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Shanthi Gears Ltd.

BSE: 522034 Sector: Auto
NSE: SHANTIGEAR ISIN Code: INE631A01022
BSE 00:00 | 16 Aug 128.70 0.55
(0.43%)
OPEN

128.00

HIGH

129.00

LOW

127.15

NSE 00:00 | 16 Aug 128.05 -0.45
(-0.35%)
OPEN

128.40

HIGH

129.00

LOW

127.40

OPEN 128.00
PREVIOUS CLOSE 128.15
VOLUME 2519
52-Week high 178.90
52-Week low 120.50
P/E 32.83
Mkt Cap.(Rs cr) 1,051
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 128.00
CLOSE 128.15
VOLUME 2519
52-Week high 178.90
52-Week low 120.50
P/E 32.83
Mkt Cap.(Rs cr) 1,051
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shanthi Gears Ltd. (SHANTIGEAR) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting to you the performance of the Company forthe year ended 31 March 2018

COMPANY PERFORMANCE

Rs. Crores
PARTICULARS YEAR ENDED 31.03.2018 YEAR ENDED 31.03.2017
Revenue from Operations (Net) 219.55 203.82
Earnings Before Interest Tax Depreciation & Amortisation 48.73 46.33
Depreciation & Amortisation Expense 15.56 17.83
Profit Before Tax 33.17 28.50
Less: Tax Expense 4.59 5.99
ProfitAfter Tax 28.58 22.51
Add: Surplus brought forward 32.33 15.82
Appropriations :
Transfer to General Reserve 9.00 6.00
Final Dividend for 2016-17 paid 6.13 -
Tax on Final Dividend 1.25 -
Interim Dividend for 2017-18 paid 8.17 -
Tax on Interim Dividend 1.67 -
Balance carried to Balance Sheet 34.69 32.33

Review of Operations

In 2017-18 your Company registered a topline growth of 16% to ` 209.1 Croresaided by growth in revenues the profit after tax grew by 27% to ` 28.6 Crores. Thebusiness continued to build relationships through high levels of customer engagementduring the year through the Connect programs. New Product Development and ImportSubstitution helped in sustaining the competitive advantage. Focus on lean principleshelped the business to reduce the net working capital by 14%. In its endeavor to buildsustainable business your Company embarked on certifications such as IMS (QMS EMS andOHSAS) coupled with approvals from Defence Industrial Scientific Research and Aerospace.Significant number of VAVE projects were taken up to meet cost reduction throughimprovement in material efficiencies and labour productivity. Focus continued to be onconsolidation of operations and maximizing returns on the investments made in the earlieryears. Capital investments were made in core value add areas to debottleneck capacities.

Management Discussion and Analysis

The Management Discussion and Analysis which forms part of this report sets out ananalysis of the business the industrial scenario and the performance of the Company.

Dividend

The Company has declared an interim dividend of ` 1/- per equity share of Face Value`1/- in February 2018 (PY ` 0.75/- per share). The same has been treated as finaldividend.

Directors

Mr. M M Murugappan Chairman resigned from the Board due to his other commitments witheffect from 2 November 2017. The Board places on record its appreciation on the servicerendered by Mr. M M Murugappan during his tenure as Chairman of the Board. Mr. C RSwaminathan Non-Executive Independent Director will retire at the ensuing Annual GeneralMeeting under Section 149 of the Companies Act 2013 ("the Act"). The Boardplaces on record its appreciation of the service rendered by Mr. C R Swaminathan duringhis tenure as Director of the Company.

During the year the Company appointed Mr. S K Sundararaman as an Additional Director ofthe Company under Section 149 of the Companies Act 2013 with effect from 6 February 2018.He holds office up to the date of the ensuing AGM. He in the field approach andDevelopment of new technical textile products. His knowledge and experience will be ofbenefit to the Company. The Board recommends his appointment as Independent Director undersection 149 of the Companies Act 2013 for a term of five viz. from the date of the 45thAGM (2018) till the date of 50th AGM (2023).

Notice has been received from a Member proposing the candidature of Mr. S KSundararaman for appointment as an Independent Director of the Company.

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting underSection 152 of the Act and being eligible he offers himself for re-appointment.

The Board takes pleasure in recommending the appointment of Mr L Ramkumar asDirector and Mr. S K Sundararaman as an Independent Director of the Company at theforthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration interms of Section 149(6) of the Act affirming that they meet the criteria of independenceas stipulated under the Act.

Key Managerial Personnel

During the year Mr. B Balamurugan was appointed as Chief Financial Officer of theCompany.

Mr. Rajiv Narayanamoorty Officer Chief Executive Mr. B Balamurugan Chief FinancialOfficer and Mr. C Subramaniam Company Secretary are the Key Managerial Personnel (KMP) ofthe Company as per Section 203 of the Companies Act 2013.

Internal Control System and their Adequacy

The Company has an Internal Control System Commensurate with its size scale andcomplexity of its operations. Audit Committee reviews internal audit reports and overseesthe internal control system of the Company.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. Areport on Corporate Governance along with a certificate from the Statutory Auditors oncompliance with Corporate Governance norms forms a part of this report.

