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Servotech Power Systems Ltd.

BSE: 535002 Sector: Engineering
NSE: SERVOTECH ISIN Code: INE782X01017
BSE 05:30 | 01 Jan Servotech Power Systems Ltd
NSE 00:00 | 07 Oct 164.80 1.60
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Servotech Power Systems Ltd. (SERVOTECH) - Director Report

Company director report

Dear Shareholders

Your Directors are pleased to present to you the 17th Annual Report of Board ofDirectors ("Board") on the business and operations of your Company along withits Audited Financial Statements for the financial year ended 31st March 2021.

CORPORATE OVERVIEW

The Company was incorporated in 2004 and listed its equity in National Stock Exchangeof India Limited at its emerge portal in

2017. The Company has been regularly working with the Public Sector Undertakingsthrough the tenders invited by them and has thereafter achieved remarkable position inPower and backup industry such as LED and Solar industry and recently in UVC segments aswell.

FINANCIAL PERFORMANCE

The financial performance of the Company for period under review is summarized below.

Particulars Financial Year ended 31st March 2021 Financial Year ended 31st March 2020
Net Sales/Income from Business Operations 879993001 874415769
Other Income 9016853 5314397
Total Income 889009855 879730166
Less: Expense 874464859 867471191
Profit/Loss before tax and Extraordinary/exceptional items 14544996 12258974
Less: Extraordinary/exceptional items 2325006 834755
Profit before tax 12219990 11424219
Less: Current Income Tax 3202136 2970000
Less: CSR Expenses - 51000
Less: Income Tax of earlier years -76335 221068
Less: Deferred Tax -126609 44044
Net Profit After Tax 9220798 8138107
Earnings per share (Basic) 0.50 0.44
Earnings per share (Diluted) 0.50 0.44

STATE OF COMPANY’S AFFAIR AND OPERATIONAL HIGHLIGHTS

During the year under review the Gross Revenue from operations of your Company for theyear ended 31st March 2021 stood at Rs. 889009855/- as compared to therevenue generated of Rs. 8797301166/- in the year ended 31st March 2020. The EBITDA ofthe company for the year under review stood at Rs. 12219990/- as compare to Rs.11424219/- in in the year ended 31st March 2020. The Profit after tax("PAT") for the year ended 31st March 2021 stood at Rs. 9220798/-as compared to Rs. 8138107/-in previous year.

COVID-19

The World Health Organization declared a global pandemic of the Novel Coronavirusdisease ("Covid-19") on 11th February 2020 and in order to contain the spreadof Covid-19 the Government of India declared a lockdown situation on 24th March 2020 allover the country. In enforcing social distancing to contain the spread of the disease ouroffices have been operating with minimal or no staff for extended periods of time.

In keeping with its employee-safety first approach the Company quickly institutedmeasures to trace all employees and assured of their well-being. The Manufacturingfacility at Kundli Haryana had resumed its operations from the last week of May 2020when lockdown was partially lifted after establishing thorough and well-rehearsed safetyprotocols. Proactive preparations were done in our work locations during this transitionto ensure our offices were safe. The future impact on the business operations is difficultassess at this point as the crisis of the pandemic continues to accelerate and thesituation remains volatile. However barring unforeseen circumstances the Company isconfident about its ability to manage this crisis and come out of it slowly but steadily.

SHARE CAPITAL

During the period under review there was no change in the share capital of theCompany. The authorized share capital of the Company stood at Rs. 190000000 dividedinto 19000000 equity shares of Rs. 10 each and issued subscribed and paid-up capitalof the Company stood at Rs. 183104290 as at 31st March 2021.

DIVIDEND

The Board of Directors of your Company has decided to retain and plough back theprofits into the business of the Company thus no dividend is being recommended for thisyear.

CHANGE IN THE NATURE OF BUSINESS

For sustained growth in the future Company wants to rely on the main business(es) ofCompany. There is no change in the nature of the business of the Company during the year.

TRANSFER TO RESERVE

The Company did not transfer any amount to the General Reserve for the Financial Yearended 31st March 2021.

DEPOSITS

During the period Company has not invited or accepted or renewed any fixed depositsfrom public as mandated under Section 73 of the Companies Act 2013 ("the Act")read with Companies (Acceptance of Deposits) Rules 2014.

DETAILS OF SUBSIDIARY/JOINT VENTURE/ASSOCIATE COMPANIES

As on 31st March 2021 the Company does not have any subsidiary or joint venture andassociate Company.

