SHANLLKARA BUILDING PRODUCTS LIMITED
Your Directors have pleasure in presenting the Twenty Fifth Annual Report on thebusiness and operations of your Company together with the Standalone and ConsolidatedAudited Financial Statements for the year ended March 31 2020.
1. Financial Highlights
The financial results of the Company for the year ended March 31 2020 are summarizedbelow.
(Rs. in Crores)
| ||Consolidated ||Standalone |
|Particulars ||Year Ended March 31 2020 ||Year Ended March 31 2019 ||Year Ended March 31 2020 ||Year Ended March 31 2019 |
|Revenue from Operations ||2639.73 ||2546.32 ||2493.84 ||2352.37 |
|Other Income ||4.98 ||4.32 ||4.24 ||3.93 |
|Total Income ||2644.71 ||2550.64 ||2498.08 ||2356.30 |
|Other Expenditure ||2522.63 ||2446.87 ||2412.10 ||2287.52 |
|Earnings before Interest Tax Depreciation and Amortization (EBITDA) ||122.08 ||103.77 ||85.98 ||68.78 |
|Depreciation and Amortization || || || || |
|Expenses ||25.37 ||14.82 ||18.60 ||9.02 |
|Finance Cost ||43.35 ||47.15 ||31.69 ||35.20 |
|Profit before Tax (PBT) ||53.36 ||41.80 ||35.69 ||24.56 |
|Tax expense: || || || || |
|Current Year ||13.94 ||11.57 ||9.42 ||7.47 |
|Earlier Year ||(0.14) ||(0.73) ||- ||(0.60) |
|Deferred Tax ||(2.57) ||2.52 ||(1.01) ||1.26 |
|Profit after Tax (PAT) ||42.13 ||28.44 ||27.28 ||16.43 |
|Profit from discontinued operation ||(2.25) ||4.30 ||- ||- |
|Add: Other Comprehensive Income ||0.24 ||(0.35) ||(0.19) ||(0.39) |
|Total Comprehensive Income ||40.12 ||32.39 ||27.09 ||16.04 |
|EARNING PER EQUITY SHARE (Face Value of Rs.10 each) || || || || |
|i) Basic ||18.44 ||12.45 ||11.94 ||7.19 |
|ii) Diluted ||18.44 ||12.45 ||11.94 ||7.19 |
|(For discontinued operation) || || || || |
|i) Basic ||(0.99) ||1.88 ||- ||- |
|ii) Diluted ||(0.99) ||1.88 ||- ||- |
|(For discontinued & continuing operations) || || || || |
|i) Basic ||17.45 ||14.33 ||- ||- |
|ii) Diluted ||17.45 ||14.33 ||- ||- |
The Company recorded consolidated revenues of Rs.2639.73 crores for the year ended 31March 2020 representing a growth of 4% over the previous year. The Company recorded aconsolidated EBITDA of Rs.122.08 crores and the EBITDA margins stood at 4.62%. We reporteda PAT from continuing operations of Rs.42.13 crores.
Our standalone revenues increased by 6% and stood at Rs.2493.84 crores for the yearended 31 March 2020. The standalone PAT stood at Rs.27.28 crores.
2. Share Capital
During the year under review the Company has not issued or allotted any shares of theCompany. The number of Equity Shares of Rs.10/- fully paid up as on March 31 2020 is22849326. The Company does not have any outstanding warrants or any convertibleinstruments as on March 31 2020.
3. Transfers to reserves
The Company has not transferred / appropriated any amount to the General Reserveretaining the entire surplus for the year ended March 31 2020 as Balance in Profit andLoss Account.
In terms of Dividend Distribution Policy of the Company the Board of Directors of theCompany declared an interim dividend of 20% (i.e. Rs.2/- per equity share of the facevalue of Rs.10/- each) for the financial year ended March 31 2020. Total outgo on theinterim dividend was Rs.5.50 crores (including dividend distribution tax of Rs.93.93lacs). The Board has not proposed any final dividend for the financial year ended March31 2020 and accordingly interim dividend paid during the year shall be treated as finaldividend.
5. Material changes and commitment if any affecting financial position of the Companyfrom the end of the financial year till the date of this Report
The Corona Virus Pandemic is an unprecedented development that has impacted the worldat large. Complete lockdown was announced in India on 25th March 2020 duringwhich economic activity came to a standstill. While limited activity has been allowed thered zones and hotspots are coming under careful observation from the governmentauthorities. This has been further discussed in the Management Discussion & Analysissection.
