We have pleasure in presenting the Thirty Fifth Annual Report together with theaudited financial statements of the Company for the Financial Yearended March 31 2020.
1. FINANCIAL SUMMARY OF THE COMPANY
| || || || ||(Rs. in Lakhs) |
| ||Particulars || |
| || ||For the year ended March 31 2020 ||For the year ended March 31 2019 ||For the year ended March 31 2020 |
|I ||Revenue from operations ||56694.56 ||55976.62 ||58435.34 |
|II ||Other Income ||88.75 ||70.70 ||128.82 |
|III ||Total Revenue (I + II) ||56783.31 ||56047.32 ||58564.16 |
|IV ||Expenses || || || |
|a ||Cost of materials consumed ||43019.54 ||41933.48 ||43691.44 |
|b ||Purchase of stock in trade ||- ||- ||- |
|c ||Changes in inventories of finished goods work-in-progress and stock-in-trade ||-1038.47 ||-52.18 ||-921.99 |
|d ||Employee benefit expenses ||2639.87 ||2489.37 ||2984.54 |
|e ||Finance Cost ||2116.68 ||1988.47 ||2122.14 |
|f ||Depreciation and amortisation expense ||1443.96 ||1215.96 ||1475.51 |
|a ||Other expenses ||5554.68 ||5241.39 ||6003.28 |
|h ||Total Expenses ||53736.26 ||52816.49 ||55354.92 |
|V ||Profit before exceptional and extraordinary items and tax (lll-IV) ||3047.05 ||3230.83 ||3209.24 |
|VI ||Exceptional Items ||- ||- ||-19.46 |
|VII ||Profit before tax (V-VI) S. extraordinary items ||3047.05 ||3230.83 ||3189.78 |
|VIII ||Extraordinary items ||- ||- ||- |
|IX ||Profit before tax (VII-VIII) ||3047.05 ||3230.83 ||3189.78 |
|X ||Tax expense: ||408.39 ||835.10 ||448.46 |
|XI ||Profit for the period - After Tax (IX-X) ||2638.66 ||2395.73 ||2741.32 |
|XIII ||Earnings per equity share: || || || |
| ||(1) Basic (in Rs.) ||16.51 ||15.21 ||16.96 |
| ||(2) Diluted (in Rs.) ||16.51 ||15.10 ||16.96 |
|XIV ||Reserves and Surplus ||29339.70 ||27101.18 ||29405.44 |
** The consolidated figures of the company could not be compared with correspondingprevious years as that of the M/s. Kaycee Industries Ltd has became the subsidiary of thecompany effective from 11.07.2019 only.
FINANCIAL SUMMARY OF THE SUBSIDIARY COMPANY
| ||Particulars ||31st March 2020 ||31st March 2019 |
|1 ||Revenue from operations ||2342.68 ||2501.81 |
|2 ||Operating Expenses || || |
|a ||Cost of materials consumed ||1137.81 ||1338.56 |
|b ||Cost of traded goods sold ||31.58 ||76.04 |
|c ||Changes in inventories of finished goods work-in-progress ||(79.67) ||28.39 |
|d ||Employee Benefit Expenses ||466.30 ||443.41 |
|e ||Other Expenses ||540.02 ||521.71 |
|3 ||Total Operating Expenses (a + b+c + d+e) ||2096.04 ||2408.11 |
|4 ||Operating Profit (1-3) ||246.64 ||93.70 |
|5 ||Other Income ||17.65 ||153.66 |
|B ||Finance cost ||6.75 ||15.60 |
|7 ||Depreciation and Amortisation Expenses ||41.99 ||38.06 |
|8 ||Profit before Tax (4+5-6-7) ||215.56 ||193.70 |
|9 ||Provision - Covid 19 for Inventory and Receivable ||19.46 ||- |
|10 ||Tax Expenses ||54.38 ||58.51 |
|11 ||Profit after Tax (8-9) ||141.72 ||135.19 |
|12 ||Other Comprehensive Income ||(11.851 ||(5.70) |
|13 ||Total Comprehensive Income (10+ 11) ||129.87 ||129.49 |
|14 ||Share Capital ||63.47 ||63.47 |
|15 ||Reserves and Surplus ||1356.44 ||1234.49 |
|16 ||Net Worth of the Company ||1419.91 ||1297.96 |
|17 ||Book Value of the shares ||2237.14 ||2045.01 |
|18 ||Earnings per share ||223.29 ||212.99 |
2. ANALYSIS OF PERFORMANCE
Your Company has registered a marginal growth in its performance with net revenues overthat of corresponding year by around 1% year on year during the financial year in spiteof the lock-down announced by government during the last week of March 2020. Besides themarginal growth is attributable to the slowdown in the economic activities not only in thedomestic market but also in the global market during the fiscal FY20 in addition to closedown of the factory during last about 10 days due to lock down on the outburst of theCOVID-19 pandemic throughout the globe.
