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 | 10 Jun||17.15||
Servotech Power Systems Ltd. (SERVOTECH) - Director Report
Company director report
To The Members
Your Directors have great pleasure in presenting Fourteenth Annual Report of theCompany together with the Audited Annual Accounts for the year ended 31st March2018.
During the year (2017-18) under review your Company recorded a turnover of 311456.77lacs as compared to 3 8320.91 lacs in the previous year (2016-17) showing a increase of37.68%. The net profit before tax stood at 3 551.07 lacs in the current financial year asagainst 3755.52 lacs in the previous financial year showing a decrease of 37.10%. .
In the challenging market scenario there has been slight dip in the Profitability ofthe Company.
The salient features of Company's Financial Results for the year ended March 31 2018under review are as follows:
In view of the inadequate profit during the year and need to conserve resources forthe expansion of the business of your Company Board expresses its inability to declareany dividend for the financial year 2017-2018.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board in consultation with itsNomination & Remuneration Committee has formulated a framework containing interaliathe criteria for performance evaluation of the entire Board of the Company its Committeeand Individual Directors including Independent Directors.
A structured questionnaire was prepared after taking into consideration of the variousaspects of the Board its functioning composition of the Board and its Committeesculture execution and performance of specific duties obligations and governance.
The Independent Directors had met separately without the presence of Non-IndependentDirectors and the members of management and discussed inter-alia the performance ofNon-Independent Directors and Board as a whole and the performance of the Chairman of theCompany after taking into consideration the views of Executive and Non- Executivedirectors.
The Nomination and Remuneration Committee has also carried out evaluation of everyDirector &their performance.
The performance evaluation of all the Independent Directors have been done by theentire Board excluding the Director being evaluated.
The Board of Directors expressed their satisfaction with the evaluation process.
The Nomination and Remuneration Committee works with the Board on the Succession planand prepares for the succession in case of any exigencies.
NUMBER OF MEETINGS OF THE BOARD
The details of the number of meetings of the Board held during the Financial Year 2017-18 forms part of the Corporate Governance Report.
M/s. Gupta Jalan and Associates Chartered Accountants(FRN No. 03721N) the StatutoryAuditors of the Company to hold office up to the forthcoming Annual General Meeting of thecompany and are eligible for re-appointment and have confirmed their eligibility andwillingness to accept the office of the auditors if re-appointed.
The Company has received letter from them that their re-appointment if made would bewithin the prescribed limits under Section 139 of the Companies Act 2013 and that theyare not disqualified for re-appointment.
The Board of Directors have recommended to appoint M/s. Gupta Jalan and AssociatesChartered Accountants(FRN No. 03721N) as the Statutory Auditors of the Company to auditthe accounts of the Company for the financial year 2018-19.
The Notes on Financial Statements referred to in the Auditors Report are selfexplanatory and do not call for any further comments. The Auditors; Report does notcontain any qualification reservation or adverse remark.
As per the new Companies (Cost Records and audit) Rules 2014 the appointment of CostAuditor is not required for your Company has maintained cost accounting records for theperiod 2017-18.
INTERNAL FINANCIAL CONTROLS
In terms of section 134 of The Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 The Company has adequate system of InternalFinancial Control to safeguard and protect from loss unauthorized use or disposition ofits assets. All the transactions are properly authorized recorded and reported to theManagement. The Company is following all the applicable Accounting Standards for properlymaintaining the books of accounts and reporting financial statements. The Internal Auditorof the Company also checks and verifies the internal financial control and monitors them.
Your Company is well aware of risks associated with its business operations.Comprehensively risk management system is being put in place involving classification ofrisk adoption of risk management measures and a strong mechanism to deal with potentialrisks and situation leading to a rise of risks in an effective manner.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS & OUTGO
Pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of theCompanies (Accounts) Rules 2014 the following information is provided:
BOARD OF DIRECTORS
The Company is enriched with highly qualified professionals and responsive Board ofDirectors. It is composed of Executive as well as Non- Executive Directors including WomenDirector. The details for Composition of Board of Directors of the Company as on date areas follows:
In accordance with the Companies Act 2013 and the Articles of Association of theCompany Mrs. Sarika Bhatia retires by rotation at the ensuing Annual General Meeting andbeing eligible has offered herself for reappointment. Your Board has recommended herRe-appointment as Executive Director of the Company.
