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Salzer Electronics Ltd.

BSE: 517059 Sector: Engineering
NSE: SALZERELEC ISIN Code: INE457F01013
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VOLUME 1028
52-Week high 263.50
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P/E 12.47
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OPEN 174.00
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VOLUME 1028
52-Week high 263.50
52-Week low 138.30
P/E 12.47
Mkt Cap.(Rs cr) 280
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Salzer Electronics Ltd. (SALZERELEC) - Director Report

Company director report

To

Dear Shareholders

It is indeed our great pleasure in presenting this Directors' Report along withAnnexures forming part of Thirty Sixth Annual Report of your Company for the year endedMarch 312021.

The Information furnished hereunder is in line with Section 134 of the Companies Act2013 and applicable Provisions contained in the SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015.

PERFORMANCE REVIEW:-

1. FINANCIAL SUMMARY OF THE COMPANY

(t in Lakhs)

Particulars

Standalone

Consolidated

For the year Ended March 312021 For the year Ended March 312020 For the year Ended March 312021 For the year Ended March 312020
I Revenue from operations 60561.96 56694.56 62573.60 58435.34
II Other Income 199.16 88.75 219.85 128.82
III Total Revenue (I + II) 60761.12 56783.31 62793.45 58564.16
IV Expenses
a Cost of materials consumed 48277.51 43019.54 49343.97 43691.44
b Purchase of stock in trade - - - -
c Changes in inventories of finished goods work-in-progress and stock-in-trade -1238.29 -1038.47 -1231.24 -921.99
d Employee benefit expenses 2433.87 2639.87 2811.50 2984.54
e Finance Cost 2127.42 2116.68 2134.48 2122.14
f Depreciation and amortisation expense 1560.55 1443.96 1601.11 1475.51
g Other expenses 4909.77 5554.68 5347.80 6003.27
h Total Expenses 58070.83 53736.27 60007.62 55354.91
V Profit before exceptional and extraordinary items and tax (lll-IV) 2690.29 3047.04 2785.83 3209.24
VI Exceptional Items - - 19.46 -19.46
VII Prior Period expenses - - -4.37 -
VIII Profit before tax (V-VDS. extraordinary items 2690.29 3047.04 2800.92 3189.78
IX Extraordinary items - - - -
X Profit before tax (VII-VIII) 2690.29 3047.04 2800.92 3189.78
XI Tax expense: 622.94 408.39 663.02 448.46
XII Profit for the period - After Tax(IX-X) 2067.35 2638.66 2137.90 2741.32
XIII Earnings per equity share:
(1) Basic (in Rs.) 12.93 16.51 12.93 16.96
(2) Diluted (in Rs.) 12.93 16.51 12.93 16.96
XIV Reserves and Surplus 31530.38 29339.70 33647.68 31393.67

2. A LOOK INTO THE STATE OF AFFAIRS

The Financial year 2020-21 affected by unprecedented challenges posed by COVID-19pandemic that adversely affected the business operations not only at the national but atthe international level also which put the lives of the people at great risk. During theyear every Country was required to reorient its programs to contain the spread of thevirus and one of such measures was lockdown pronounced by the Government which led to thesuspension of business operations for some time and caused disruption in the supply chain.Even now the impact still continues across the country by way of second wave. Thissituation led us to severely restrict our manufacturing operations in all the unitsshutting down of offices and workplaces resulting in a financial stiffness. In thesetrying times your Company has shown tremendous resilience and has come out with arecognisable performance in the financial year that has just concluded.

In the yean 2020-21 your Company on a standalone basis has earned revenue ofRs..605.62 Crs and registered a growth of around 7% over the corresponding period of theyear - 2019-20. The Wires and Cables division was the major contributor to the growth inthe year.

However the profitability of the Company has significantly suffered in the year due toincrease in Prices of raw materials such as copper plastics steel and every othermaterial throughout the year. Considering the likely impact of the competition in themarket your Company was able to pass on the price increase only to a limited extent insome of the product lines and consequently resulting in the margins getting reduced to theextent.

Your company's export markets showed viable signs of a strong recovery with substantialdemand for our products coming in from developed countries. The Contribution from exportswas 20% in FY21 as against 17.17% in FY20 mainly driven by higher exports to the US andother regions. Exports grew at 24.56% in FY21.