6. Unclaimed Dividend
Section 124 of the Companies Act 2013 read with Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016 (the Rules') mandatesthe Companies to transfer dividend that has remained unpaid/unclaimed for a period ofseven years in the unpaid dividend account to the Investor Education and Protection Fund(IEPF). The details of the unpaid/unclaimed dividend lying with the Company are availableon the website of the company i.e. https://www.shankarabuildpro.com/pdf/Unclaimed%20Dividend%202018-19.pdf
Transfer to Investor Education and Protection Fund ("IEPF")
a) Transfer of Unclaimed Dividend to IEPF
Pursuant to the provisions of Section 124 of Companies Act 2013 read with IEPF(Accounting Audit Transfer and Refund) Rules 2016 dividends which remain unpaid orunclaimed for a period of seven years from the date of its transfer to unpaid dividendaccount are required to be transferred by the Company to Investor Education and ProtectionFund ("IEPF") established by the Government of India under the provisions ofSection 125 of the Companies Act 2013. During the year under review there is nounclaimed divided required to be transferred to the Account of IEPF.
b) Transfer of Shares to IEPF
Section 124(6) of Companies Act 2013 read with IEPF (Accounting Audit Transfer andRefund) Rules 2016 mandates transfer of underlying shares in respect of which dividendhas not been paid or claimed for seven consecutive years or more in the name of InvestorEducation and Protection Fund. During the year under review the Company is not requiredto transfer shares to the IEPF Authority pursuant to the aforesaid rule.
7. 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 i.e.https://www.shankarabuildpro.com/pdf/pdf-Di vidend-Distribution-Policy.pdf. Thesaid Policy has been annexed as Annexure-I to this Directors' Report.
8. 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 Directors' Report.
9. Subsidiary Companies
Shankara Building Products Limited has the following subsidiary companies (i) TaurusValue Steel & Pipes Pvt. Ltd. - Having a tube and strip processing facility atHyderabad. (ii) Vishal Precision Steel Tubes & Strips Pvt. Ltd.
Having a tube strip processing facility at Bengaluru.
(iii) Centurywells Roofing India Pvt. Ltd Wholly owned subsidiary primarilyengaged in providing color coated roofing products. It has processing facilities inChennai Bangalore Secunderabad Coimbatore Pune Vijayawada and Hubli. (iv) SteelNetwork (Holdings) Pte Ltd. Wholly owned subsidiary registered at Singaporeengaged in the business of manufacture distribution of roofing sheets steel pipes andgeneral hardware and general wholesale trade (including general importers &exporters). No new subsidiary was added and no company has ceased to be a ShankaraBuilding Products Limited subsidiary during FY 2019-20. However the Board of Directors inits meeting held on 26th day of April 2019 approved the acquisition of shares of step-downsubsidiary company Centurywells Roofing India Pvt. Ltd from wholly owned subsidiarycompany Steel Network Holdings Pte Ltd.
A Statement containing salient features of the Financial and Operational information ofthe Subsidiaries is provided in Form AOC-1 as Annexure- II to this Directors'Report.
Pursuant to Section 136 of the Companies Act 2013 the Financial Statements of theSubsidiaries are available on the website of the Company and also will be made availableupon the request by any member of the Company. The policy for determining "MaterialSubsidiary" framed by the Company in terms of Regulation 16(c) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is available on the Company'swebsite at the following link https://www.shankarabuildpro.com/pdf/pdf-Material-Subsidiaries.pdf
10. 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 as per theapplicable Accounting Standards issued by the Institute of Chartered Accountant of India.The Audited Consolidated Financial Statements along with the Auditors' Report have beenannexed to the Annual Report.
11. Capital Expenditure on tangible assets
This year on a standalone basis we undertook a capital expenditure of Rs.17.06 Crores(Gross) as against Rs.35.25 Crores (Gross) in the previous year. The shareholders of theCompany in its Extra-Ordinary General Meeting held on May 20 2019 approved sale ofpartial assets including land building and equipment of Taurus Value Steel & PipesPrivate Limited (a wholly owned subsidiary of Shankara Building products Limited).
On a consolidated basis our capital expenditure stood at Rs.23.61 Crores (Gross) forFY 2020 as against Rs.49.10 Crores (Gross) for the previous year.
12. Change in the nature of Business
Your Company continues to be in the business of organized retailers of homeimprovements and building products and there has been no change in the nature of businessof the Company or any of its subsidiaries during the year under review. As mentionedabove there was a partial sale of assets including land building and equipment of TaurusValue Steel & Pipes Private Limited (a wholly owned subsidiary of Shankara Buildingproducts Limited) in the last financial year. This has reduced our backend processingcapacities.
13. Credit Ratings
CRISIL has assigned the Long Term Rating BBB+/Stable' and Short Term RatingCRISIL A2' on the bank loan facilities of the Company.
(i) Statutory Auditor: In terms of the provisions of section 139 of the CompaniesAct 2013 read with Companies (Audit and Auditors) Rules 2014 M/s. Sundaram &Srinivasan Chartered Accountants (Firm Registration No.004207S) have been appointed asStatutory Auditors of the Company to hold office from the conclusion of 24th AnnualGeneral Meeting till the conclusion of 29th Annual General Meeting to be heldduring calendar year 2024. In accordance with the amendment to the provisions of Section139 by the Companies Amendment Act 2017 notified on May 7 2018 by the Ministry ofCorporate Affairs the appointment of Statutory Auditors is not required to be ratified bythe Members at every Annual General Meeting.