Further following changes at took place in the board of the Company during theFinancial Year and up to date are as under:
APPOINTMENTS ON THE BOARD
Mr. Raman Bhatia was Re-designated from Executive Director to Managing Directorof the Company w.e.f. 2nd June2017 his appointment was further regularized at the EGM ofthe Company as Managing Director of the Company on 6th June 2017.
Mr. Sahiel Khurana was appointed as Additional Director of the Company w.e.f.2nd June 2017 and his appointment was further regularized at the EGM of the Company asNon-Executive Independent Director of the Company on 6th June 2017.
Mr. Jagmohan Singh was appointed as Additional Director of the Company w.e.f.2nd June 2017 and his appointment was further regularized at the EGM of the Company asNon-Executive Independent Director of the Company on 6th June 2017.
Mr. Pankaj Dawar was appointed as Additional Director of the Company w.e.f. 2ndJune 2017 and his appointment was further regularized at the EGM of the Company asNon-Executive Independent Director of the Company on 6th June 2017.
Mr. Yogesh Mahajan was appointed as an Additional Executive Director w.e.f. 29thMay 2018 and he shall hold office upto the date of ensuing Annual General Meeting. TheCompany has received requisite notice in writing from him proposing his candidature forappointment as Independent Director of the Company not liable to retire by rotation for aterm upto 5 (five) years.
RESIGNATIONS FROM THE BOARD
Mr. Pankaj Malik resigned as Executive Director w.e.f. 11th May 2017.
Mr. Arun Handa resigned from the directorship of the Company w.e.f. 24thFebruary 2018.
Mr. Jagmohan Singh resigned from the directorship of the Company w.e.f. 26thMarch 2018.
The Company has formulated a policy on performance evaluation of the IndependentDirectors Board and its Committees and other individual Directors which shall be basedon inter alia criteria like attendance effective participation domain knowledgeaccess to management outside Board Meetings and compliance with the Code of Conductvision and strategy and benchmark to global peers.
On the basis of policy for performance evaluation of Independent Directors BoardCommittees and other individual directors a process of evaluation was carried out. Theperformance of the Board individual directors and Board Committees were found to besatisfactory.
Further Independent Directors of the Company have given declaration that they meet theeligibility criteria of Independence as provided under Section 149(6) of the CompaniesAct 2013 & under Regulation 17 and 72 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
KEY MANAGERIAL PERSONNEL
The details of Key Managerial Personnel are as under:-
Pallavi Sahni was appointed as Company Secretary on 02.06.2017. and resignedw.e.f. 30.06.2018
Kamlesh Kumar Thakur (Appointed as CFO w.e.f. 02.06.2017 and Resigned from thepost of CFO w.e.f. 28th February 2018)
Ghanshyam Das Singla was removed from the post of CFO w.e.f 31st August 2018.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92(3) of the Companies Act 2013 is annexed herewith as Annexure-ll andforms an integral part of this report.
SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
The Board had appointed A Divay and Company Company Secretaries to conduct theSecretarial Audit for the Financial Year 2017-18. The Secretarial Audit Report for theFinancial Year ended on March 31 2018 in the prescribed format is attached herewith asAnnexure-lll to this report.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark to be explained by the Directors of the Company.
The Company has appointed M/s. GAAP and Associates Chartered Accountants as anInternal Auditor of the Company to conduct Internal Audit of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 with the Stock Exchanges in India is presented as Annexure-I in this report.
The Company has not accepted any deposits within the meaning of Section 73 of CompaniesAct 2013 and the Companies (Acceptance of Deposit) Rules 2014 during the Financial Year2017-18 under review.
The Authorized Share capital of the Company is Rs. 190000000. Further Paid up ShareCapital of the Company is Rs. 183104290 (Divided into equity shares of Rs. 10 each).
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION AND PROJECTION FUND LISTINGWITH STOCK EXCHANGES
Your Company did not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to InvestorEducation and Protection Fund (IEPF).
