Your Directors have pleasure in presenting the Twenty Fourth Annual Report on thebusiness and operations of your Company together with the Standalone and ConsolidatedAudited Financial Statements for the year ended March 31st 2019.
1. Results of our operations
| || |
|Particulars ||Year Ended March 31 2019 ||Year Ended March 31 2018 ||Year Ended March 31 2019 ||Year Ended March 31 2018 |
|Revenue from Operations ||2654.10 ||2548.67 ||2352.37 ||2247.98 |
|Other Income ||4.43 ||0.64 ||3.93 ||0.64 |
|Total Income ||2658.53 ||2549.31 ||2356.30 ||2248.62 |
|Other Expenditure ||2534.69 ||2373.48 ||2287.52 ||2157.03 |
|Earnings before Interest Tax Depreciation and Amortization (EBITDA) ||123.85 ||175.83 ||68.78 ||91.59 |
|Depreciation and Amortization Expenses ||18.62 ||13.59 ||9.02 ||4.98 |
|Finance Cost ||56.70 ||46.35 ||35.20 ||27.45 |
|Profit before Tax (PBT) ||48.53 ||115.90 ||24.56 ||59.17 |
|Tax expense: || || || || |
|Current Year ||12.84 ||38.15 ||7.47 ||21.54 |
|Earlier Year ||(0.73) ||1.10 ||(0.60) ||(0.27) |
|Deferred Tax ||3.68 ||2.84 ||1.26 ||(0.36) |
|Profit After Tax (PAT) ||32.74 ||73.80 ||16.43 ||38.25 |
|Add: Other Comprehensive Income ||(0.35) ||0.10 ||(0.39) ||0.04 |
|Total Comprehensive Income ||32.40 ||73.91 ||16.04 ||38.29 |
|EARNING PER EQUITY SHARE (Face Value of '10 each) || || || || |
|i) Basic ||14.33 ||32.30 ||7.19 ||16.74 |
|ii) Diluted ||14.33 ||32.30 ||7.19 ||1 6.74 |
The Company recorded consolidated revenues of '2654.10 crores for the year ended 31stMarch 2019 representing a growth of 4% over the previous year. The Company recorded aconsolidated EBITDA of '123.85 crores and the EBITDA margins stood at 4.7%. We reported aPAT of '32.74 crores.
Our standalone revenues increased by 4.6% and stood at '2352.37 crores for the yearended 31st March 2019. The standalone PAT stood at '16.43 crores.
The first half of the previous financial year was very robust. However the Companyfaced several headwinds in the second half including weak operating environment naturalcalamities in South India and commodity price volatility. These impacted the performanceof the Company for the year ended 31st March 2019.
The Board subject to the approval of the members of the Company at the ensuing AnnualGeneral Meeting recommends a dividend of '1.50 per fully paid up equity share of '10 eachof the Company for the year ended 31st March 2019 as against '3.25 per share for theprevious year.
3. Key consolidated balance sheet information
In compliance with the applicable provisions of the Companies Act 2013("Act") and regulations of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") the Company has prepared consolidated financial statements and as perthe applicable Accounting Standards issued by the Institute of Chartered Accountant ofIndia.
The Audited Consolidated Financial Statements along with the Auditors' Report have beenannexed to the Annual Report.
4. Capital Expenditure on tangible assets
This year on a standalone basis we undertook a capital expenditure of '32.55 Crores(Net) as against '15.14 Crores (Net) in the previous year. On a consolidated basis ourcapital expenditure stood at '40.31 Crores (Net) for FY 2019 as against '40.33 Crores(Net) for the previous year.
5. Particulars of loans guarantees or investments
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the Notes to the financial statements provided in this Annual Report.
6. Transfers to reserves
The Company transferred Rs. Nil from the Profit of the year towards reserve.
7. Nature of Business
There has been no change in the nature of business of the Company.
8. Particulars of contracts or arrangements made with related parties During thefinancial year ended 31st March 2019 all the contracts or arrangements or transactionsentered into by the Company with the related parties were in the ordinary course ofbusiness and on arm's length basis and were in compliance with the applicable provisionsof the Companies Act 2013 and the SEBI (LODR) 2015.
Further the Company has not entered into any contract or arrangement or transactionwith the related parties which could be considered material in accordance with the policyof the Company on materiality of related party transactions. In view of the abovedisclosure in FORM AOC-2 is not applicable.
Transactions with related parties as per requirements of Indian Accounting Standard 24are disclosed in the notes to accounts annexed to the financial statements. Your Company'sPolicy on Related Party Transactions as adopted by your Board can be accessed on theCompany's website i.e www.shankarabuildpro.com.