In the concluded financial year 2019-20 Net Revenue of the Company increased fromRs.559.80 Crs to Rs.588.95 crore with marginal growth of 1% in the otherwise subduedmarket conditions for the electrical and electronics industry. This growth was driven byall three key businesses of Industrial Switch Gears Building segment and Wires &cables. Similarly EBITDA (Earnings Before Interest Taxation Depreciation andAmortization) and Profitability of the Company went up by 4% and 13% respectively onaccount of better operational efficiency and availability of the deferred Tax Credit. Thecontribution from domestic sales at 87% was mainly driven by increase in demand and goodtraction for products in almost all the business divisions.
During the year the legacy products of your Company such as rotary switches andtoroidal transformers have shown growth and uptick in demand along with other productslike three phase dry type transformers and wire harnesses.
Yours Company's focus will always remain on adding new high margin products reach outdifferent markets with customized product and solutions in order to add newer clients andgrow our business and constantly looking for new opportunities for technical associationsto strengthen our base of product offerings.
Your Company would continue to focus on adding new high margin products under itsproduct portfolio reach out to new geographies and offer total customer solutions to itscustomers besides strengthening the revenue drivers improving ROCE working capital cycleas well as constantly looking for new opportunities for technical associations tostrengthen the base of product offerings which are part of its core strategy.
Industrial switch gear Division
The industrial switch gear division is one of the largest contributors to overallrevenues of your Company. This division comprises Cam Operated Rotary Switches; ToraidalTransformers Relays Load Break Switches Wire Harness Three Phase ?ry Type Transformersetc.. This division posted a growth of 1.3% on year on year and made 45% contribution tothe total revenue of the Company mainly driven by products - three phase dry typetransformers and wire harness.
Wire and cable Division
Wire and cable division consisting of copper wires and cables is the second majorbusiness of your Company. On a yearly basis wire and cable business contributed 47% witha year on year growth of 1.9% mainly on account of consolidation of Salzer Magnet Wiresand increase of new product offerings. From the start of this financial year your Companyhas started to manufacture and sell wires and cables under the Salzer brand which isseeing good demand and also a growing opportunity in the market. This is apart from ourregular brand labelling business that we are doing for Larsen & Toubro Crompton and afew other large brands
In order to strengthen the revenues of this division your Company has acquired thewhole of the business undertaking from Salzer Magnet Wires Limited on slump basis as agoing concern in pursuance of the business transfer Agreement effective March 08 2019 fora total value of Rs.2029.10 Lakhs for consideration other than cash. The acquiredundertaking has been facilitating well growth support forthis division.
Building Product Division
This is the only division where your Company has been operating on a B2C basis. ThePortfolio under this division involves Distribution Boards Modular Switches &Speciality Switches Movement Sensors Remote Switches Single Phase Motors SwitchesHouse Wires etc..The building division contributed around 6% of your Company's revenuesin 2019-20 with a downtrend of 16% on account of slowdown in economy during 2019-20 andalso clubbed with lockdown as announced by government to combat the COVID-19 during lastweek of March 2020. Your Company is confident of increasing contribution from thisdivision in the coming two to three years to around 10% of its total revenue levels as ithas opened up new opportunities in real estate sector where Unit has got some annual ratecontracts with major builders and more focus on retail segment.
Energy management Division
The fourth is the Energy Management division and an order driven business. This is anew technology oriented business which was developed by your Company's in-house RS.D team.This product division has given a benefit of being the largest ESCO with highest CRISILrating -Grade A in the country for your Company. Energy management division during thefull year FY2020 has contributed only 2% to the total net revenues of the Company.
Going forward your Company's focus remains to achieve profitable growth by adding newerproducts which are customized and value added in nature exploring newer geographies whichcan yield better margins. With a very competent team in place your Company is quiteconfident of achieving the milestone which it has set for itself.
The Board of Directors at their meeting held on June 18 2020 considered the proposalof Dividend for the financial year ended March 312020 taking into account the company'sperformance during the period under review as well as the dividend track record for thelast more than two decades the dividend payout ratio at an average rate of 18% theglobal economic slowdown including in domestic market during the year under review thelockdown announced by the government to contain the spread of COVID-19 crept in December2019 in China and aggressively spread all over the world impacting the economic activitiesand the standard of living of the society at large the continuation of the lockdownannounced by government with uncertainty on lifting the same due to continuous spread ofthe COVID-19 resulting in heavy human loss and bringing the economic activities to a stateof standstill globally.