The Company is committed to maintain the highest standards of corporate governance andadhere to the Corporate Governance Requirements set out by SEBI.A detailed CorporateGovernance Report of the Company in pursuance of Regulation 15 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of the Annual Reportof the Company. The requisite Certificate from a Practicing Company Secretary confirmingcompliance with the conditions of Corporate Governance as stipulated under the aforesaidRegulation 15 is attached to the Corporate Governance Report.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTOR
Your Company has put in place a system to familiarize its Independent Directors aboutthe Company its Business Segment the Industry and Business model of the Company. Inaddition italso undertakes various measures to update the Independent Director about theongoing events and development relating to the Company. All the Independent Directors ofthe Company are made aware of their role responsibilities & liabilities at the timeof their appointment / re appointmentthrough a formal letter of appointment which alsostipulates various terms and conditions of their engagement including the compliancerequired from him under Companies Act 2013 Listing Regulation and other various statuesand an affirmation is obtained for the same. The Detail of the Familiarization Programmefor Directors are available on the Company's Website at the link -
SUBSIDIARIES /JOINT VENTURES /ASSOCIATE COMPANIES
During the year under review no company became or ceased to be a Subsidiary/JointVenture/Associate of the Company.
SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATORS OR COURT
No significant and/or material orders were passed by any Regulators/Courts/Tribunalswhich impact the going concern status of the Company or its future operations.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of the companyhave occurred between the end of financial year of the company to which the financialstatements relate and the date of report.
However on August 24 2018 - the Company received a Letter from National StockExchange (NSE) regarding Listing of Securities of Servotech Power Systems Limited on theExchange and admitted to dealings on the Capital Market Segment of the Exchange w.e.f.August 24 2018.
NUMBER OF MEETINGS OF THE BOARD
The details of the number of meetings of the Board held during the Financial Year2017-18 forms part of the Corporate Governance Report.
Pursuant to the requirements under Section 177 and 178 of Companies Act 2013 andRegulation 1819 20 and 20 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board of Directors has constituted various Committees of the Boardsuch as Audit Committee Nomination and Remuneration Committee Stakeholders RelationshipCommittee and Corporate Social Responsibility Committee. The details of composition andterms of reference are in the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(3)(c) read with Section 134(5) of theCompanies Act2013 with respect to Directors' Responsibility Statement it is herebyconfirmed that:
i) In the preparation of the annual accounts for the Financial Year ended March 312018 the applicable Accounting Standards read with the requirements set out underSchedule III to the Companies Act 2013 have been followed and there are no materialdepartures from the same;
ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2018 and of the profitand loss of the Company for the year ended on that date;
iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv) The Directors have prepared the Annual Accounts of the Company for the FinancialYear ended March 31 2018 on a 'going concern' basis;
v) The Directors have laid down Internal Financial Control to be followed by theCompany and that such internal financial control are adequate and were operatingeffectively; and
vi) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
RISK ASSESSMENT/ MANAGEMENT
The Board of Directors of the Company is responsible for the direction andestablishment of internal control to mitigate material business risks. The policy isframed to identify the element of risk for achieving its business objective and to providereasonable assurance that all the material risks misstatements frauds or violation oflaws and regulations will be mitigated.
The Company promotes ethical behavior in all its business activities. Towards this incompliance to the provisions of Section 177 of Companies Act 2013 the Company hasadopted a policy on Vigil Mechanism and Whistle Blower. The Company has constituted AuditCommittee to process and investigate a protected disclosure made under the policy. Theconfidentiality of those reporting violations is maintained and they are not subjected toany discriminatory practice or victimization. The Audit Committee oversees the VigilMechanism. The policy on vigil mechanism and whistle blower is available on Company'swebsite at the link
RELATED PARTY TRANSACTIONS
In terms of the provisions of Section 188 of Companies Act 2013 and Regulation 23 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hadnot entered into any contract/ arrangement/ transactions with Related Parties which couldbe considered material in accordance with the policy of the Company on materiality ofrelated party transactions during the year. The policy on dealing with Related PartyTransaction and policy for determining Material transactions are posted on the Company'swebsite at the link https://servotech.in/partv-transaction-policv/
PARTICULARS OF LOANS GIVEN. INVESTMENTS MADE. GUARANTEES GIVEN AND SECURITIES PROVIDED
The details of Loans given Investments made Guarantees given and Securities providedby the Company are given in Note Number 10 to the Financial Statement.