9. Subsidiary Companies:
Shankara Building Products Limited has the following subsidiary companies
(i) Taurus Value Steel & Pipes Pvt. Ltd. - Having a tube & galvanized stripprocessing facility at Hyderabad.
(ii) Vishal Precision Steel Tubes & Strips Pvt. Ltd. Having a tube & coldrolled strip processing facility at Bengaluru.
(iii) Steel Network Holdings Pte. Ltd. - Wholly owned subsidiary registered atSingapore having an Indian colour coated roofing profiling subsidiary CenturywellsRoofing India Pvt. Ltd.
(iv) Centurywells Roofing India Pvt. Ltd - Step-down wholly owned subsidiary heldthrough Steel Network Holdings Pte Limited primarily engaged in providing colour coatedroofing products. It has processing facilities in Chennai Bangalore Coimbatore PuneVijayawada and Hubli.
No new subsidiary was added and no company has ceased to be a Shankara BuildingProducts Limited subsidiary during FY 2018-19
The details in Form AOC-1 for each subsidiary is as per Annexure- I
10. Information Technology
We have implemented a company-wide ERP system. This system is used to manage andco-ordinate all resources information and functions of the business on a real-time basis.The ERP system helps in integration of different functional areas to ensure propercommunication productivity quality and efficiency in decision making. It further helpsin tracking customer demands and assisting in maintaining optimum inventory levels. Wehave a dedicated IT team which is involved in maintaining the ERP system.
11. Human Resource
As of March 31 2019 we have 1617 employees on the payroll of our Company andSubsidiaries. The following table sets forth the break-up as of March 31 2019:
|Departments ||No.of Employees |
|1. Sales and marketing ||533 |
|2. Finance Accounts and Administration ||434 |
|3. Operations ||441 |
|4. Supply Chain ||229 |
|Total ||1617 |
In addition to the employees listed above we also engage contract labour to facilitateour processing operations. As of March 31 2019 we engaged 462 contract workers. OurCompany is in compliance with the Contract Labour (Regulation and Abolition) Act 1970and the rules prescribed thereunder in this regard.
12. Directors' Responsibility Statement
To the best of knowledge and belief and according to the information and explanationsobtained by us your Directors make the following statements in terms of Section 134(3)(c)and 1 34(5) of the Act that:
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;
iii. they have taken proper and sufficient care for the 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 andthat such 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 were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Company's internal financial controls were adequate and effectiveduring FY.201 8-19.
13. Directors & key managerial personnel
A. Composition and size of the Board:
The Board has an optimum combination of executive non-executive and independentdirectors. The total strength of the Board as on the date of reporting is seven Directorsof which four are Independent Directors.
B. Director retiring by rotation:
Mr. C. Ravikumar (DIN : 01247347) is liable to retire by rotation in terms ofprovisions of the Act at the ensuing Annual General Meeting of the Company and beingeligible offers himself for re-appointment. The Board recommends his re-appointment.
As stipulated under Regulation 36(3) of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 brief resume of the director proposed to be re-appointedis given in the Notice of the Annual General Meeting.
The Board of Directors at its meeting held on 14th August 2018 has approved theappointment of Mr. B. Jayaraman as Independent Director of the Company for a period offive years subject to the approval of the shareholders at the ensuing Annual GeneralMeeting.
On the recommendation of Nomination and Remuneration Committee the Board of Directorsat its meeting held on 9th May 2019 has approved the re-appointment of Mr. V. Ravichandaras Independent Director of the Company for a period of five years subject to the approvalof the shareholders at the ensuing Annual General Meeting.
Pursuant to the provisions of section 149 of the Act Mr. V. Ravichandar Mr. ChanduNair Ms. Jayashri Mural i and Mr. B. Jayaraman were appointed as Independent Directors ofthe Company.
All Independent Directors of the Company have given declarations to the Company underSection 149(7) of the Act that they meet the criteria of independence as provided inSub-Section 6 of Section 149 of the Act and also under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations)
Pursuant to the provisions of section 203 of the Act the key managerial personnel ofthe Company are Mr. Sukumar Srinivas Managing Director
Mr. Siddhartha Mundra Chief Executive Officer Mr. Alex Varghese Chief FinancialOfficer and Ms. Ereena Vikram Company Secretary.
14. Number of meetings of the Board
D u ring the year 4 meetings of the Board of Directors were held and one meeting ofIndependent Directors was also held. For details of the meetings of the board pleaserefer to the corporate governance report which forms part of this report.