Your Company expects that the near-term market situation could still be somewhatunsettled given the on-going second wave of the pandemic and the continuance partiallockdowns in various parts of India. But based on demand recovery and positive indicationsfrom various OEMs and customers your Company is quite optimistic about a profitablegrowth in the current year. Your company is well positioned to cater to any demand acrossthe markets and is poised to take up any opportunities coming its way.

The domestic business and retail market started moving up and slowly catching up thePre-Covid -19 level that reflects in Company's Switch Gear and Building segments businessbeing on a recovery path from the fourth quarter. Your Company is hopeful that in thecurrent financial year a demand for its products would continue to gain momentum despitesome headwinds.

3. Standalone financial result

For reasons as stated above the business in the first quarter of the FY21 wasadversely impacted the revenues that have a big impact on the EBITDA and PAT for the fullyear. Hence the results may not be directly comparable with the previous correspondingyear.

The Company's standalone revenue stood at Rs..605.6 crores up by 6.8% over that of theprevious year. A strong demand for the Wire Harness products Three Phase TransformersWires and Cables business altogether in the later part of the year offset the impact ofCOVID-19 on the first quarter.

EBITDA for FY21 stood at Rs..61.8 crores compared to Rs..65.2 crores in FY20 a declineof 5.2% mainly due to increase in raw material prices. Similarly EBITDA margin in FY21stood at 10.2% as against 11.5% in the previous corresponding period- squeezed by the risein raw material prices and also higher contribution from the low yielding Wires and Cablesbusiness.

Profit After Tax at Rs.. 20.67 crore in FY21 as against Rs.. 26.39 crore in FY20 with ade-growth rate of 22% which was attributable to the substantial reversal of deferred taxamount of t.A crores in FY20 due to adoption of New Tax Regime under Section 115BAA of theIncome Tax 1961 and consequent reduction in the Tax Rates.

Your Company's focus will continue to remain on adding new high margin products reachout to different markets with customized products and solutions in order to add newclients to grow our business and constantly looking for new opportunities for technicalassociations to strengthen our base for offering of products - existing and new.

Your Company would always strive to focus itself on adding new high margin products toits Portfolio reach out to new geographies and offer Total Solutions to its customersbesides strengthening the current revenue drivers improving Return on Capital Employedworking capital cycle as well as constantly looking for the new opportunities fortechnical association in the emerging areas for developing components parts etc. andcharging stations forthe Electric Vehicles.

a. Industrial switch gear Division

The industrial switch gear business is one the largest contributors to overall revenuesof your Company. This division comprises of legacy products like Cam Operated RotarySwitches and Load Break Switches apart from Toraidal Transformers Relays Wire HarnessThree Phase ?ry Type Transformers Contactors Over Load relays & MCB's etc.. Duringthe year this division made a 41% contribution to the total revenues of the Company.

The Company's new Wire Harness product has achieved a consistent growth rate ever sinceit was introduced in the market- mainly driven by the business from various existing OEMs.Wire Harness business grew at 122% year-on-year in FY21. Industrial Switch Gear division'sEBITDA margin percentage stood at 14.6% for FY'21 as against 15.4% in FY20. The Decline ismainly due to increase in Raw Material prices.

b. Wires and cables Division

There was an overall increase in demand across all sectors for Wires and Cables. Priceincrease coupled with a significant growth in volumes led to a 63% year-on-year increasefor this division during Q4 of FY21. For Full year in FY21 the division had a growth of20%. This division's EBITDA stood at 7.7% for the year FY 21 and contributed 53% to theoverall revenue of the Company.

c. Building Products Division

This is the only segment where your Company has been operating on a B2C basis. ThePortfolio under this Segment involves Distribution Boards Modular Switches &Speciality Switches Movement Sensors Remote Switches Single Phase Motors SwitchesHouse Wires MCB's etc.. The building segment product division contributed around 5% toyour Company's revenues in 2020-21.

