BOARD OF DIRECTORS
THE MEMBERS OF
Your Directors have pleasure in presenting to you their 36th Annual Reporttogether with the Audited Accounts of the Company for the year ended 31stMarch 2018 and the Auditors' Report thereon.
1. FINANCIAL RESULTS:
The summarized working results for the year ended 31st March 2018 ascompared with the earlier year are as under:
(Rs. in Lakhs)
|Particulars ||2017-18 ||2016-17 |
|Gross income ||5110.68 ||5692.28 |
|Profit before depreciation and tax ||1885.40 ||2502.03 |
|Provision for depreciation ||132.70 ||49.64 |
|Net Profit after depreciation but before tax ||1752.70 ||2452.39 |
|Provision for tax ||522.29 ||843.59 |
|Net Profit after tax ||1230.41 ||1608.80 |
|Other comprehensive income (Net of tax) ||(10.45) ||(29.84) |
|Total comprehensive income for the year ||1219.96 ||1578.96 |
|Balance of profit brought forward from previous year ||608.07 ||29.11 |
|Balance available for appropriation ||1828.03 ||1608.07 |
|Transfer to General Reserve ||- ||1000.00 |
|Add: Capital Reserve transferred to retained earnings ||10.03 ||- |
|Less : Dividend on Equity Shares for year ended 31st March 2017 ||480.00 ||- |
|Less: Tax on above dividend ||97.72 ||- |
|Surplus carried to Balance Sheet ||1260.34 ||608.07 |
2. DIVIDEND :
Your Directors recommend a dividend of Rs.10/- per share (i.e.) 100%. The same is inline with the financial strategy and policy of the Company. This dividend if approved byyou at the ensuing 36th Annual General Meeting will be paid to the Shareholderswhose names appear in the Register of Members as on the date of said Meeting.
3. MANAGEMENT DISCUSSION AND ANALYSIS:
INDUSTRY AND BUSINESS OVERVIEW AND OPERATIONAL AND FINANCIAL PERFORMANCE:
Our Company sold 2475 mln pieces of Carbon Rod
as against 2632 mln pieces which is 94% Sales of last year. The Domestic Sales Quantityand Value were 892 mln pieces and Rs. 12.99 crores respectively which works out to 85% and82% of the Sales of last year. The decrease in Domestic Sales was due to the introductionof GST for Batteries at the rate of 28% which impacted heavy drop in sale of Batteries.However it improved to some extent on revision of the GST rate at 18%.
The Export Sales Quantity and value were 1583 Mln. Pcs. and Rs.29.60 Crores(FOB basis)respectively compared to last year's quantity of 1576 Mln. Pcs. and Rs. 31.60 Crores whichworks out to 100 % by quantity and 94 % by value. As informed last year your Companycould stabilize the exports to Panasonic Group Battery Factories in Poland PeruThailand Indonesia Brazil Costa Rica China and other African customers on regularbasis. We could not get the orders from some of the African countries as planned due topolitical disturbances in those countries and also due to import of cheaper cost batteriesfrom China which resulted in low production by the Battery companies in African countries.However we could get additional export orders from Panasonic group Companies from otherregions.
During the year the Chinese Government enforced strict Adherence of Environment Ruleson the Chinese Factories. This resulted in shutting down/stopping of production of manyfactories producing the raw materials used by your company. The short supply of thesematerials resulted in steep price increase in Chinese Market. Consequently the prices ofthese materials increased steeply in the Indian market also. Further the Crude prices alsoincreased steeply leading to increase of fuel costs and other petroleum based rawmaterials used by your company. In the current Financial Year Indian Rupee appreciated byabout 4% compared to the previous year resulting in reduced realization of Exports. YourCompany reduced the impact of these increases through Inhouse Power generation using the 1MW Solar Plant erected in the end last financial year which almost met our powerrequirements. Further energy conservation activities carried out also reduced energycost.The fuel consumption in tunnel kiln was reduced by 5% through usage of in-house madelight weight bricks and installing auto fuel cut off systems in the kiln.