(ii) Secretarial Auditor: Pursuant to the provisions of Section 204 of theCompanies Act 2013 and rules thereunder Mr. K. Jayachandran Practicing CompanySecretary (ACS No. 11309 and Certificate of Practice No. 4031) was appointed as theSecretarial Auditor of the Company to conduct Secretarial Audit of the Company for theFinancial Year 2019-20.
The Secretarial Audit Report for FY 2019-20 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 2019-20 signed by Mr. K. Jayachandran Practicing Company Secretary is appended as Annexure- IV to the Directors' Report.
15. 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 are self-explanatory and does not need furtherexplanation.
(ii) Secretarial Auditor's Report
The Secretarial Audit Report does not contain any reservation qualification or adverseremark which calls for any further explanation.
16. 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. The composition of the Board of Directors is indue compliance of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
B. Retirement by rotation
Mr. RSV. Siva Prasad (DIN : 01247339) 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 forthe approval of the Members.
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.
C. Appointments and Re-appointments
On the recommendation of Nomination and Remuneration Committee the Board of Directorsat its meeting held on 5th February 2020 has approved the re-appointment ofMs. Jayashri Murali (DIN: 00317201) and Mr. Chandu Nair (DIN: 00259276) as an IndependentDirector of the Company for a period of five years subject to the approval of theshareholders at the ensuing Annual General Meeting.
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 ChiefExecutive Officer Mr. Alex Varghese Chief Financial Officer and Ms. Ereena VikramCompany Secretary.
17. 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 hasformulated and adopted a Nomination and Remuneration policy which is disclosed on ourwebsite at i.e. https://www.shankarabuildpro.com/pdf/pdf-Nomination-Remuneration-Policy.pdf
It is affirmed that the appointment and remuneration of Directors Key ManagerialPersonnel and all other employees during the year ended March 31 2020 is in accordancewith the Remuneration Policy of the Company.
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- V forming part of this Directors' Report.
Further particulars of employees pursuant to Rule 5 (2) & 5 (3) of the above Rulesform part of this report. However in terms of provisions of section 136 of the said Actthe report and accounts are being sent to all the members of the Company and othersentitled thereto excluding the said particulars of employees. Any member interested inobtaining such particulars may write to the Company Secretary at the registered office ofthe Company. The said information is available for inspection at the registered office ofthe Company during working hours.
18. Number of meetings of the Board
The Board during the financial year 2019-20 met six times viz. 26th April2019; 9th May 2019; 12th August 2019; 11th November2019; 5th February 2020 and 13th March 2020 and also had onemeeting of Independent Directors. The maximum interval between any two meetings did notexceed 120 days as prescribed in the Companies Act 2013. Detailed information regardingthe meetings of the Board and various Committees of the Board are included in the reporton Corporate Governance which forms part of this Report.
19. Audit committee
The Audit Committee of the Board currently headed by an Independent Director asChairperson meets at regular intervals to discharge its terms of reference effectively andefficiently. During the year there were no instances where the recommendations of theAudit Committee were not accepted by the Board. A detailed note on the composition roleand functions of the Audit Committee are disclosed in the Report on Corporate Governancewhich forms part of this Report.
20. Directors' Responsibility Statement
Pursuant to the requirement under Section 134 of the Companies Act 2013 with respectto Directors' Responsibility Statement it is hereby confirmed that: i. in the preparationof the Annual Accounts of the Company both standalone and consolidated for the yearended March 31 2020 the applicable accounting standards read with requirements set outunder Schedule III to the Companies Act 2013 have been followed and that there are nomaterial departures from the same. ii. the Directors have selected such accountingpolicies and made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at March 31 2020 and of theprofit for the year ended on that date; iii. the Directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; iv. the Annual Accounts for theyear ended March 31 2020 have been prepared on a going concern basis; v. adequateinternal financial controls have been laid down and such controls are operatingeffectively; vi. proper and adequate systems to ensure compliance with the provisions ofall applicable laws have been devised and such systems are operating efficiently; and vii.there are no instances of frauds involving the officers or employees of the Companyreported by the Auditor under section 143 (12) of the Act during the year ended March 312020.
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.2019-20.
21. Human Resource
As of March 31 2020 we have 1237 employees on the payroll of our Company andSubsidiaries. The following table sets forth the break-up as of March 31 2020:
|Sr. No Departments ||No. of Employees |
|1. Sales and Marketing ||493 |
|2. Finance Accounts and Administration ||387 |
|3. Operations ||110 |
|4. Supply Chain ||247 |
|Total ||1237 |
In addition to the employees listed above we also engage contract labour to facilitateour processing operations. As of March 31 2020 we engaged 400 contract workers. OurCompany is in compliance with the Contract Labour (Regulation and Abolition) Act 1970and the rules prescribed thereunder in this regard.