The Consumer sentiment in the real estate market was relatively muted this year.However the Company is seeing some signs of gradual recovery now which could help toincrease the contribution from this segment to the overall revenues in the current year.

d. Energy management Division

The energy management segment is an order driven business. This is a new technology-oriented business developed by your Company's in-house RS.D team. Energy Managementdivision during the full year FY21 has contributed only 1% to the total revenues of theCompany. There are no ongoing projects as of now and hence no revenues from this Divisionfor Q3 and Q4 in FY 21.

e. Pandemic and its impact on the affairs of the Company

As already indicated earlier Covid-19 caused a huge impact both on the lives andlivelihood of the people across the globe and posed unprecedented challenges for survivalright from March 2020. Owing to this business activities were severally hampered thesupply chain was heavily disrupted particularly during the first quarter of the financialyear 2020-21 due to lockdowns and severe restrictions in the people movement.

As directed by the Government authorities your Company suspended its Operationalactivities in all its Units in the first one and half months of the year and thereafterfor another one and half months we were operating at 50% Capacity. During this periodthe sales took a huge hit which cast its shadow on the full year's financial results.Subsequent to the Lock downs all Units resumed operations in strict compliance with theStandard Operating Procedures and other Guidelines issued by the Government Authoritiesfrom time to time we took the utmost care in protecting well being of the employees at alllevels.

In its efforts to be a responsible employer the company had reacted out to itsemployees with timely and periodical assistance - attending to the medical needs andrecognizing their predicaments conducted Vaccination Drives across all its Units in themonths of April and May 2021 and the employees were administrated COVID Vaccine. Theemployees are strictly advised to follow all safety procedures during these pandemictimes. Further depending on the exigencies of the situation the company is extending itshelp to its employees in a significant measure.

The Company as mark of its support to the Government efforts in saving the lives ofPeople from deadly Corona Virus contributed Rs..25 Lakhs to Chief Minister's PublicRelief Fund (CMPRF) during May 2021.

4. CONSOLIDATED FINANCIAL RESULT

il Your company's consolidated revenue for the financial year 2020-21 was Rs.625.73crores which is not comparable with the previous year containing the results only for theperiod between date of acquisition of controlling stake in Kaycee in July 2019 and March31 2020. For your information we would like to state that the affairs of the Subsidiarysituated in the state of Maharastra were severely affected by a continuous period oflockdowns. As the result the Subsidiary could only earn revenue of Rs..23 Crores in theyear and its profitability and rate of return on capital employed came down considerably.However the Subsidiary was able to maintain its dividend distribution pattern for theyear and

ill Further your Company performed a detailed assessment of its liquidity position andthe recoverability of the assets as on the balance sheet date and concluded that based onthe indicators of future economic conditions the carrying value of the assets would berecovered. Your Company believes that it had fully considered the possible impact of allthe known events arising from COVID-19 pandemic in its assessment. However the impactassessment of COVID-19 is a continuing process. Your Directors will continue to monitorany material changes to future economic conditions.

5. DIVIDEND

Your Board of Directors at their meeting held on June 15 2021 considered the proposalof Dividend for the financial year ended March 31 2021 and recommended a Dividend at therate of 16% i.e Rs..1.60 pen equity share of Rs..10/- each for the financial year 2020-21which will involve a cash outgo of Rs..255.72 Lakhs.

The above recommended dividend if approved by you at the Annual General Meeting willbe payable to all eligible shareholders whose name appears on the relevant date withinthe stipulated time as permitted under the Provisions of the Companies Act 2013.

NOTE:- As announced in the Union Budget in February 2020 the Dividend is now taxablein the hands of the recipient and the Company is required to deduct the TDS from theDividend payment to the shareholders exceeding Rs..5000/- at the rate of 10% and 20% forNon PAN Shareholders.

B. CAPITAL STRUCTURE AND OTHER RELATED ISSUES

Amendment to the Memorandum and Articles of Association

During the year under review your Company has not amended any Provisions in theMemorandum and Articles of Association.

7. CORPORATE GOVERNANCE

As required under Schedule VO of SEBI (Listing Obligations and Disclosure Requirements)Regulations a separate section on corporate governance practices followed by the Companytogether with a certificate from the Company's Auditors confirming compliance are attachedto this report as Annex: 1

8. RESERVES

Your Board of Directors as a prudent policy in the absence of specific provisions inthe Companies Act 2013 and Rules made there-under have transferred Rs..50.00 Lakhs to theGeneral Reserve Account. Now your Company has General Reserve of Rs.. 2008.46 Lakhs asat March 312021.