However the Company had incorporated a subsidiary namely Rebreathe Medical DevicesIndia Private Limited ("RMDIPL/ subsidiary") vide CIN U33119DL2021PTC383180incorporated on 5th July 2021. The authorized share capital of the RMDIPL stood at Rs.1500000 divided into 150000 equity shares of Rs. 10 each and issued subscribed andpaid-up capital of the Company stood at Rs. 1500000 as at 31st March 2021. The Companyhold 95% shareholding in the Subsidiary i.e. 1425000.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year under review 6 (Six) meetings of the Board of Directors were held. Fordetails of the meetings of the Board please refer to the Corporate Governance Reportwhich forms part of this Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of the Company upon the recommendation of the Nomination and RemunerationCommittee in its meeting held on 22th May 2020 and 12th February2021 had appointed Mr. Vikas Bhatia as Chief Financial Officer Rai (DIN: 09050751) andMr. Anupam Gupta (DIN: 09050762) as additional Non-Executive Independent Directors of thecompany respectively.

Mr. Yogesh Mahajan and Mr. Pankaj Dawar resigned from the position Non-ExecutiveIndependent Directors both w.e.f 11th February 2021.

Mr. Arun Handa Chief Executive Officer ("CEO) of the Company resigned from thePost of CEO w.e.f. 29th May 2021.

Declaration by Independent Directors

All Independent Directors of the Company have given declaration confirming that theymeet the criteria of independence laid down under section 149(6) of the Act and ListingRegulation.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Act the Board of Directors to the best of theirknowledge and ability confirm that:

i) in preparation of annual accounts for the financial year under review theapplicable accounting standards have been followed and that no material departures havebeen made from the same;

ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;

iii) they have taken proper and sufficient care for their maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv) they have prepared the annual accounts on a ‘going concern’ basis;

v) they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; and

vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

AUDITORS AND AUDITOR’S REPORT STATUTORY AUDITORS

The provision of section 139 of the Companies Act 2013 requires that the statutoryauditor may be appointed by the shareholders for a period of 5 (five) consecutive years;however the said appointment needs to be placed for ratification by the members in eachAGM. Now with effect from 7th May 2018 the aforesaid requirement related to annualratification of appointment of statutory auditors by the members has been omitted by theCompanies (Amendment) Act 2017. Hence the tenure of M/s. Gupta Jalan and AssociatesCharted Accountants (FRN No. 03721N) as the statutory auditor whose appointment wasapproved by the members in the 12th AGM for a term of five consecutive yearswill be expired in the AGM held in the financial year 2021.

Accordingly the Board had decided to re-appoint M/s. Gupta Jalan and AssociatesCharted Accountants (FRN No. 03721N) for a fresh term of 1 year subject to the approvalof Members of the Company in the ensuing 17th AGM for a term of one year will be expiredin the AGM held in the financial year 2021-22.

Auditors’ Report and the Notes on financial statements referred to in theAuditors’ Report are self-explanatory and do not call for any further comments. TheAuditors’ Report does not contain any qualification reservation or adverse remark.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsin its meeting held on 27th August 2021 have appointed R & D CompanySecretaries as Secretarial Auditor of the Company to conduct the Secretarial Audit of theCompany for the financial year 2021-22.

The Secretarial Audit Report in prescribed Form MR-3 for the financial year ended 31stMarch 2021 is appended as Annexure-1 to this Report. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.

COST AUDITOR

Appointment of M/s. NN Sharma & Associates as Cost Auditors of the Company for thefinancial year 2021-22 at an annual fee of Rs. 30000 plus applicable taxes will besubject to ratification made by the shareholders at the ensuing AGM.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report highlighting the performance and prospectsof the Company’s business forms part of the Annual Report.

CORPORATE GOVERNANCE

Our corporate governance practices are a reflection of the Company’s value systemencompassing our culture policies and relationships with our stakeholders. Integrity andtransparency are key to our corporate governance practices to ensure that we gain andretain the trust of our stakeholders at all times. Corporate governance is aboutmaximizing shareholder value legally ethically and sustainably. The Board exercises itsfiduciary responsibilities in the widest sense of the term. Our disclosures seek to attainthe best practices in international corporate governance. We also endeavour to enhancelong-term shareholder value and respect minority rights in all our business decisions. OurCorporate governance report for financial year 2020-21 forms part of this Annual Report.

The members may please note that the Company being listed on the Small and MediumEnterprise platform is exempted from provisions of corporate governance as per theprovisions stated in Chapter IV -Regulation 15 of the Securities and Exchange Board ofIndia Listing Regulations. However keeping in view the objective of encouraging the useof better governance practices through voluntary adoption the Company has decided toprovide the Corporate Governance Report to its members which not only serve as a benchmarkfor the corporate sector but also help the Company in achieving the highest standard ofcorporate governance. The members may please note that any inconsistency shall not beconstrued as a non-compliance of any relevant provisions thereof.