Further due to provision for depreciation on substantial investment on Solar plant madein March 2017 the depreciation charge for the year under review has gone up to Rs.132.70lakhs as against Rs.49.64 lakhs.
Thus inspite of all these efforts due to reduced sales and the steep increase inmaterial and fuel prices and depreciation provided the Profitability (excludingexceptional item) compared to previous year reduced by INR 700 lakhs .
OUTLOOK ON OPPORTUNITIES AND THREATS RISKS AND CONCERNS:
The Company has introduced high speed and high safety mixer machines with variablespeed drives. Trials are under progress to reduce the process time using these machines.Your company has increased the production capacity of smaller size Carbon rods in linewith the market trend and also introduced on line stacking arrangement to R03 line toreduce the manufacturing time and inventory.
Your Company is also hopeful in maintaining the Domestic Sales by maintaining thequality and timely supply. On the Export Front the Company is depending on the Batterymarket trend of various countries. Based on the present indications your Company isconfident of maintaining the current year's levels of export quantities in the comingyears and also initiating efforts for improving the same. The Directors assure that allsteps are being taken by the Company to achieve growth in the coming years in proportionto the growth of the Dry Battery Industry by giving due consideration to the adverseconditions if any in the Dry Battery Industry. There are no materially significantthreats risks or concerns to the Company.
4. SEGMENT-WISE PERFORMANCE:
The Company operates in only one Segment (i.e.) Carbon Rod as a component of Dry CellBatteries.
By value while Domestic Sales contributed 33% of Sales and Exports Sales constitutethe remaining 67%
5. FINANCIAL ARRANGEMENTS:
Your Company continues to be free from debts - both on Long Term and on Working Capitalrequirements. The surplus funds available with the Company are being invested with Banksin fixed deposits at regular intervals in line with the policy of the Company. This isreflected in increased deposits. Our Company had not accepted any Public Deposits underChapter V of the Companies Act 2013 (Act).
6. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Directors had laid down internal financial controls to be followed by the Companyand such policies and procedures are being adopted by the Company for ensuring the orderlyand efficient conduct of its
business including adherence to Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information. TheAudit Committee evaluates the internal financial control system periodically. A firm ofexperienced Chartered Accountants had carried Internal Audit throughout the year. Wheneverit is required the systems and procedures are upgraded.
7. HUMAN RESOURCES:
The relationship with Employees continues to be cordial. The Company always considerits human resources as its most valuable assets. Imparting adequate and specializedtraining to its employees is an ongoing exercise in the Company.
8. STATEMENT PURSUANT TO LISTING AGREEMENTS:
The Company's Securities are listed with BSE Ltd. The company confirms that it has paidthe Annual Listing Fees to the said stock exchange for the financial year 2017-18 in timeand there were no arrears.
9. TECHNOLOGY ABSORPTION ENERGY CONSERVATION FOREIGN EXCHANGE EARNINGS AND OUTGO:
In compliance with section 134(3) (m) of the Act read with rule 8 of the Companies(Accounts) Rules 2014 the prescribed particulars of conservation of energy foreignexchange and technology absorption including R&D have been attached as Annexureherewith.
10. CODE OF CORPORATE GOVERNANCE:
Pursuant to the Regulation 34(3) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a detailed report on Corporate Governance as updated withthe particulars of this financial year is annexed to this report as Annexure togetherwith Report of the Auditors on the compliance with the said Code.
11. EXPORT HOUSE STATUS:
The Company had obtained ONE STAR EXPORT HOUSE Certificate from Government of IndiaMinistry of Commerce Directorate General of Foreign Trade (DGFT) in recognition of goodExport performance. The Company continues to enjoy the Export House Certificate status.
Your Company has consistently emphasized and worked towards sustainable use of naturalresources. In order to promote the Environment Awareness for everybody and everywhere withan objective to create awareness and boost the PCIN brand image on a global basis yourcompany had observed the June month as "Environment month" and organized the"ECO" relay event emphasizing on Water Conservation on 23rd June2017 at the TADA Village where your factory is located. The Company had distributedT-Shirts and Caps with the slogan inscribed on ECO Activities to participants especiallystudents from TADA School. The Company actively makes effort to increase awareness amongthe students about the global warming prevention by creation and usage of green energy andenergy saving tips to sustain the environment and environmental protection.