9. LIQUIDITY

a) The Company has adequate cash and cash equivalents in its Books as at March 31 2021taking care of all current liabilities comfortably.

bl Further your Company performed a detailed assessment of its liquidity position andthe recoverability of the assets as on the balance sheet date and concluded that based onthe indicators of future economic conditions the carrying value of the assets would berecovered. Your Company believes that it had fully considered the possible impact of allthe known events arising from COVID-19 pandemic in its assessment. However the impactassessment of COVID-19 is a continuing process. Your Directors will continue to monitorany material changes to future economic conditions.

10. CHANGE IN THE NATURE OF BUSINESS IF ANY

During the year the nature of the business of your Company Manufacturing of ElectricalInstallation Products-has not changed.

11. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYWHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THEFINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

Though there was a localised Lockdown imposed by the State Government during the monthof May and June 2021 to contain the Covid -19 in its second wave the operations of theCompany have not been significantly impacted and affected the financial position duringthe period between the end of the financial year of the Company to which the Financialstatements relate and the date of this report.

12. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

No orders were passed by any Court in India or by any Regulator or by Tribunalaffecting the going concern status and Company's operations in future during the yearunder review and also upto the date of this report.

13. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS.

The Company has put in place adequate internal financial controls over financialreporting. These are reviewed periodically and made part of work instructions or processesin the Company. The Company continuously tries to automate these controls to increase itsreliability.

The Company has adopted accounting policies which are in line with the IndianAccounting Standards notified under Section 133 of the Companies Act 2013 read togetherwith the Companies (Indian Accounting Standards) Rules 2015. Changes in policies if anyare approved by the Audit Committee in consultation with the Statutory Auditors.

The Company has identified inherent reporting risks for each major element in thefinancial statements and put in place controls to mitigate the same. These risks and themitigation controls are reviewed periodically in the light of changes in business ITsystems regulations and internal policies. Corporate accounts function is involved indesigning large process changes as well as validating changes to IT systems that have abearing on the books of account.

The Company periodically conducts a physical verification of inventory fixed assetsand cash on hand and matches them with the books of accounts. No discrepancies were foundduring the year under review.

The Company in preparing its financial statements makes judgements and estimatesbased on sound policies and uses external agencies to verify/validate them as and whenneeded and appropriate. The basis of such judgements and estimates are also approved bythe Audit Committee of the Board of Directors of the Company in consultation with theStatutory Auditors of the Company. The company has a well-run internal audit system mannedby competent external agencies. The system periodically reports to the Audit Committee anysignificant changes or non-confirmation to procedures.

The Company has a Code of Conduct applicable to all its employees as well as Board ofDirectors along with a Whistle Blowing Policy Mechanism.

14. DETAILS OF SUBSIDIARY/JOINT VENTURES / ASSOCIATE COMPANIES

Your Company has one Subsidiary Company - M/s.Kaycee Industries Ltd Mumbai which isengaged in the business of manufacturing of electrical installation products.

THE FINANCIAL PERFORMANCE OF SUBSIDIARY COMPANY FOLLOWS AS UNDER

Particulars 31st March 2021 31st March 2020
1 Revenue from operations 2271.62 2342.68
2 Operating Expenses
a Cost of materials consumed 1326.42 1169.37
b Changes in inventories of finished goods work-in-progress 7.05 (79.67)
c Employee Benefit Expenses 377.64 471.45
d Other Expenses 438.03 540.03
3 Total Operating Expenses (a + b+c + d+e) 2149.14 2101.18
4 Operating Profit (1-3) 122.48 241.50
5 Other Income 34.95 17.65
B Finance cost 7.06 6.75
7 Depreciation and Amortisation Expenses 40.57 41.99
8 Profit before Tax (4+5-6-71 109.80 210.41
9 Provision - Covid 19 for Inventory and Receivable (15.09) 19.46
10 Tax Expenses 40.08 52.95
11 Profit after Tax (8-9-10) 84.81 138.00
12 Other Comprehensive Income (0.83) (8.13)
13 Total Comprehensive Income (11+ 12) 83.98 129.87
14 Share Capital 63.47 63.47
15 Reserves and Surplus 1421.37 1356.44
16 Net Worth of the Company 1421.37 1419.91
17 Book Value of the shares (in Rs.) 2237.14 2237.14
18 Earnings per share (in Rs.) 133.62 217.43

15. DEPOSITS

During the Financial year under the review your Company has not accepted any depositswithin the meaning of Section 73 of the Companies Act 2013 read with Companies (Acceptanceof Deposits) Rules 2014.