22. 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.
23. Board Performance Evaluation
Pursuant to the provisions of the Companies Act 2013 and Regulation 19 of SEBI (LODR)Regulations 2015 annual evaluation of the performance of the Board the Directorsindividually as well as the evaluation of the working of its various committees has beencarried out through a structured questionnaire covering various aspects of the Board'sfunctioning such as adequacy of the composition of the Board and its Committees Boardculture execution and performance of specific duties obligations independencegovernance ethics and values adherence to corporate governance norms attendance andcontribution at meetings etc. The evaluation process has been explained in the CorporateGovernance Report which forms part of this report.
24. 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 Directors' Report.
The Company has not extended any loans guarantees or investments to any other personor body corporate during the year under review.
25. Particulars of contracts or arrangements made with related parties
During the financial year ended 31 March 2020 all the contracts or arrangements ortransactions entered into by the Company with the related parties were in the ordinarycourse of business and on arm's length basis and were in compliance with the applicableprovisions of the Companies Act 2013 and the SEBI (LODR) 2015. Further the Company hasnot entered into any contract or arrangement or transaction with the related parties whichcould be considered material in accordance with the policy of the Company on materialityof related party transactions. In view of the above disclosure in FORM AOC-2 is notapplicable. Transactions with related parties as per requirements of Indian AccountingStandard 24 are disclosed in the notes to accounts annexed to the financial statements.Your Company's Policy on Related Party Transactions as adopted by your Board can beaccessed on the Company's website i.e. https://www.shankarabuildpro.com/pdf/pdf-RPT.pdf
26. Corporate social responsibility
In line with the provisions of Section 135 of the Companies Act 2013 the Company hasconstituted a committee to formulate implement and monitor the CSR Policy of the Company.The composition of the CSR Committee is disclosed in the Report of Corporate Governanceforming part of this Report.
The detailed report on CSR initiatives undertaken during the financial year 2019-20together with the report on CSR activities as required by the Companies (Corporate SocialResponsibility Policy) Rules 2014 are set out in Annexure- VI to this Directors'Report.
Reasons for not spending the amount earmarked for CSR Activities:
The Company allocated an amount of Rs.76.84 Lakhs to be spent on corporate socialresponsibility (CSR) activities during the year 2019-20. Out of this the Company spentRs.55.86 Lakhs during the year under review. The unspent amount of Rs.20.98 Lakhs has beencarried forward for spending in forthcoming years. The Company believes as a part of CSRActivities in spending on such activities which really benefit the targetedbeneficiaries. During the year under review the Company while continuing to support itsongoing projects has associated itself with few new projects to expand its CSRinitiatives in a systematic manner.
The Company is continuously extending its effort for making contributions to varioussocially useful projects and is confident of meeting the statutory requirement during thefinancial year 2020-21. The detailed report on CSR Activities is set out in Annexure-VI to this Director' Report. The policy is available on the website of the Companyi.e. https://www.shankarabuildpro.com/ pdf/pdf-CSR-Policy.pdf
27. Corporate Governance and Shareholders' Information
Pursuant to Regulation 34 of the SEBI Regulations the Report on Corporate Governancefor the financial year 2019-20 along with a Certificate issued by a Practising CompanySecretary confirming compliance with the mandatory requirements relating to CorporateGovernance as stipulated under Chapter IV of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is presented as a separate section forming part of theAnnual Report forms an integral part of this report.
28. 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 framework have beenexplained in the Management's Discussion and Analysis Report which is provided as an Annexure-VII to this report.
29. 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
30. Whistle Blower Policy
In pursuance of the provisions of Section 177(9) of the Companies Act 2013 rules madethereunder and Regulation 4 of the SEBI (LODR) Regulations 2015 your Company hasformulated a vigil mechanism which also includes a whistle blower policy to deal withinstances of unethical behaviour actual or suspected fraud or violation of Company'sCode of Conduct or Ethics Policy.
The Company has a vigil mechanism process wherein the employees are free to reportviolations of laws rules regulations or unethical conduct. The confidentiality of thosereporting violations is maintained and they are not subjected to any discriminatorypractice. The whistle blower policy of the Company is disclosed on our website i.e. https://www.shankarabuildpro.com/pdf/pdf-Whistleblower-Policy.pdf
31. 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 (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder your Company hasframed a Policy on prevention prohibition and redressal of sexual harassment at workplaceand constituted Internal Complaints Committee having designated members to redresscomplaints regarding sexual harassment. During the year under review no complaint ofsexual harassment has been reported.
32. Extract of annual return
Pursuant to the provisions of Section 92(3) of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 as amended from time to time theextract of the Annual Return in the Form MGT-9 is given in Annexure - VIII formingpart of this Directors' Report.