Hence your Board of Directors thought it prudent to conserve the resources to meet notonly the eventuality arising out of the COVID-19 but also the future requirements of thecompany to ensure the sustainability of the business for value addition and mutual benefitto all the stakeholders in the long run. The Board of Directors has decided to ploughback the profit into the business. However your Board of Directors are continuouslymonitoring the situation not only to sustain the business but also to improve theperformance of the company under this strenuous environment and the interest of thestakeholders would be considered accordingly depending upon the business growth exigenciesin the periods ahead.
4. SHARE CAPITAL AND OTHER RELATED
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.
5. CORPORATE GOVERNANCE
As required under Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations a separate section on corporate governance practices followedby the Company together with a certificate from the Company's Auditors confirmingcompliance attached with this report Annexure: 1
Your Board of Directors as a prudent policy in the absence specific provisions in theCompanies Act 2013 and Rules made there-under has transferred Rs.4500 Lakhs to theGeneral Reserve Account. Accordingly your Company has general reserve of Rs.1958.48 Lakhsas at March 312020.
Inspite of the prevailing environment your company has ensured to have adequate cashand cash equivalents in its Books and taking care of all such current liabilitiescomfortably.
Moreover the government has announced various concessions and reformative measures toensure the liquidity in the market by permitting the banks to give moratorium by way ofrepayment of its term liabilities as well as payment of interest both on term liabilityand working capital for a period of three months initially from March 2020 andsubsequently extended the same by another three months till 31.08.2020. In order tofelicitate the MSME and corporate to have the sufficient liquidity during this COVID-19period and your company as a conservative measure has been availing the facilities soextended by the government to combat the economical slowdown during COVID-19 period. Thiswould also support the liquidity position of your company with adequate cash and cashequivalents to combat the eventualities during this period.
8. CHANGE IN THE NATURE OF BUSINESS IF ANY
During the year the nature of the business of your Company - Manufacturing ofElectrical
Installation Products- has not been changed.
9. 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
a. There are no material changes which could have been affected the financial positionsof the company between the end of the financial year and the date of this report exceptM/s. Kaycee Industries Ltd have become the subsidiary of the company consequent to theacquisition of controlling interests to the extent of 74.92% both from the erstwhilepromoters of the Kaycee Industries Ltd and also acquisition of shares from the public incompliance with the relevant SEBI regulations in force.
b. Impact of COVID-19 :- The outbreak of COVID-19 pandemic and the resulting lockdownenforced from 24th March 2020 have affected the Company's regular operations. Accordinglythe Company has considered the possible effects that may result from the pandemic on thecarrying amounts of property plant and equipment investments inventories receivablesand other current assets. In developing the assumptions relating to the possible futureuncertainties in the global economic conditions because of this pandemic the Company asat the date of approval of these financial results has used internal and externalinformation which are relevant in determining the expected future performance of theCompany. The Company has evaluated its liquidity position recoverability of such assetsand based on current estimates expects the carrying amount of these assets will berecovered. The impact of COVID-19 on the Company's financial results may differ from thatestimated as at the date of approval of these financial results. Moreover the Company hasa practice of providing requisite provisions in the Financial Statements in line with theAccounting Standards for the expected credit loss on the carrying cost of both fixed andcurrent assets taking care of all possible loss arising out of any uncertainties.
The Management believes that it has taken into account all the possible impact ofevents arising from COVID 19 pandemic in the preparation of the standalone financialresults 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. The Company will continue to monitor any material changes tofuture economic conditions.
10. 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 passed by any Court in India or by any Regulator or by Tribunals affectingthe going concern status and Company's operations in future.
11. 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 physical verification of inventory fixed assets andcash on hand and matches them with the books of account and dealt with appropriately. NoDiscrepancies were found during the year under review.
The Company in preparing its financial statements makes judgements and estimates basedon sound policies and uses external agencies to verify/validate them as and whenappropriate. The basis of such judgements and estimates are also approved by the AuditCommittee of the Board of Directors of the Company in consultation with the StatutoryAuditors of the Company.
The Company has a Code of Conduct applicable to all its employees as well as Board ofDirectors along with a Whistle Blower Policy which requires employees to update accountinginformation accurately and in a timely manner.
12. DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES
As stated supra M/s. Kaycee Industries Ltd is subsidiary of your company with effectfrom 11.07.2019 which is also in the synergical line of manufacture of electricalinstallation products having its registered office and factory at Mumbai in the state ofMaharastra.