Your Company has received an award namely "Panasonic Green Factorycertification" issued by Our Collaborators Panasonic Corporation Japan on 16thApril 2018 and also received the "Commemorative Medal" for our excellentperformance in promoting environment improvement activities.
The Company has also made substantial investment in Solar panel installation andgenerated 1.72 million units and contributed to reduce the CO2. Generation by1594 tons.
Mr. R. Senthil Kumar was re-appointed as Managing Director of the Company for a periodof one year with effect from 1st April 2018 .
Mrs.C. Jayashree was re-appointed as an Independent Women Director at the Board Meetingheld on 16th May 2018 for a period of three years with effect from 1stApril 2018 .
Information about all the Directors proposed to be appointed/re-appointed is furnishedin the Explanatory Statement under Section 102 of the Companies Act 2013 attached to theNotice of the ensuing Annual General Meeting for your consideration.
The Directors recommend that all the resolutions placed before the Members regardingthe appointment of the Directors be approved.
14. MEETINGS OF THE BOARD:
Four Board Meetings were held during the Financial year and the details of the meetingswere given in the Corporate Governance Report. The intervening gap between the Meetingswas within the period as prescribed under the Companies Act 2013
15. PERFORMANCE EVALUTION:
The Board evaluates the performance of Nonexecutive and Independent Directors everyyear. All the Non-Executive and Independent Directors are eminent personalities havingwide experience in the field of Business Industry Law and Administration. Their presenceon the Board is advantageous and fruitful in taking business decisions.
16. REMUNERATION POLICY:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management personnelKey Managerial Personnel and fixing their remuneration.
The objective and broad framework of the Remuneration Policy is to consider anddetermine the remuneration based on the fundamental principles of payment forperformance for potential and for growth. The Remuneration Policy reflects on certainguiding principles of the Company such as aligning remuneration with the longer terminterest of the Company and its Shareholders. It also ensures the effective recognition ofperformance and encourages a focus on achieving superior operational results.
The Nomination and Remuneration Committee recommends the remuneration of executiveDirectors which is approved by the Board of Directors subject to the approval ofShareholders where ever necessary. The level and composition of remuneration shall bereasonable and sufficient to attract retain and motivate the Directors and Key managerialpersonnel of the quality required to run the Company successfully.
1 7. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirements u/s 134(5) of the Companies Act 2013 with respect toDirectors' Responsibility Statement your Directors confirm that they have:
1. followed in the preparation of financial Statements the applicable AccountingStandards and given proper explanation relating to material departures if any;
2. 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 andLoss Account of the Company for that period;
3. taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Act so as to safeguard the Assets of the Companyand to prevent and detect fraud and other irregularities;
4. prepared the Annual Accounts on a Going Concern basis;
5. laid down internal financial controls in the Company that are adequate and wereoperating effectively; and
6. Devised proper systems to ensure compliance with the provisions of all applicablelaws and these are adequate and are operating effectively.
18. CORPORATE SOCIAL RESPONSIBILITY:
As part of its initiatives under "Corporate Social Responsibility (CSR) theCompany has undertaken projects in the areas of Education Health Care Drinking WaterRural Development and Sanitation. These projects are largely in accordance with Section135 read with Schedule VII of the Companies Act 2013 (Act) the Company's initiativestowards Corporate Social Responsibility have been suitably focused. The brief outline ofthe CSR Policy and the CSR initiatives undertaken by the Company during the financial yearunder review are provided in the Annual Report on Corporate Social ResponsibilityActivities 2017-18 forming part of this report. The Policy adopted by the Company can beviewed at website of the Company.(www.panasoniccarbon.co.in )
19. GREEN INITIATIVE:
During the year 2017-18 we started a sustainability initiative with the aim of goinggreen and minimizing our impact on the environment. Like the previous year this year toowe are publishing only the statutory disclosures in the print version of the AnnualReport. Additional information is available on our website www.panasoniccarbon.co.in
Electronic copies of the Annual Report 2017-18 and Notice of the 36th AGMare sent to all members whose email addresses are registered with the Company / DepositoryParticipant(s). For members who have not registered their email addresses physical copiesof the Annual Report 2017-18 and the Notice of the 36th Annual General Meetingare sent in the permitted mode. Members requiring physical copies can send a request tothe Company Secretary Panasonic Carbon India Co. Limited.