BOARD EVALUATION

In pursuance to the provisions of the Companies Act 2013 and the SEBI ListingRegulations the Board has carried out annual performance evaluation of its ownperformance of the directors individually as well the evaluation of the working ofcommittees. The performance of the Board was evaluated by the Board after seeking inputsfrom all the directors on the basis of the criteria such as the Board composition andstructure board meetings and effectiveness of board processes information andfunctioning etc. The performance of the committees was evaluated by the board afterseeking inputs from the committee members on the basis of the criteria such as thecompliance with the terms of reference of the committees composition of committeesfunctions and duties committee meetings and procedures etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings attendanceindependent judgment etc. In a separate meeting of independent directors performance ofnon-independent directors performance of the board as a whole was evaluated taking intoaccount the views of executive directors and non-executive directors.

COMMITTEES OF THE BOARD OF DIRECTORS

Your Company has following Committees of Board of Directors:

1. Audit Committee;

2. Nomination and Remuneration Committee;

3. Stakeholders’ Relationship Committee;

4. Corporate Social Responsibility Committee; and

5. Committee of Board of Directors

The role and composition of these Committees including the number of meetings heldduring the period under review and the related attendance are provided under CorporateGovernance Report which forms part of the Annual Report.

MATERIAL CHANGES

The Company had on 5th July 2021 incorporated its Subsidiary namelyRebreathe Medical Devices India Private Limited ("RMDIPL/Subsidiary") vide CINU33119DL2021PTC383180. Also the Company being eligible in accordance with the provisionof SEBI (Issue of Capital and Disclosure Requirements) Regulations 2020 read with SEBI(Listing Obligations and

Disclosure Requirements) Regulation 2015 has filed application for Migration to MainBoard of NSE.

This application has been filed with NSE subsequent upon the approvals of Members ofthe Company received by way of vide Postal Ballot Process dated 3rd July 2021.Thereafter the Company had filed the in-principle application on th7 August2021 and NSE had issued the approval for in-principle application on 24thAugust 2021. Now on 31st August 2021 the Company has received the approval letter ofMigration to Main Board of NSE now the shares of the Company listed on NSE ExchangeCapital Market Segment.

RELATED PARTY TRANSACTION

Your Company has adopted the practice of undertaking related party transactions only inthe ordinary and normal course of business and at arm’s length as part of itsphilosophy of adhering to highest ethical standards transparency and accountability. Inline with the provisions of Section 188 of the Companies Act 2013 read with Rule 8(2) ofthe Companies (Accounts) Rules 2014 the particulars of contract and arrangement in FormAOC- 2 is annexed with this report as Annexure-2. The Related Party TransactionsPolicy as approved by Board on recommendation of the Audit Committee is placed on theCompany’s website at www.servotech.in. For details on related party transactionsentered during the year members may refer to the notes to the financial statement.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has effective and reliable Internal Control System commensurate with thesize scale and complexity of its operations. The scope and authority of the InternalAudit function is well defined in the organization and is aligned with the statutoryrequirements. The Audit Committee reviews the internal audit plans adequacy andeffectiveness of the Internal the Control System significant sustainability of remedialmeasures.

SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its future operations.

CORPORATE SOCIAL RESPONSIBILITY

The Company does not fall in any of the criteria of Section 135 of the Companies Act2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014 andhence the Company is not required to comply with the same.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO ANDRESEARCH & DEVELOPMENT

In accordance with the requirements of Section 134 (3) (m) of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 a statement showingparticulars with respect to Conservation of Energy Technology Absorption ForeignExchange Earnings and Outgo is annexed hereto as Annexure-3 and forms part of thisreport.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

In accordance with the provisions of the Act and Listing Regulations the Company hasadopted a Whistle Blower Policy to provide appropriate avenues employee and director todirectly communicate to the Chairman of the Audit Committee to report any fraudirregularity or mismanagement in the Company. The policy ensures strict confidentialitywhile dealing with concerns and also that no discrimination or victimization is meted outto any whistle blower. The details of the Whistle Blower Policy is explained in theCorporate Governance Report and also available on the website of the Company atwww.servotech.in.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act 2013 as amended by theCompanies (Amendment) Act 2017 effective from 31st July 2019 an extract of the annualreturn in form MGT-9 is annexed hereto as Annexure-4 and available on the website of theCompany at www.servotech.in.

SECRETARIAL STANDARDS

The Company complies with all applicable Secretarial Standards issued by the Instituteof Company Secretaries of India.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS MADE BY THE COMPANY

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act are given in the notes to the Financial Statements.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed as Annexure-5to this Report.