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. As such there was no deposit as at March 312020.
14. 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 10.08.2019 M/s. JDS Associates CharteredAccountant has been appointed as the Statutory Auditors of the Company as consented andconfirmed vide its letter dated 08.05.2019 on their eligibility to be so appointed for aterm of Five years immediately after conclusion of the 34" Annual General Meetingtill the conclusion of the 39" Annual General Meeting for the financial year 2023-24consequent to the demission of office by the statutory auditor M/s.Swamy & Ravi incompliance with the regulations of appointment of statutory auditors.
The company has investments in quoted equities and unquoted equities and the companyhas adequate measures to review the significant impact by way of changes in fair value ofthe equity shares and accordingly they are dealt with in the financial statements. Thecompany has quoted equity investment in the subsidiary during the financial year underreporting as detailed elsewhere in the directors report and the carrying value of theinvestment is at cost considering the future growth rate experts opinion market capacityand the brand value.
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 wherein the Auditors have not made any qualification / adverse remarks based onthe auditing.
17. EXTRACT OF THE ANNUAL RETURN
The extract of the annual return in form No. MGT - 9 forms part of the Board's reportgiven as Annexure: 2 herewith in compliance with Rule 12(1) of the Companies (Managementand Administration) Rules 2014.
18. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The details of conservation of energy technology absorption foreign exchange earningsand outgo given as Annexure: 3 herewith separately.
19. CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of the provisions of section 135 of the Companies Act 2013 read withCompanies (Corporate Social Responsibility Policy) Rules 2014 the Board of Directors ofyour Company has constituted a Corporate Social Responsibility ("CSR")Committee. The composition and terms of reference of the CSR Committee is provided in theCorporate Governance report which forms part of this report. Your Company has also inplace a CSR Policy and the same is available on your Company's website www.salzergroup.net/investor.
The Company for the past many years has been fulfilling the objectives of socialnature in the area of education health and other social causes in and aroundPeriyanaickenpalayam Region Coimbatore District. The Company primarily through its Trusthas been promoting education healthcare etc.. The Company is at the service of theSociety in general for up-liftment of literacy and health care.
Accordingly the Company was required to spend Rs.58.59 Lakhs during the year towardsCSR activities and against which spent Rs.14.41 Lakhs in respect of various specifiedactivities enshrined in Schedule VII of the Companies Act 2013 and also in Salzer'sCorporate Social Responsibility Policy. The Annual Report on the CSR Activities has beenattached with this report as Annexure:4
A) Changes in Directors and Key Managerial Personnel
During the year under review one of the Directors Mr. R.DhamodaraswamyNon-Independent and Non Executive Director passed away on 27.11.2019. On the date of thisreport Dr. Otto Eggimann vacated his office as an Independent Director on 24.05.2020
Mr.Vishnu Rangaswamy Son of Mr.R.Doraiswamy Managing Director and brother ofMr.D.Rajeshkumar Joint Managing Director and Chief Financial Office of the company wasappointed on the Board as an additional director designated as Non Executive and NonIndependent Director and who shall hold office till the conclusion of forthcoming 35"Annual General Meeting for the financial year 2019-20.
Based on the nomination for the appointment of Mr.Vishnu Rangaswamy as a Director onthe Board of Director on a regular basis received by the company necessary proposal forhis appointment as a Director designated as Non Executive and Non Independent Director isplaced for approval of the share holders at this meeting with a tenure of office subjectto retirement by rotation. Based on the recommendation of Nomination and RemunerationCommittee your Board of Directors considered this appointment and recommended for yourapproval as required by relevant regulations.
Bl Retirement by Rotations
Dr.Thilagam Rajesh and Mr.S.Baskarasubramanian Directors of the company who are theretiring Directors in the ensuing 35th Annual General Meeting offeredthemselves to get re-appointed in pursuance of Section 152 of the Companies Act 2013 readwith Article 178 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(B) 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
Relationship with stakeholders
Company performance and strategy
Tracking Board and committees' effectiveness
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.
E) 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.
21. LISTING REGULATIONS
Your Company has duly complied with various Regulations as prescribed under SEBI(Listing obligations and Disclosures) Regulations 2015.
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.
23. VIGIL MECHANISM
A vigil Mechanism has been in place providing opportunity to Directors/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 personal 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)
Contact No. 0422 4233614
Office of the Managing Director
Office of Joint Managing Director and Chief Financial Officer
During the year under review no complaints were received by the above officers underVigil Mechanism with respect to the performance of the company and other related mattersthereof.