The prescribed return is placed on the Company's website at www.shankarabuildpro.com
33. Deposits from public
The Company has not accepted any deposits covered under Chapter V of Companies Act2013 and also any other deposit which is not in compliance with the requirements ofChapter V of the Companies Act 2013.
34. Compliance with Secretarial Standards
During the year under review the Company has complied with all the applicableSecretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
35. 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.
36. Conservation of energy technology absorption foreign exchange earnings and outgoConservation 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 Annexure-IX 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 a Foreign Exchange outflow of USD 1389674.19 from Shankara BuildingProducts Limited to wholly owned subsidiary Steel Network Holdings Pte Limited inSingapore during the year.
37. Reporting of frauds
There was no instance fraud during the year under review which required the StatutoryAuditors to report to the Audit Committee and/ or Board under Section 143 (12) of the Actand Rules framed thereunder.
38. 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
During the year no significant and material orders were passed by the regulators orcourts or tribunals on the Company impacting the going concern status of the Company andCompany's operations in future.
39. 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.
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.
Annexure-I to the Directors' Report
DIVIDEND DISTRIBUTION POLICY
As per SEBI regulations Shankara Building Products Limited (the "Company")has approved and adopted the Dividend Distribution Policy at its meeting held on May 102018 being the effective date of the policy. The policy details are as follows:
1. BACKGROUND SCOPE PURPOSE AND EFECTIVE DATE
The Securities Exchange Board of India (SEBI) on July 8 2016 has notified the SEBI(Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations 2016(Regulations). Vide these Regulations SEBI has inserted Regulation 43A after Regulation43 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 whichrequires top five hundred listed companies (based on market capitalization of everyfinancial year) to formulate a Dividend Distribution Policy which shall be disclosed inits Annual Report and on its website. Shankara Building Products Limited (the"Company") being one of the top five hundred listed company as per the criteriamentioned above the Company has approved and adopted this Dividend Distribution Policy(the "Policy") at its meeting held on May 10 2018 being the effective date ofthe Policy. The intent of the Policy is to broadly specify the external and internalfactors including financial parameters that shall be considered while declaring dividendand the circumstances under which the shareholders of the Company may or may not expectdividend and how the retained earnings shall be utilized etc.
The Policy shall not apply to:
Determination and declaration of dividend on preference shares as and whenissued by the Company as the same will be as per the terms of issue approved by theshareholders
Issue of Bonus Shares by the Company
Buyback of Securities.
The Policy is not an alternative to the decision of the Board for recommendingdividend which is made every year after taking into consideration all the relevantcircumstances enumerated hereunder or other factors as may be decided as relevant by theBoard.
2.1 "Board" shall mean Board of Directors of the Company.
2.2 "Companies Act" shall mean the Companies Act 2013 and Rulesthereunder notified by the Ministry of Corporate Affairs Government of India asamended.
2.3 "Dividend" includes any interim dividend.
2.4 "Listed Entity / Company" shall mean Shankara Building ProductsLimited.
2.5 "Policy" means Dividend Distribution Policy.
2.6 "Regulations" shall mean the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 as notified byThe Securities and Exchange Board of India as amended from time to time.
2.7 "Stock Exchange" shall mean a recognised Stock Exchange as definedunder clause (f) of Section 2 of the Securities Contracts (regulation) Act 1956.
A. PARAMETERS AND FACTORS FOR DECLARATION OF DIVIDEND
The dividend pay-out decision of the Board depends upon the following financialparameters and internal and external factors:
i. Operating cash flow of the Company
ii. Profit earned during the year
iii. Up gradation of technology and physical infrastructure
iv. Creation of contingency fund
v. Acquisition of brands and business
vi. Cost of Borrowing
vii. Past dividend payout ratio / trends
viii.Profit available for distribution
ix. Working capital requirements
x. Capital expenditure requirement
xi. Business expansion and growth
xii. Earnings Per Share (EPS)
xiii. Likelihood of crystallization of contingent liabilities if any
xiv. Additional investment in subsidiaries and associates of the company
i. Economic environment
ii. Capital markets
iii. Global conditions
iv. Government regulations
v. Statutory provisions and guidelines
vi. Dividend payout ratio of competitors
vii. Any other factors
Subject to the other considerations as provided in the Policy the Board shalldetermine the dividend payout in a particular year after taking into consideration theoperating and financial performance of the Company the advice of executive management andother relevant factors.