The Company is providing remote E voting facility to all members to enable them to casttheir votes electronically on all resolutions set forth in the Notice. This is pursuant tosection 108 of the Companies Act 2013 and Rule 20 of the Companies (Management andAdministration) Rules 2014. The instructions for remote E voting are provided in theNotice.
20. EXTRACT OF ANNUAL RETURN:
In compliance with Section 134 (3)(a) of the Act an extract of the Annual Return inthe prescribed format is appended to this report as Annexure- 4.
21. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 (1) of the Companies Act 2013 and TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s. Rabi Narayan & Associates a firm of Company Secretaries inPractice to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportis annexed to this report as Annexure - 5.
22. PARTICULARS OF EMPLOYEES:
The information required pursuant to section 197(12) read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 andCompanies (Particulars of Employees) Rules 1975 in respect of employees of the companyand Directors is furnished in Annexure - 6.
23. DISCLOSURE UNDER THE SEXUAL HARASMENT OF WOMAN AT WORKPLACE (PREVENTIONPROHIBITION AND REDESSAL) ACT 2013
The Company has in place an anti Sexual Harassment Policy in line with the requirementof the Prevention of Sexual Harassment of Women at Workplace (Prohibition Prevention andRedressal) Act 2013. Internal complaints committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary and trainees) are covered under this policy.
The Company has not received any complaint of Sexual harassment during the year 2017-18under review.
24. RELATED PARTY TRANSACTIONS:
All related party transactions or arrangements were entered in to by the company duringthe financial year were on an arm's length basis and were in the ordinary course ofbusiness. In Compliance with the provisions of the Act and Regulation 23(2) of the SEBIRegulations 2015 all related party transactions had been placed before the AuditCommittee for prior approval.
Pursuant to Section 134(3) of the Act read with Rule 8(2) of the Companies (Accounts)Rules 2014 information pertaining to related parties are given in Form AOC-2 as Annexure7 of the report.
As per Regulation 34(3) of the SEBI Regulations 2015 the related party disclosure hasbeen made part of this Annual Report.
As per the explanation 23(1) a transaction with a related party shall be considered"Material" if the transaction(s) to be entered into individually or takentogether with previous transactions during a financial year exceeds ten percent of theannual consolidated turnover of the Company as per the last audited financial statement ofthe Company.
The Company sells Carbon rods to Battery manufacturers which are subsidiaries to ParentCompany for the past so many years. All such transactions were on an arm's length basisand in the ordinary course of business.
As per requirements of Regulation 23 (4) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 [SEBI Regulations 2015) and the relevant provisions ofthe Companies Act 2013 read with related applicable rules and regulations approval ofthe Shareholders for related party transactions which are considered as"Material" and entered into by the company in the ordinary course of businessand also on arm's length basis for a sum not exceeding Rs.100 crores (Rupees HundredCrores only) per annum for the financial year 2016-17 and each subsequent financial yeartill the termination of the said arrangement or any modification in the terms thereof hasbeen obtained in the Annual General Meeting held on 29th July 2016.
25. WHISTLE BLOWER POLICY/VIGIL MECHANISIM
In compliance with provisions of Section 177 of the Act read with SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board of Directors of theCompany has constituted Vigil Mechanism/Whistle Blower Policy for Directors employees andvendors of the Company. The Whistle Blower Policy enables the Directors employees andvendors to report concerns about unethical behavior actual or suspected fraud orviolation of the Code of Conduct or ethics Policy thereby ensuring that the activities ofthe Company are conducted in a fair and transparent manner. The said policy is availableat the Company's website at www.panasoniccarbon.co.in
We further affirm that no employee has been denied access to the audit committee duringthe year 201718.