24. 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. Investigation is being conducted and decisions made by the IC at the respectiveUnits and a senior woman employee is the presiding officer over every case. All employees(permanent contractual temporary trainees) are covered under this policy.
During the year under review the Committee has not received any such complaint.
25. 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 nomineesforelection 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 charterand policy are available on ourwebsite.
26. 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 312020 the Board had thirteen members four of whom are ExecutiveDirectors; two are NonExecutive and Non-Independent members and seven IndependentDirectors. One non-executive and non-independent member of the Board is woman. The policyof the Company on directors' appointment and remuneration including the criteria fordetermining 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 our 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 and also pursuant to the Regulationsin force.
27. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review:
The Company has not granted/taken any unsecured loans from or to Companiesfirms or other parties listed in the Register maintained under section 189 of theCompanies Act 2013 ('the Act') the terms and conditions are not prima facie prejudicialto 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.
28. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year underreview were on an arm's length basis and were in the ordinary course of business. Duringthe year the Company had material related party transaction with the related parties withdue compliance of the approval accorded by the shareholders under Relevant Regulation.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on an annual basisfor the transactions which are of a foreseen and repetitive nature in compliance withRegulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The transactions entered into pursuant to the omnibus approval so granted are audited anda statement giving details of all related party transactions is placed before the AuditCommittee and the Board of Directors for their approval on a quarterly basis. None of theDirectors has any pecuniary relationships with respect to the transactions vis-a-vis theCompany.
In response to Rule 8(2) of Companies (Accounts) Rules 2014 particulars of contractsor arrangements with related parties during the year under review given in the Form AOC-2annexed herewith as Annexure: 5.
29. 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.
30. 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 Annexure - B.
31. SECRETARIAL AUDIT REPORT
In terms of Section 204 of the Companies Act 2013 the Board of Directors of theCompany at their meeting held on 24th May 2019 has appointed Mr. G Vasudevan B.Com LLB& FCS M/s. G V Associates Company Secretaries (Certificate of Practice No. 6522) asthe Secretarial Auditor to conduct an audit of the secretarial records for the financialyear 2019-20.
The Company has received consent from Mr. G Vasudevan B.Com LLB & FCS M/s. G VAssociates Company Secretaries to act as the Secretarial Auditor for conducting audit ofthe Secretarial records for the financial year ending 31st March 2020 in terms of Section204 of the Companies Act 2013 read with Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.
The Secretarial Audit Report for the financial year ended 31st March 2020 is set outin the Annexure-7 to this report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
32. COMPLIANCE ON SECRETARIAL STANDARDS
The Company complies with all applicable mandatory secretarial standards issued by theInstitute of Company Secretaries of India.
33. 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.378732/-. Further 9763 corresponding shares onwhich 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
34. RISK MANAGEMENT POLICY
Risk management is attempting to identify and then manage threats that could severelyimpact or bring down the organization. Generally this involves reviewing operations ofthe organization 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. Further the Risk Management Committee last met on 06.02.2020 and reviewed the riskprofile and accordingly the remedial actions have been initiated wherever necessary.
35. 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 Annexure :8.
36. 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 CMA Mr. A.R.Ramasubramania Raja Practicing Cost and Management Accountant as the Cost Auditor of theCompany for the Financial Year 2020-21 to conduct the audit on the Maintenance of CostRecords of the Company and submit the report to the Central Government with the dueapproval of the Board of Directors within the stipulated time.
37. POLICIES OF THE COMPANY
The Company is committed to 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 Non
j) Policy on Familiarization Program for the Non Executive 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
38. 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 2020 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
> that such accounting policies have been selected and appliedconsistentlyandjudgments and estimates have beenmade that are reasonable and prudent so asto give a true and fair view of the state of affairsof the Company as at March 31 2020and of the profit 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 a going concern. Howeverthe impact assessment of COVID 19 is a continuing process given the uncertaintiesassociated with its nature and duration. The Company will continue to monitor any materialchanges to future economic conditions
> that internal financial controls are being followed by the company and that suchinternal financial controls are adequate and are operating effectively.
> that systems to ensure compliance with the provisions of all applicable laws arein place and are adequate and operating effectively
39. CREDIT RATINGS
During the year under review the credit ratings have reaffirmed as 'CRISIL A/Stable'for long term borrowing and 'CRISIL A1' for short term borrowings.
40. INDUSTRIAL RELATIONS
During the year under review industrial relations at the Company's Units continued toremain cordial and peaceful.
41. 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.
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 Private Ltd (Registrar & Share Transfer agent)for their continued support and cooperation. 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 18 2020 ||DIN : 00054437 |