B. CIRCUMSTANCES UNDER WHICH THE SHAREHOLDERS OF THE COMPANY MAY OR MAY NOT EXPECTDIVIDEND
The decision regarding dividend pay-out is a crucial decision as it determines theamount of profit to be distributed among shareholders of the Company and the amount ofprofit to be retained in business. The decision seeks to balance the dual objectives ofappropriately rewarding shareholders through dividends and retaining profits in order tomaintain a healthy capital structure to support future growth. The shareholders of theCompany may not expect dividend in the following circumstances notwithstanding theparameters and factors conducive for dividend subject to discretion of the Board ofDirectors i. Proposed expansion plans requiring higher capital allocation ii. Whenever itundertakes any acquisitions amalgamation merger joint ventures business combinationsnew product launches etc. which requires significant capital outflow iii. Requirement ofhigher working capital for the purpose of business of the Company iv. Whenever companyproposes to utilize surplus cash for buy back of securities.
v. In the event of loss or inadequacy of profit vi. Any restrictions and covenantscontained in any agreement as may be entered with the lenders.
C. UTILIZATION OF THE RETAINED EARNING
The portions of profits not distributed among the shareholders but retained and used inbusiness are termed as retained earnings. It is also referred to as ploughing back ofprofit. The Company should ensure to strike the right balance between the quantum ofdividend paid and amount of profits retained in the business for various purposes. Theseearnings may be utilized for internal financing of its various activities and for fixed aswell as working capital. Thus the retained earnings shall be utilized for carrying outthe main objectives of the Company and maintaining adequate liquidity levels. The decisionof utilisation of the retained earnings of the Company shall be based on the followingfactors:
Where the cost or debt is expensive
Long term strategic plans
Diversification of business
Market expansion plan
Other such criteria as the board may deem fit from time to time.
The Company may declare dividend out of the profits of the Company for the year or outof the profits for any previous year(s) or out of the free reserves available fordistribution of Dividend after having due regard to the parameters laid down in thisPolicy.
D. MANNER OF DIVIDEND PAYOUT
In case of final dividend
- Recommendation if any shall be done by the Board usually in the Board meeting that considers and approves the annual financial statements subject to approval of the shareholders of the Company.
- The dividend as recommended by the Board shall be approved/declared at the Annual General Meeting of the Company.
- The payment of dividends shall be made within the statutorily prescribed period from the date of declaration to those shareholders who are entitled to receive the dividend on the record date/book closure period as per the applicable law.
In case of interim dividend
- Interim dividend if any shall be declared by the Board.
- Before declaring interim dividend the Board shall consider the financial position of the Company that allows the payment of such dividend.
- The payment of dividends shall be made within the statutorily prescribed period from the date of declaration to the shareholders entitled to receive the dividend on the record date as per the applicable laws.
- In case no final dividend is declared interim dividend paid during the year if any will be regarded as final dividend in the Annual General Meeting.
E. PARAMETERS TO BE ADOPTED WITH REGARD TO VARIOUS CLASSES OF SHARES
At present the issued and paid-up share capital of the Company comprises only equityshares; the Company does not have different classes of shares. As and when the Companyissues other kind of shares the Board of Directors may suitably amend this Policy.
The Company shall make appropriate disclosures as required under the SEBI Regulations.
5. POLICY REVIEW AND AMENDMENTS
The Policy shall be reviewed as and when required to ensure that it meets theobjectives of the relevant legislation and remains effective. This Policy would be subjectto revision/amendment in accordance with the guidelines as may be issued by Ministry ofCorporate Affairs Securities Exchange Board of India (SEBI) or such other regulatoryauthority as may be authorised from time to time on the subject matter. The Companyreserves its right to alter modify add delete or amend any of the provisions of thisPolicy. In case of any amendment(s) clarification(s) circular(s) and so on issued by therelevant authorities not being consistent with the provisions laid down under thisPolicy then such amendment(s) clarification(s) circular(s) and so on shall prevail uponthe provisions hereunder and this Policy shall stand amended accordingly from theeffective date as laid down under such amendment(s) clarification(s) and circular(s)among others.
(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies (Accounts) Rules 2014)
Rs. in lakhs
|Sr. No Name of the Subsidiary ||Reporting Currency ||Share Capital ||Reserve & Surplus ||Total Assets ||Total Liabilities ||Investments ||% of Holding ||Sales & Other Income ||Profit before Taxation ||Provision for taxation ||Profit after Tax ||Proposed Dividend |
|1 ||2 ||3 ||4 ||5 ||6 ||7 ||8 ||9 ||10 ||11 ||12 ||13 |
|1 Taurus Value steel & Pipes Pvt. Ltd ||Rupees ||151.01 ||9870.36 ||13770.77 ||3749.39 ||- ||100% ||11195.01 ||209.20 ||62.65 ||(78.71) ||Nil |
|2 Vishal Precision Steel Tubes & Strips Pvt. Ltd ||Rupees ||350.00 ||6286.86 ||14862.55 ||8225.69 ||- ||100% ||39597.69 ||826.92 ||46.39 ||780.53 ||Nil |
|3 Century Wells Roofing India Pvt. Ltd ||Rupees ||199.92 ||2304.40 ||7650.59 ||5146.27 ||- ||100% ||19525.95 ||672.86 ||177.88 ||494.98 ||Nil |
|4 Steel Network Holdings Pte Limited ||USD ||15.55* ||(1.96) ||13.90 ||0.30 ||- ||100% ||Nil ||Nil ||Nil ||Nil ||Nil |
*Note: The shareholders of M/s Steel Network Holdings Pte Limited in its meetingheld on 30th December 2019 have reduced the share capital of the Company from US$2000000 divided into 2000000 ordinary shares to US$ 1555919 divided into 1555919ordinary shares.