15. Policy on directors' appointment and remuneration and other details
The Nomination and Remuneration Policy of the Company for appointment and remunerationof the Directors Key Managerial Personnel and Senior Management of the Company along withother related matters have been provided in Corporate Governance Report.
The Company has formulated and adopted a Nomination and Remuneration policy which isdisclosed on our website at i.e. www.shankarabuildpro.com
A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read withRule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is given in Annexure-II forming part of this report.
16. Internal financial control systems and their adequacy
The Company has in place adequate internal financial controls with reference tofinancial statements and no material reportable weakness was observed in the system duringthe year. The details in respect of internal financial control and their adequacy areincluded in the management discussion & analysis which forms part of this report.
The Board has reappointed M/s GRSM & Associates Chartered Accountants as InternalAuditor in the Board Meeting held on May 9 2019.
17. Audit committee
The details pertaining to composition of the Audit Committee and terms of reference areincluded in the Corporate Governance Report which forms part of t h i s report.
(i) Statutory Auditor: M/s. Sundaram & Srinivasan Chartered AccountantsChennai (Firm Registration No.004207S) were appointed as statutory auditors of theCompany to hold office from the conclusion of this Annual General Meeting till theconclusion of 29th Annual General Meeting to be held during calendar year 2024. They haveconfirmed their eligibility under Section 141 of the Companies Act 2013 and the Rulesframed there under for reappointment as Statutory Auditors of the Company.
Accordingly consent of the members is being sought for their appointment as thestatutory auditors of the Company.
(ii) Secretarial Auditor: Mr. K. Jayachandran Practicing Company Secretary (ACS No.11309 and Certificate of Practice No. 4031) was appointed as the Secretarial Auditor ofthe Company to conduct Secretarial Audit of the Company for the Financial Year 2018-19 asrequired under Section 204 of the Companies Act 2013 and the Rules made there under. TheSecretarial Audit Report for FY 2018-19 is appended as Annexure - III to theDirectors' Report.
Pursuant to Regulation 24A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 every listed entity and its material unlistedsubsidiaries incorporated in India shall undertake secretarial audit and shall annex withits annual report a secretarial audit report. The Annual Secretarial Compliance Reportfor FY 201819 signed by Mr. K. Jayachandran Practicing Com- mpany Secretary is appendedas Annexure- IV to the Directors' Report
19. Reporting of frauds
There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and/ or Board under Section 143 (12)of the Act and Rules framed thereunder.
20. Unclaimed Dividend of the previous years Section 124 of the Companies Act 2013 readwith Investor Education and Protection Fund Authority (Accounting Audit Transfer andRefund) Rules 2016 ('the Rules') mandates the Companies to transfer dividend that hasremained unpaid/unclaimed for a period of seven years in the unpaid dividend account tothe Investor Education and Protection Fund (IEPF).
The details of the unpaid/ unclaimed dividend lying with the Company are available onthe website of the Company i.e. www.shankarabuildpro.com.
21. Explanations or comments by the Board on every qualification reservation oradverse remark or disclaimer made
(i) Statutory Auditor's report
The Auditors Report to the Shareholders for the year under review does not contain anyreservation qualification or adverse remark. The comments in the Auditors' Report to theshareholders for the year under review to the shareholders for the year under review areself-explanatory and does not need further explanation.
(ii) Secretarial Auditor's Report
There are no qualifications reservations or adverse remarks made by the SecretarialAuditor in his report.
22. Risk Management
In terms of regulation 179(b) of the Listing Regulations the Board of Directorsadopted a Risk Management Policy. The main objective of Risk Management Policy is toenable long term sustainable growth by creating a robust risk management frameworkinvolving identification evaluation & management of risks by partnering withbusinesses and its associate functions.
The details of Risk Management are provided as a part of Management's Discussion andAnalysis which forms part of this report.
23. Corporate social responsibility
The Company has implemented various CSR projects directly and/or through implementingpartners and the projects undertaken by the Company are in accordance with Schedule VII ofthe Act.
The brief outline of the corporate social responsibility (CSR) policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure - V of this report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014.
Reasons for not spending the amount earmarked for CSR Activities:
A sum of '8.81 lakhs has remained unspent since some of the projects undertaken by theCompany are multiyear in nature and therefore further expenditure would be done in stages/ ensuing years.
For other details regarding the CSR Committee please refer to the Corporate GovernanceReport which forms part of this report. The policy is available on the website of theCompany www.shankarabuildpro.com.