The Company does not have any employee who is in receipt of remuneration of Rs.850000/- per month or Rs. 10200000 per annum and hence the Company is not required togive information under Sub rule 2 and 3 of Rule 5 of the companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

NOMINATION AND REMUENRATION POLICY

Nomination and Remuneration Committee covers the areas as contemplated under Section178 of the Companies Act 2013 besides other terms as referred by the Board of Directors.The role includes formulation of criteria for determining qualifications positiveattributes and independence of a director and recommending to the Board the remunerationfor the directors key managerial personnel and other employees formulation of criteriafor evaluation of Independent Directors the Board and Committees of the Board developingon diversity of Board of Directors and identification of persons who are qualified tobecome directors and who may be appointed in senior management in accordance with thecriteria laid down.

The Board on the recommendation of the Nomination and Remuneration Committee hasframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration. The Remuneration Policy is available on thewebsite of the Company at www.servotech.in.

RISK MANAGEMENT

The Audit Committee in supervision of Board of Directors is responsible foridentifying evaluating and managing all significant risks faced by the Company. Thedetailed statement indicating the development and implementation of risk management policyincluding identification therein of elements of risk has been covered in the ManagementDiscussion and Analysis Report which forms part of this report

DISCLOSURE UNDER SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

The Company has in place a Sexual Harassment Policy in compliance with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. The Company always endeavors to create and provide an environment that is freefrom discrimination and harassment including sexual harassment. The Internal ComplaintsCommittee (ICC) has been set up to redress complaints regarding sexual harassment if any.

Further the Company has always provided a congenial atmosphere for work to all theemployees that is free from discrimination and harassment including sexual harassment.There were no cases/complaints pertaining to the sexual harassment reported to the Boardduring the year under review.

UNPAID AND UNCLAIMED DIVIDEND

As per the provision of section 124(1) of the Act any money transferred to the UnpaidDividend Account of a company which remains unpaid or unclaimed for a period of 7 (seven)years from the date of such transfer shall be transferred by the company along withinterest accrued if any thereon to the Investor Education and Protection Fundestablished in accordance with section 125(1).

The members may please be informed that the Company has not declared any dividend inlast 7 (seven) years. Accordingly there were no funds which were required to betransferred to Investor Education and Protection fund

FRAUD REPORTING

There was no fraud disclosed during the Financial Year ended 31st March2021.

LISTING OF EQUITY SHARES

The equity shares of your Company are listed on National Stock Exchange of IndiaLimited ("NSE") emerge Portal. The Annual Listing Fees for the year 2021-22 hasbeen paid to the NSE.

In addition the Company has also paid Migration Fee and Listing Fee towards listing onthe Main Board to NSE with respect to migration of Company’s listing from SME Portalof NSE to Main Board.

DEPOSITORY SYSTEM

The Members are requested to note that as on 31st March 2021 99.31% of theCompany’s total paid-up share capital representing 18185343 shares are indematerialized form. In view of the numerous advantages offered by the Depository Systemas well as to avoid frauds members holding shares in physical mode are advised to availof the facility of dematerialization from National Securities Depository Limited("NSDL") and Central Depository Services (India) Limited ("CDSL").

HEALTH SAFETY AND ENVIRONMENT

Your Company has complied with all the applicable Health & Safety StandardsEnvironment Laws and Labour laws and has been taking all necessary measures to protect theenvironment and provide workers a safe work environment. Your Company is committed towardsimprovement in Health & Safety as well as Environmental performance by providing aSafe & healthy work environment to all its employees and co-workers.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Your Company considers people as its biggest assets and "Believing in People"is at the heart of its human resource strategy. Lot of efforts are put in for talentmanagement strong performance management learning and training initiatives in order toensure that your Company consistently develops inspiring strong and credible leadership.During the year under review your Company continued to have cordial relationship with allits employees and maintained healthy cordial and harmonious industrial relations at alllevels.

ACKNOWLEDGMENTS

The Directors thank the Customers vendors Investors Financial Institutions andbankers for their continued support during this year. We appreciate the contribution madeby our employees at all levels. The growth of the Company is made possible by their hardwork solidarity co-operation and support.

The Directors also thank the government of various countries government of India thegovernments of various states in India and concerned government departments/agencies fortheir co-operation and support to the Company who all made our consistent growth possible

FOR AND ON BEHALF OF BOARD OF DIRECTORS
RAMAN BHATIA SARIKA BHATIA
MANAGING WHOLE-TIME DIRECTOR
DATE: 27.08.2021 DIRECTOR DIN- 00155602
PLACE: New Delhi DIN- 00153827

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