1B. STATUTORY AUDITORS

In terms of Proviso to Section 139 (1) of the Companies Act 2013 and with the approvalof the shareholders at their meeting held on August 10 2019 M/s. JDS AssociatesChartered Accountants have been appointed as the Statutory Auditors of the Company for aterm of Five years immediately after conclusion of the 34th Annual GeneralMeeting till the conclusion of the 39th Annual General Meeting for thefinancial year 2023-24.

17. INVESTMENTSMADEBYTHECOMPANY

The Company has adequate measures to review the significant impact by way of anyincrease/ decrease of the fair value of the investments and accordingly being dealt within the financial statements of the Company. During the reporting period there was nosignificant variance in the fair value of the Investments.

18. AUDITORS'REPORT

The Independent Audit Report along with the Annexure as prescribed under Companies(Auditors' Report) Order 2015 as issued by the Auditors' are appended in this AnnualReport. The Auditors have not made any qualification / adverse remarks based on theauditing on the accounts and transactions of the year.

19. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (121 OF SECTION143 OF THE COMPANIES ACT 2013

There were no instances of fraud reported by the Auditors to the Central Government orto the Audit Committee of the Company as indicated under the provisions of Section 143(12) of the Companies Act 2013.

20. MAINTENANCE OF COST RECORDS UNDER SUB-SECTION (11 OF SECTION 148 OF THE COMPANIESACT 2013

Pursuant to the provisions of Section 148 (1) of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 the Company was required to maintain costrecords. Accordingly the Company has duly made and maintained the Cost Records asmandated by the Central Government

21. EXTRACT OF THE ANNUAL RETURN

The Annual Return in Form No. MGT 7 forms part of the Board's report given in thecompany's website www.salzergroup.net in compliance with Rule 12(1) of the Companies(Management and Administration) Rules 2014.

22. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

The details of conservation of energy technology absorption foreign exchange earningsand outgo given as Annex: 2 herewith separately.

23. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has constituted a CSR Committee of the Board of Directors and has adopted aCSR Policy. The same is posted in the Company's website www.salzergroup.net A report inthe prescribed format detailing the CSR expenditure for the year 2020-21 is attachedherewith as Annex: 3 and forms a part of this report

The Chief Financial Officer has certified that the funds disbursed have been utilizedfor the purpose and in the manner approved by the Board for the FY2020-2021

24. DIRECTORS:

A) Changes in Directors and Key Managerial Personnel

During the year under the review the following changes took place in the Board'sComposition

(i) Mr. L.Venkatapathy Independent and NonExecutive Director retired from the Boardon September 12 2020 following the completion of his second tenure of five years.

(ii) Mr.Otto Eggimann Independent and Non-Executive Director retired from the Boardon May 24 2020 after completion of his term and

(iii) Mr. D.Vishnu Rangaswamy who was appointed on the Board as an additional director(designated as Non-Executive and Non Independent Director) on February OB 2020 wasregularized by the shareholders at their 35th Annual General Meeting inaccordance with Section 160 of the Companies Act 2013.

Presently your Board is having 11 members comprising of Four Executive Directors TwoNonExecutive and Non Independent Directors and Five Independent Directors

Bl Retirement by Rotations

Mr.P.Ramachandran and Mr. D.Vishnu Rangaswamy Directors of the company who are theretiring Directors in the ensuing 36th Annual General Meeting offer themselvesto get reappointed in pursuance of Section 152 of the Companies Act 2013 read with Article178 of the Articles of Association of the Company.

Cl Declaration by the Independent Directors

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation25 of SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015. The Boardhas optimum composition of the Independent and Non Independent Directors.

Dl Formal Annual Evaluation

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates thatthe Board shall monitor and review the Board evaluation framework. The framework includesthe evaluation of directors on various parameters such as: -

• Board dynamics and relationships

• Information flows

• Decision-making.