24. Board Evaluation
The Companies Act and Listing Regulations relating to Corporate Governance containprovisions on evaluation of the performance of the Board and its Committees as a whole andDirectors including Independent Directors Non-Independent Directors and Chairpersonindividually. In pursuant thereof Annual Evaluation of performance of the Board workingof its Committees contribution and impact of individual directors has been carried outthrough a questionnaire for peer evaluation on various parameters.
25. Dividend Distribution Policy
As required under the Regulation 43A of the Listing Regulations the Company has aPolicy on Dividend Distribution. This Policy can be accessed on the Company's website atwww.shankarabuildpro.com
26. Extract of annual return
As per the provisions of Section 92(3) of the Act read with Rule 12 of the Companies(Management and Administration) Rules 2014 as amended from time to time the extract ofthe Annual Return in the Form MGT-9 is given in Annexure - VI forming part of thisreport.
27. Corporate Governance
As required under Regulation 34(3) of the Listing Regulations read with Schedule V (c)of the Listing Regulations a report on Corporate Governance and the certificate asrequired under schedule V (e) of the Listing Regulations from Mr. K. JayachandranPracticing Company Secretary regarding compliance of conditions of Corporate Governanceare given in Annexure - VII & Annexure - VIII forming part of this report.
28. Management Discussion and Analysis Report
In terms of regulation 34 of the Listing Regulations the Management Discussion andAnalysis Report on your Company's performance industry trends and other material changeswith respect to your Company and its subsidiaries wherever applicable are forming partof this report.
29. Particulars of employees
The details of remuneration to Employees as required under Rule 5(2) read with Rule5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended are given in Annexure-IX and form part of this Report.
30. Disclosure requirements
As per SEBI Listing Regulations Corporate Governance Report with Auditors' Certificatethereon and Management Discussion and Analysis are attached which form part of thisreport.
31. Deposits from public The Company has not accepted any deposits covered underChapter V of Companies Act 2013 and also any other deposit which is not in compliancewith the requirements of Chapter V of the Companies Act 2013.
32. Conservation of energy technology absorption foreign exchange earnings and outgo
Conservation of energy:
The particulars as prescribed under Section 134 of the Companies Act 2013 read withRule 8 (3) of the Companies (Accounts) Rules 2014 in respect of Conservation of EnergyTechnology Absorption and Foreign Exchange Earnings and Outgo are enclosed in the AnnexureX to the Directors' report.
Technology absorption adaptation and innovation:
The Company continues to use the latest technologies for improving the productivity andquality of its services and products. The Company's operations do not require significantimport of technology.
Foreign Exchange earnings and outgo
There was no Foreign Exchange inflow and outflow during the year.
33. Disclosure as per the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal)
Act 2013 As per the requirement of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder yourCompany has framed a Policy on prevention prohibition and redressal of sexual harassmentat workplace and constituted Internal Complaints Committee having designated members toredress complaints regarding sexual harassment. During the year under review no complaintof sexual harassment has been reported.
34. The details of significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and company's operations in future;
No significant or material orders have been passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future.
35. Other disclosures
(i) Details of equity shares with differential rights
The Company has not issued any equity shares with differential rights during the year.
(ii) Details of sweat equity shares issued
The Company has not issued any sweat equity shares during the year.
(iii) Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
(iv) Bonus Shares
No Bonus Shares were issued during the year under review.
36. Whistle Blower Policy
The Company in compliance with Section 177 of the Companies Act 2013 and Regulation 22of SEBI Listing Regulations has established a Whistle Blower policy / Vigil Mechanism forthe Directors and Employees to report genuine concerns or grievances about unethicalbehavior actual or suspected fraud or violation of the company's Code of Conduct orEthics Policy. The Company has a vigil mechanism process wherein the employees are free toreport violations of laws rules regulations or unethical conduct.
The confidentiality of those reporting violations is maintained and they are notsubjected to any discriminatory practice. The whistle blower policy of the Company isdisclosed on our website i.e. www.shankarabuildpro.com
Your Directors place on record their sincere appreciation for the significantcontribution made and services rendered by employees of the Company with dedication andcommitment at all levels which has been critical for the Company's success.
Your Directors take this opportunity to thank Clients Bankers Vendors Shareholdersand Investors at large for their valuable co-operation and continued support.
The directors appreciate and value the contributions made by every member of theShankara family.
| ||For and on behalf of the Board of Directors |
| ||Sd/- ||Sd/- |
| ||Sukumar Srinivas ||C. Ravikumar |
|Date: Bengaluru ||Managing Director ||Whole-time Director |
|Place: May 9th 2019 ||DIN: 01668064 ||DIN: 01247347 |