PARTICULARS OF EMPLOYEE AND MANAGERIAL REMUNERATION
During the year under review the Company does not have any employee who is drawing theremuneration in excess of the limits prescribed by provisions of Section 197(12) of theCompanies Act 2013 read with Rules 5 (1) (2) and (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
DISCLOSURES PURSUANT TO SECTION 197 (12) AND RULE 5 OF COMPANIES
The Company has given remuneration according to the remuneration policy formulated bythe Company. Further information is as follows:
I. The Ratio of Remuneration of each Director to the Median Employees Remuneration ofthe Company for the financial year 2017-18 is as follows:
The Ratio of Remuneration of each Director to the Median Employees Remuneration of theCompany is 33.27:1
II. The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year2017-18 :
III. The percentage increase in the median remuneration of employees in the FinancialYear 2017-18:
There has been an increase of 4.95% in percentage of median remuneration paid toemployees in the Financial Year 2017-18 as compared to Financial Year 2017-18
IV. The number of permanent employees on the rolls of Company:
The numbers of permanent employees on the rolls of the Company are 245.
V. Affirmation that the remuneration is as per the remuneration policy of the Company:
It is hereby confirmed that the remuneration in the Financial Year 2017-18 has beenpaid according to the remuneration policy of the Company.
RISK MANAGEMENT POLICY
The Board of Directors of the company is of the view that currently no significant riskfactors are present which may threaten the existence of the company.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors of the Company have constituted Corporate Social Responsibility(CSR) committee pursuant to Section 135 of Companies Act 2013 schedule VII and relevantrules and provisions comprising Mr. Yogesh Mahajan (Chairperson) Mr. Pankaj Dawar and Mr.Sahiel Khurana as members of the Committee. The said Committee has been entrusted with theresponsibility of formulating and recommending to the Board a CSR Policy indicating theactivities to be undertaken by the Company monitoring the implementation of the frameworkof the CSR Policy and recommending the amount to be spent on CSR activities.
During the year under review Company has not spent any amount on CSR activities due toinadequacy of profits.
The Company donated 5100000 for kerala relief fund on 29th August 2018.
The Corporate Social Responsibility policy is available on our website at the link
None of the Employees drew salary more than Rs. 850000/- per month or 3 12000000/-in a year as required under the provisions of Section 197 (12) of the Companies Act 2013read with Rules 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
NOMINATION AND REMUNERATION POLICY
The Board of Directors have constituted Nomination and Remuneration Committee pursuantto Section 178 of Companies Act 2013 comprising Mr. Sahiel Khurana (Chairperson) Mr.Pankaj Dawar and Mr. Yogesh Mahajan as members of the Committee. The Board of Directorshas formulated a policy which lays down a framework in relation to remuneration ofDirectors Key Managerial Personnel and Senior Management of the Company. The Policy alsolays down the criteria for selection and appointment of Board Members.
The Nomination and Remuneration Policy is available on our website at the linkhttps://servotech.in/nomination- remuneration-policv/
WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Board at its meeting has adopted a Whistle Blower Policy/Vigil Mechanism inaccordance with the provisions of the Companies Act 2013 and SEBI (LODR) 2015 whichprovides a formal mechanism for all directors employees and other stakeholders of theCompany to report to the management their genuine concerns or grievances about unethicalbehaviour actual or suspected fraud and any violation of the Company's Business Code ofConduct.
The Policy also provides a direct access to the Chairperson of the Audit Committee tomake protective disclosures to the management about grievances or violation of theCompany's Business Code of Conduct.
The Whistle Blower policy is also available on our website at the link
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT. 2013
Your Company has always believed in providing a safe and harassment free workplace forevery women working in its premises through various interventions and practices. TheCompany always endeavors to create and provide an environment that is free fromdiscrimination and harassment including sexual harassment.
In accordance with "The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013" to provide for the effective enforcement of thebasic human right of gender equality and guarantee against sexual harassment and abusemore particularly against sexual harassment at work places measures are laid down by theCompany. During the year there was no complaint lodged with the Company.
All employees (permanent contractual temporary trainees) are covered under thispolicy.
FORMAL ANNUAL EVLUATION
The evaluation framework for assessing the performance of Directors comprises of thefollowing key areas:
Attendance of Board Meetings and Board Committee Meetings;
Quality of contribution to Board deliberations;
Strategic perspectives or inputs regarding future growth of Company and itsperformance;
Providing perspectives and feedback going beyond information provided by themanagement;
Commitment to shareholder and other stakeholder interests
The evaluation involves Self-Evaluation by the Board Member and subsequently assessmentby the Board.
Your Directors wish to place on record their appreciation for the continuous supportextended by all the employees shareholders customers investors government authoritiesand bankers for their continued support and faith reposed in the Company.