26. STATUTORY AUDITORS:
M/s.BSR & Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022)allotted by the Institute of Chartered Accountants of India (ICAI) were appointed as theStatutory Auditors of the Company at the 35th Annual General Meeting of theCompany held on 8th August 2017 to hold office for a term of
five years till the conclusion of 40th Annual General Meeting of theCompany. The Board was authorized to fix such a remuneration as may be recommended by theAudit Committee in consultation with the Auditors.
The said appointment was subject to ratification by the Members at every interveningAnnual General Meeting held after the said 35th Annual General Meeting of theCompany. By The Companies (Amendment) Act 2017 (vide notification dated 3rdJanuary 2018) which has already come into force the requirement relating to suchratification of appointment every year has been omitted.
Accordingly the existing Statutory Auditors viz M/s.BSR & Co. LLP CharteredAccountants will continue to be the Statutory Auditors of the Company till the conclusionof 40th Annual General Meeting of the Company .
27. COST AUDITORS
In terms of Section 148 of the Companies Act 2013 read with Companies (Cost records andaudits) Rules 2014 as amended Carbon Rod products manufactured by the Company andfalling under the specified Central Excise Tariff Act heading are not covered under theambit of mandatory cost audit .
28. INDEPENDENT DIRECTORS:
The Company has received necessary declaration from each Independent Directors of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).
Whenever new Non-executive and Independent Directors are inducted in the Board they areintroduced to our Company's culture through appropriate orientation session and they arealso introduced to our organization structure our business constitution boardprocedures our major risks and management strategy. The appointment letters ofIndependent Directors has been placed on the Company's website.
The Independent Directors of the Company had met during the year on 31stJanuary 2018 to review the performance of Non- Independent Directors Chairperson of theCompany and the Board as a whole. They had accessed the quality quantity and timelinessof flow of information between the Company management and the Board.
The term of office of Mrs.C. Jayashree the Independent Women Director expired by 31stMarch
2018. At the Board Meeting held on 31st January 2018 she has beenre-appointed subject to the approval of Shareholders for a term up to 31stMarch 2021. The subject of her re-appointment is now placed before you for your approvalunder item no.4
29. RISK MANAGEMENT:
The Board of Directors had constituted Risk Management Committee to identify elementsof risk in different areas of operations and to develop policy for actions associated tomitigate the risks. The Committee on timely basis informed members of Board of Directorsabout risk assessment and minimization procedures and in the opinion of the Committeethere was no risk that may threaten the existence of the Company. The details of RiskManagement Committee are included in the Corporate Governance Report.
30. DIRECTORS AND KEY MANANGERIAL PERSONNEL:
Pursuant to the provisions of Section 203 of the Companies Act 2013 Mr. R. SenthilKumar Managing Director & CEO Mr. Vinayagam Sume Chief Financial Officer and Ms.PMaheswari Company Secretary of the Company are the Whole Time Key Managerial Personnel(KMP) of the Company as on date of this report. The remuneration and other details of KMPfor the FY 2017-18 are provided in Extract of the Annual Return which forms part of thisDirectors' report.
31. OTHER DISCLOSURES:
No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year of the Company to which the financialstatements relate and the date of the report.
There was no change in the nature of business during FY 2017-18.
The Company does not have any Subsidiary Joint ventures or associates.
No significant material orders were passed by the regulators or court during thefinancial year which would have impacted the going concern status of the Company'soperation in the future.
Your Directors wish to record their sincere appreciation for the support co-operationguidance and assistance provided by the Foreign Collaborators M/s. Panasonic CorporationJapan. Your Directors thank the valued Customers for their patronage the Suppliers fortheir timely and quality supply the Shareholders for the confidence reposed and theBankers State and Central Governments for extending their invaluable support.
Your Directors place on record their appreciation of the dedicated services of theemployees of the Company at all levels for the growth of the Company.
Your Directors are especially thankful to the esteemed Shareholders for their continuedencouragement and support.
By Order of the Board of Directors For Panasonic Carbon India Co. Limited
|V.R. GUPTE ||R. SENTHIL KUMAR |
|DIRECTOR ||MANAGING DIRECTOR |
|Place : Chennai || |
|Date : 16th May 2018 || |