounting to Rs. 8423942/-

Pursuant to the provisions of Section 124 (5) of the Companies Act 2013 unclaimeddividend of Rs 157860/- which remained unpaid or unclaimed for a period of 7 years andhave been transferred to the Investor Education and Protection Fund in this financialyear.

The details of the unpaid and unclaimed dividend lying with the Company have beenuploaded on the website of Ministry of Company Affairs.

Pursuant to the provisions of Section 124 (6) of the Companies Act 2013 8610 equityshares for which dividend remained unpaid or unclaimed for a period of 7 years have beentransferred by the Company to the Investor Education and Protection Fund in this financialyear.

DEPOSITS

The Company has neither accepted nor renewed any deposits during the financial year.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

(i) & (ii) The ratio of the remuneration of each Director to the median and meanremuneration of the employees of the Company for the financial year and the percentageincrease in remuneration of Director Chief Financial Officer Chief Executive OfficerCompany financial year:

Name of Directors/Key Management Personnel Ratio to Median Remuneration (times) % Increase / Decrease in Remuneration
Mr A V Palaniswamy Managing Director 8.52 -13.72
Mr Jayaram Govindarajan 8.87 10.29
Mr. Dhananjayan 0.37 30.00
Mr. Selvakumar 0.46 25.00
Mr R Alagar 1.23 1.90
Mrs A Panath Anitha 1.99 0.91
Mr J Saravanan (Chief Financial Officer) 3.70 -0.57
Mr S Aravinthan (Company Secretary) 3.04 -0.65

iii) The percentage increase in the median remuneration of employees in the financial

iv) The number of permanent employees on the rolls of the Company: 210

v) The average increase in salaries of employees other than managerial personnel in2020-21 was 22.09%. Percentage increase in the managerial remuneration for the year was2.07%

vi) The Company affirms that remuneration is as per the remuneration policy of theCompany.

The information required under Section 197 of the Act read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2015 are givenbelow:

During the period under review there was no employee drawing remuneration in excess ofthe limits prescribed under Section 197 of the Companies Act 2013 and Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

STATUTORY AUDITORS

M/s V Krish & Associates Chartered Accountants Chennai were appointed asStatutory Auditors of the Company from the conclusion of the 25th Annual General Meetingheld on 10.05.2019 until the conclusion of 28th Annual General Meeting. They have to bere-appointed at this Annual General Meeting. The report of the Statutory Auditors forfinancial year ended 31st March 2021 is given along with the Financial Statements whichis annexed to and forms part of this report.

SECRETARIAL AUDIT REPORT

Pursuant to the requirements of the Companies Act 2013 the Company has appointed Mr MR L Narasimha B.Com FCS Practicing Company Secretary (Cop No: 799) as the SecretarialAuditor for the financial year 2020-21 whose report on 21st June 2021 is attachedseparately to this report as

Annexure 6.

EXPLANATION OR COMMENTS OR QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualifications reservations or adverse remarks made by the StatutoryAuditors and there are no qualifications in the Secretarial Audit Report of the PracticingCompany Secretary.

CONSERVATION OF ENERGY

Company has procured most of its power requirement through wind power companies atreduced costs. Steps has been taken to improve better yields for same power units.

TECHNOLOGY ABSORPTION INDUSTRIAL RELATIONS

Company has developed more items of production in the automated high production lines.New production techniques are being developed to reduce dependence of labor and capex.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange inflow (actual) : Rs. 340866196/-Foreign exchange used (actual) :Rs. 2289840/-

INDUSTRIAL RELATIONS

Relationship with the employees/labor was cordial during the year under review.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank M/s. Bank of India for the supportextended during the period. Your Directors also wish to thank all the suppliersemployees Government Departments/Agencies and others for their valuable contribution andassistance during the year.

FOR AND ON BEHALF OF THE BOARD
Sd/- A.V. PALANISWAMY Sd/- JAYARAM GOVINDARAJAN
DIN No. 01817391 DIN No. 02178416
Managing Director Whole time Director

Place : Coimbatore

Date : 21.06.2021

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