• Relationship with stakeholders

• Company performance and strategy

• Tracking Board and committees' effectiveness Peer evaluation

The Companies Act 2013 states that a formal annual evaluation needs to be made by theBoard of its own performance and that of its committees and individual directors. ScheduleIV of the Companies Act 2013 states that the performance evaluation of independentdirectors shall be done by the entire Board of Directors excluding the director beingevaluated. The evaluation of all the directors and the Board as a whole was conductedbased on the criteria and framework adopted by the Board. The evaluation process has beenexplained in the corporate governance report.

El Committees of the Board.

Currently the Board has five committees: the Audit Committee the Nomination andRemuneration Committee the Corporate Social Responsibility Committee StakeholdersRelationship Committee and the Risk Management Committee. A detailed note on thecomposition of the Board and its committees is provided in the corporate governance reportsection of this Annual Report.

25. LISTING REGULATIONS

Your Company has duly complied with various Regulations as prescribed under SEBI(Listing obligations and Disclosures) Regulations 2015.

26. MEETINGS

The details in respect of the Meeting of the Board of Directors Audit Committee andall other sub Committee are given in the Corporate Governance Report.

27. WHISTLE BLOWING POLICY MECHANISM

A whistle blowing policy mechanism has been in place providing opportunity toDirectors/Employees

> To access in good faith to the Audit Committee in case they observe unethical andimproper practices or any other wrongful conduct in the Company

> to prohibit managerial personnel from taking any adverse personnel action againstthose employees and

> to provide necessary safeguards for protection of employees from reprisals orvictimization

This policy applies to all directors and employees of the Company to report concernsabout unethical behaviour actual or suspected fraud or violation of the company's code ofconduct or ethics policy

To report such incidents practices etc. the concerned Employees / Directors cancontact / report to

Office of the Audit Committee (Compliance Officer)

E-Mail: baskarasubramanian@salzergroup.com Contact No. 0422 4233614

Office of the Managing Director

E-Mail: rd@salzergroup.com Contact No.0422-4233612

Office of Joint Managing Director and Chief Financial Officer

E-Mail: rajesh@salzergroup.com Contact No.0422-4233610

During the year under review no complaint was received by the above officers underwhistle blowing policy mechanism with respect to the performance of the company and otherrelated matters.

28. PREVENTION OF SEXUAL HARASSMENT AT THE WORK PLACE

The Company has constituted an Internal Committee CIC) in all the Units to consider andresolve all sexual harassment complaints reported by women. The constitution of the IC isas per the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. All employees (permanent contractual temporary trainees) are covered underthis policy.

During the year under review the Committee has not received any complaint.

29. NOMINATION AND REMUNERATION COMMITTEE

The purpose of the committee is to screen and to review individuals qualified to serveas executive directors non-executive directors and independent directors consistent withpolicies approved by the Board and to recommend for approval by the Board nominees forelection at the AGM.

The committee also makes recommendations to the Board on candidates for

(i) nomination for election or re-election by the shareholders; and

(ii) any Board vacancies that are to be filled.

It also reviews and discusses all matters pertaining to candidates and evaluates thecandidates. The Nomination and Remuneration Committee coordinates and oversees the annualselfevaluation of the Board and of individual directors.

The nomination and remuneration committee's charterand policy are available onourwebsite.

30. POLICY ON THE DIRECTORS APPOINTMENT AND REMUNERATION

In accordance with the Regulation 17 of SEBI (Listing Obligations and DisclosuresRequirements) Regulation 2015 read with Salzer's Policy for Nomination and Remunerationthe Board is having an optimum combination of the executive non-executive and independentdirectors. As of March 31 2021 the Board has eleven members four of whom are ExecutiveDirectors; two are Non Executive and Non-Independent member and five IndependentDirectors. One non-executive and non independent member of the Board is a woman. Thepolicy of the Company on directors' appointment and remuneration including the criteriafor determining qualifications positive attributes independence of a director and othermatters as required under sub-section (3) of Section 178 of the Companies Act 2013 isavailable on its website.

We affirm that the remuneration paid to the directors is as per the terms laid out inthe Nomination and Remuneration Policy of the Company.

31. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the year under review

• During the year the Company has not granted/taken loans unsecured from or toCompanies firms or other parties listed in the Register maintained under section 189 ofthe Companies Act 2013 ('the Act') the terms and conditions are not prima facieprejudicial to the interest of the Company during the course of its business and

• The investments in other bodies corporate are well within the limit asprescribed under Section 186 of the Companies 2013.

32. RELATED PARTY TRANSACTIONS

All the transactions of the Company with related parties are at arms' length and havetaken place in the ordinary course of business. None of the transactions with relatedparties is a material transaction. Since there are no transactions that are not in arms'length and material in nature disclosure under AOC 2 does not arise. A copy of theRelated Party Transaction Policy is available at the Company's website www.salzergroup.net

33. INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with therequirements of the SEBI (Prohibition of Insider Trading) Regulation 2015. The InsiderTrading Policy of the Company lays down guidelines and procedures to be followed anddisclosures to be made while dealing with shares of the Company as well as theconsequences of violation. The policy has been formulated to regulate monitor and ensurereporting of deals by employees and to maintain the highest ethical standards of dealingin Company securities. The Insider Trading Policy of the Company covering code ofpractices and procedures for fair disclosure of unpublished price sensitive informationand code of conduct for the prevention of insider trading is available on our websitewww.salzergroup.net

34. MANAGERIAL REMUNERATION

A) The Company has not employed any individual whose remuneration falls within thepurview of the limits prescribed under the provisions of Section 197 of the Companies Act2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 i.e

> No employee of the Company throughout the Financial year was in receipt ofremuneration for that year which in the aggregate for Rupees one Crore and two Lakhsrupees and

> No employee of the Company for a part of the Financial year was in receipt ofremuneration for any part of year which in the aggregate for Rupees Eight Lakhs andFifty Thousand per month

B) The Company does not have such director who is in receipt of any commission from thecompany and who is a Managing Director or Whole-time Director of the Company receiving anyremuneration or commission from any Holding Company or Subsidiary Company of such Company.

Details pursuant to section 197(12) of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 form part of thisReport and are annexed herewith as Annex: 4.

35. SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Companies Act

2013 the Board of Directors at their meeting held on June 182020 appointed Mr. GVasudevan B.Com LLB & FCS M/s.G V Associates Company Secretaries (Certificate ofPractice No. 6522) as the Secretarial Auditor to conduct an audit of the secretarialrecords for the financial year 2020-21 in terms of Section 204 of the Companies Act 2013read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

The Secretarial Audit Report for the financial year ended 31st March 2021 is set outin the Annex: 5 to this report.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark except the following one

Observation in the Report

The Annual Report 2020-21 contains only the Managing Director certification instead ofboth Chief Executive Officer and Chief Financial Officer

Management comments

Since the Company does not have any Chief Executive Officer the Managing Director hasbeen certifying Compliance Report as a person virtually acting as the Chief ExecutiveOfficer of the Company and

?ue to some typo error the certification of the Chief Financial Officer was left outinadvertently in the Report. This is purely a printing error and does not bear anysignificance on the Compliance.

36. COMPLIANCE ON SECRETARIAL STANDARDS

The Company complies with all applicable mandatory secretarial standards issued by theInstitute of Company Secretaries of India.

37. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 ("the IEPFRules") all unpaid or unclaimed dividends are required to be transferred by theCompany to the IEPF established by the Government of India after the completion of sevenyears. Further according to the Rules the shares on which dividend has not been paid orclaimed by the shareholders for seven consecutive years or more shall also be transferredto the demat account of the IEPF Authority. During the year the Company has transferredthe unclaimed and unpaid dividends of Rs..349176/-. Further 8988 corresponding shareson which dividends were unclaimed for seven consecutive years were transferred as per therequirements of the IEPF rules. The details are available on our website atwww.salzergroup.net

38. RISK MANAGEMENT POLICY

Risk management is attempting to identify and manage threats that could severely impactor bring down the organization. Generally this involves reviewing operations of theorganization identifying potential threats to the firm and the likelihood of theiroccurrence and then taking appropriate actions to address the most likely threats. Inorder to tackle such risks emanating during the course of business operation the Board ofDirectors constituted Risk Management Committee with an objective of identifying thepotential threats that are likely to impact the growth of the organization and evolvesuitable measure strategically to mitigate such identified Risks.