Annexure-III to the Directors' Report
FORM NO. MR-3
<dhhead>SECRETARIAL AUDIT REPORT</dhhead>
SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31 2020
[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]
SHANKARA BUILDING PRODUCTS LIMITED CIN: L26922KA1995PLC018990 G-2 Farah WinsfordNo.133 Infantry Road Bangalore - 560001
I have conducted the Secretarial Audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by
SHANKARA BUILDING PRODUCTS LIMITED having CIN: L26922KA1995PLC018990(hereinafter called "the Company"). Secretarial Audit was conducted in a mannerthat provided me a reasonable basis for evaluating the corporate conducts and statutorycompliances and expressing my opinion thereon.
Based on my verification of the Company's Books Papers Minute Books Forms andReturns filed and other Records maintained by the Company and also the informationprovided by the Company its Officers Agents and Authorized Representatives during theconduct of Secretarial Audit I hereby report that in my opinion the Company has duringthe Audit Period covering the Financial Year ended on 31st March 2020 complied with thestatutory provisions listed hereunder and also that the Company has proper Board-processesand compliance-mechanism in place to the extent in the manner and subject to thereporting made hereinafter: I have examined the Books Papers Minute Books Forms andReturns filed and other Records maintained by the Company for the Financial Year ended on31st March 2020 according to the provisions of: (i) The Companies Act 2013 (theAct') and the Rules made there under; (ii) The Securities Contracts (Regulation) Act 1956(SCRA') and the rules made there under;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed there under;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act'):-
- The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2018;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;
(c) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015;
(d) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
(e) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011.
(vi) There were no specific Laws Norms and Directions applicable to the Company exceptLabour Laws.
I have also examined compliance with the applicable clauses of the following:
- The Listing Agreements entered into by the Company with BSE Limited and National Stock Exchange of India Limited;
(ii) Secretarial Standards issued by The Institute of Company Secretaries of India.
During the period under review the Company has complied with the applicable provisionsof the Act Rules Regulations Guidelines Standards etc. mentioned above.
I further report that:
Due to COVID -19 pandemic and lockdown we were not able to physically verify fewdocuments and registers during our Audit and in such cases we have carried out the auditbased on electronic documents/soft copies provided to us.
Based on the information provided by the Company its Officers and AuthorizedRepresentatives during the conduct of the Audit and also on the review of the DetailsRecords Documents and Papers provided in my opinion adequate systems and processes andcontrol mechanism exists in the Company to monitor and to ensure compliance withapplicable General Laws like Labour Laws Competition Law and Environmental Law.
The compliance of applicable Financial Laws like direct and indirect tax laws havenot been reviewed in this Audit since the same have been subject to review by statutoryfinancial audit and other designated professionals. The Board of Directors of the Companyis duly constituted with proper balance of Executive Directors Non-Executive DirectorsIndependent Directors and Women Director. The changes in the composition of the Board ofDirectors that took place during the period under review were carried out in compliancewith the provisions of the Act. Adequate notices were given to all the Directors toschedule the Board Meetings Agenda and detailed Notes on Agenda were sent at least SevenDays in advance and at least one Independent Director was present wherein the Boardmeetings were held at a shorter notice to transact urgent matters and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.
As per the minutes of the meetings duly recorded and signed by the Chairman thedecisions were carried unanimously and there were no dissenting views.
There were adequate systems and processes in the Company commensurate with the size andoperations of the Company to monitor and ensure compliance with applicable laws rulesregulations and guidelines.
I further report that during the audit period:
1. The Company has given guarantee against the loans borrowed by wholly ownedsubsidiary companies.
2. The Company has obtained approval of the
Board of Directors and approval of the Members by way of Special resolution pursuant tothe provisions of Section 180 (1) (a) of the Companies Act 2013 to sell partial assetsincluding land building and equipment of Taurus Value Steel & Pipes Private Limited(CIN: U28112TG2009PTC064592) a wholly owned subsidiary of the Company.
3. The Company has acquired entire Equity Shares of Centurywells Roofing India PrivateLimited (CIN: U28112TN2002PTC049959) a step down subsidiary of the company from Steel -Network Pte Limited (Singapore) a wholly owned subsidiary of the Company.
4. The Company has entered in to related party transactions during the Financial Yearand has considered all the related party transactions are on arm's length basis in theordinary course of business.