Accordingly the operating management review the risk profile which has got impact onthe performance of the company in accordance with the policy of the company on RiskManagement and also in compliance with the relevant regulations thereof on a periodicalbasis.

39. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

In terms of the provisions of Regulation 34 of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 theManagement's discussion and analysis is set out in this Annual Report as Annex: 6

40. COST AUDITOR

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Directors on the recommendation of theAudit Committee and subject to the approval of the Members have appointed CMAMr.A.R.Ramasubramania Raja Practicing Cost and Management Accountant as the Cost Auditorof the Company for the Financial Year 2021-22 to conduct the audit on the Maintenance ofCost Records of the Company and submit the report to the Central Government with the dueapproval of the Board of Directors within the stipulated time.

41. POLICIES OF THE COMPANY

The Company is committed to a good corporate governance and has consistently maintainedits organizational culture as a remarkable confluence of high standards of professionalismand building shareholder equity with principles of fairness integrity and ethics.

The Board of Directors of the Company have from time to time framed and approvedvarious Policies as required by the Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations. These Policies and Codes are reviewed by the Boardand are updated if required.

Some of the key policies adopted by the Company are as follows:

a) Policy on Materiality of Related Party Transactions

b) Corporate Social Responsibility Policy

c) InsiderTrading Policy

d) Nomination and Remuneration Policy

e) Policy on Related Party Transactions

f) Risk Management Policy

g) Policy on prevention of sexual harassment at workplace

h) Whistle Blower Policy

i) Policy on payment of remuneration to NonExecutive Directors

j) Policy on Familiarization Program for the NonExecutive Directors

k) Policy on Determination of materiality of events/ information

l) Policy for Preservation of Records

m) Code of Practices and Procedures for Fair Disclosure of Unpublished Price SensitiveInformation

n) Policy on Subsidiary & Material Subsidiary Company

42. DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act 2013 your Directors make thefollowing statements:

> that in the preparation of the annual financial statements for the year endedMarch 31 2021 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

> that such accounting policies have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at March 31 2021 and of theprofit and loss of the company for that period;

> that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

> that the annual financial statements have been prepared on a going concern basis;

The Management and the Board believe that it has taken into account all the possibleimpact of events arising from COVID 19 pandemic in the preparation of the financialstatements including the ability of the Company to continue as going concern. However theimpact assessment of COVID 19 is a continuing process given the uncertainties associatedwith its nature and duration.

> that internal financial controls are being followed by the company and that suchinternal financial controls are adequate and were operating effectively.

> that systems to ensure compliance with the provisions of all applicable laws arein place and are adequate and operating effectively

43. CREDIT RATINGS

During the year under review the credit ratings have reaffirmed as 'CRISIL A/Stable'for long term borrowing and 'CRISIL AT for short term borrowings.

44. INDUSTRIAL RELATIONS

During the year under review industrial relations at the Company's all units havecontinued to remain cordial and peaceful.

45. DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY ANDBANKRUPTCY CODE 201B DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THEFINANCIAL YEAR - Not Applicable

4B. DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIMESETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIALINSTITUTIONS ALONG WITH THE REASONS THEREOF - Not Applicable

47. CAUTIONARY STATEMENT

Statements in the Annual Report particularly those which relate to ManagementDiscussion and Analysis describing the Company's objectives projections estimates andexpectations may constitute 'forward looking statements' within the meaning of applicablelaws and regulations. Although the expectations are based on reasonable assumptions theactual results might differ.

48. ACKNOWLEDGEMENTS

Your Directors place on record their deep sense of appreciation and gratitude to theShareholders various Government Agencies Canara Bank Union Bank of India ICICI BankCiti Bank NA M/s. Axis Bank M/s. HDFC Bank M/s. Larsen & Toubro Limited - MarketingAssociates CRISIL M/s.GNSA Infotech Ltd (Registrar & Share Transfer agent) fortheir continued support and co-operation. Your Directors also wish to record theirappreciation for the dedicated services being rendered by the employees at all levels.

For and on behalf of the Board
N RANGACHARY
Place : Bangaluru CHAIRMAN
Date : June 15 2021 DIN : 00054437

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