SHANKARA BUILDING PRODUCTS LIMITED
G-2 Farah Winsford No.133 Infantry Road
Bangalore - 560001
Our report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.
2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.
4. Wherever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.
Annexure-IV to the Directors' Report
ANNUAL SECRETARIAL COMPLIANCE REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31 2020
I K. Jayachandran Practicing Company Secretary have examined:
(a) all the documents and records made available to us and explanation provided by SHANKARABUILDING PRODUCTS LIMITED (CIN:L26922KA1995PLC018990) ("the listed entity")
- the filings/ submissions made by the listed entity to the stock exchanges
(c) the website of the listed entity
(d) any other document / filing as may be relevant which has been relied upon to makethis certification for the year ended 31st March 2020 ("Review Period") inrespect of compliance with the provisions of:
- the Securities and Exchange Board of India Act 1992 ("SEBI Act") and the Regulations circulars guidelines issued thereunder; and
- (b) the Securities Contracts (Regulation) Act 1956 ("SCRA") rules made thereunder and the Regulations circulars guidelines issued thereunder by the Securities and Exchange Board of India ("SEBI");
The specific Regulations whose provisions and the circulars/guidelines issuedthereunder have
been examined include:-
(a) Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015;
(b) Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2018;
(c) Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(d) Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;
(e) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993;
and circulars/guidelines issued thereunder; and based on the above examination Ihereby report that during the Review Period:
(a) The listed entity has complied with the provisions of the above Regulations andcirculars guidelines issued thereunder except in respect of matters specified below:-
|Sr. No. ||Compliance Requirement (Regulations/ circulars / guidelines including specific clause) ||Deviations ||Observations / Remarks of the Practicing Company Secretary |
|1. ||Nil ||Nil ||Nil |
(b) The listed entity has maintained proper records under the provisions of the aboveRegulations and circulars guidelines issued thereunder insofar as it appears from myexamination of those records.
(c) The following are the details of actions taken against the listed entity/itspromoters/directors/material subsidiaries either by SEBI or by Stock Exchanges (includingunder the Standard Operating Procedures issued by SEBI through various circulars) underthe aforesaid Acts/ Regulations and circulars/ guidelines issued thereunder:
|Sr. No. ||Action taken by ||Details of violation ||Details of action taken e.g. fines warning letter debarment etc. ||Observations/ remarks of the Practicing Company Secretary if any. |
|1. ||Nil ||Nil ||Nil ||Nil |
(d) The listed entity has taken the following actions to comply with the observationsmade in previous reports:
|Sr. No ||Observations of the practicing company secretary in the previous report ||Observations made in the Secretarial Compliance Report for the year ended
||Actions taken by the listed entity if any ||Comments of the Practicing Company Secretary on the actions taken by the listed entity |
|1. ||Not Applicable ||Not Applicable ||Not Applicable ||Not Applicable |
STATEMENT OF DISCLOSURE OF REMUNERATION
(Information pursuant to Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014)
1. Ratio of the remuneration of each Executive Director to the median remuneration ofthe employees of the Company for the Financial Year 2020 the percentage increase inremuneration of Managing Director Whole time Directors Chief Executive Officer ChiefFinancial Officer and Company Secretary during the Financial Year 2020.
|Sl. No ||Name of Director/Key Managerial Personnel ||Designation ||Ratio of remuneration of each Director to median remuneration of employees ||Percentage increase in Remuneration |
|1. ||Mr. Sukumar Srinivas ||Managing Director ||53.43x ||Nil |
|2. ||Mr. C. Ravikumar ||Whole - Time-Director ||24.97x ||Nil |
|3. ||Mr. RSV. Siva Prasad ||Whole - Time-Director ||19.91x ||Nil |
|4. ||Mr. Siddhartha Mundra ||Chief Executive Officer ||43.53x ||Nil |
|5. ||Mr. Alex Varghese ||Chief Financial Officer ||12.74x ||Nil |
|6. ||Ms. Ereena Vikram ||Company Secretary ||4.29x ||31% |
a. Percentage of increase in remuneration is effective 1st April 2019.
b. Independent Directors of the Company are entitled for sitting fees as per theStatutory Provisions.
c. As a Policy the Non-Executive - Non-Independent Directors are neither paid sittingfee nor paid any commission. The details of remuneration of Non-executive Directors areprovided in the Corporate Governance Report. The ratio of remuneration and percentageincrease for Non-executive Directors Remuneration is therefore not considered for theabove purpose.
2. Percentage increase in the median remuneration of employees for the financial year:2019-20
3. Number of permanent employees on rolls of the Company as on March 31 2020: 1237
4. Average percentile increase already made in the salaries of employees other thanmanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and to point out ifthere are any exceptional circumstances for increase in the managerial remuneration: Asper Company's increment guidelines.
5. Affirmation that the remuneration is as per remuneration policy of the Company: Yes