Corporate Social Responsibility (CSR)

As a corporate citizen your Company is committed to the conduct haswide experience ofits business in a socially responsible manner. The Company contributed a portion of itsprofit for the promotion of worthy causes like education healthcare scientific researchetc. As a part of Corporate Social Responsibility program the Company has undertakenprojects in the area of Education Scientific Research etc. List of CSR ActivitiesComposition of CSR Committee and CSR Policy is annexed herewith as Annexure-A

Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as Annexure-C

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and belief confirm that : i) in the preparation of the annualaccounts applicable Accounting Standards have been followed and that there were nomaterial departures therefrom; ii) they have in the selection of the accounting policiesconsulted the statutory auditors and have applied their recommendations consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31 March 2018 and of the profit of theCompany for the year ended on that iii) they have taken proper and sufficientcare for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; iv) they have prepared the annual accounts on agoing concern basis; v) they have laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and were operatingeffectively during the year ended 31 March 2018; and vi) proper system has been devised toensure compliances with the provisions of all applicable laws and that such systems wereadequate and operating effectively during the financial year ended 31 March 2018.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act 2013 the Nomination and RemunerationCommittee of the Board of the Company has formulated the criteria for Board nominations aswell as policy on remuneration for Directors and employees of the Company. TheRemuneration policy provides the framework for remunerating the members of the Board KeyManagerial Personnel and other employees of the Company. This policy is guided by theprinciples and objectives enumerated in Section 178 (4) of the Companies Act 2013 andreflects the remuneration philosophy and principles of the Murugappa Group to ensurereasonableness and sufficiency of remuneration to attract retain and motivate competentresources a clear relationship of remuneration to performance and a balance betweenrewarding short and long-term performance of the Company. The policy lays down broadguidelines for payment of remuneration to Executive and Non-Executive Directors within thelimits approved by the shareholders. The Board Nomination criteria and the Remunerationpolicy are available on the website of the Company athttp://www.shanthigears.com/wp-content/uploads/2014/07/sgl-remuneration-policy.pdf.

Related Party Transactions

All related party transactions that were entered during the year under review were onan arm's length basis and were in ordinary course of business. There are no materiallysignificant related party transactions during the year which may have a potential conflictwith the interest of the Company at large. Necessary disclosures as required underAccounting Standard (Ind AS 24) have been made in the notes to the Financial Statements.The Policy on Related Party Transactions as approved by the Board is uploaded and isavailable on the Company's website http://www.shanthigears.com/wp-content/themes/shanthi/pdf/Policy-on-Related-Party-Transactions.pdf. None of the Directors had anypecuniary relationships or transactions vis-a-vis the Company.

Board Evaluation

The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report.

Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the CorporateGovernance Report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner thebusiness in the achievement of its ambitious growth plans and to build a strong leadershippipeline for the present and several years into the future. Industrial Relations continuedto be cordial. The Company had 534 permanent employees on its rolls as on 31 March 2018.

The disclosure with respect to remuneration as required under Section 197 of theCompanies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is attached and forms part of this Report as Annexure-B.The information relating to employees and other particulars required under Section 197 ofthe Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136of the Companies Act 2013 the Report and Accounts are being sent to the Membersexcluding the information on employees particulars of which are available for inspectionby the Members at the Registered Office of the Company during business hours on allworking days of the Company up to the date of the forthcoming Annual General Meeting. Ifany Member is interested in obtaining a copy thereof such member may write to the CompanySecretary in the said regard.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of energy technology absorption and foreign exchange earnings and outgois annexed herewith as Annexure-D.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has in place an anti-sexual harassment policy in line with the requirementof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Compliance Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (Permanent contractual temporary andtrainees) are covered under this policy. The Company has not received any complaint aboutsexual harassment during the year 2017-18.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. M R L Narasimha Practicing Company Secretary to undertake Secretarial Auditof the Company. The Secretarial Audit Report is annexed herewith and forms part of thisReport as Annexure-E. No qualification or observation or other remarks have been made bythe Secretarial Auditor in his Report.

Auditors

The Members appointed M/s Deloitte Haskins & Sells Chartered Accountants (FirmRegistration No. 008072S) the Statutory Auditors of the Company for a period of 4 yearsfrom the conclusion of 41st AGM (2014) till the conclusion of theensuing Annual General Meeting.

It is proposed to re-appoint M/s Deloitte Haskins & Sells Chartered Accountantsas the Statutory Auditors of the Company for a period of five years from the conclusion ofthe ensuing 45th Annual General Meeting (2018) till the conclusion of the 50th AnnualGeneral Meeting (2023).

M/s Deloitte Haskins & Sells Chartered Accountants have confirmed that they areeligible under section 141 of the Companies Act 2013 (‘the Act") and the Rulesthereunder for re-appointment as the Statutory Auditors and have further furnished theirconsent under the second proviso to Section 139 of the Act and also necessaryconfirmations. Further they have also furnished a copy of the certificate issued by thePeer Review Board of the Institute of Chartered Accountants of India.

The Board recommends the re-appointment of M/s Deloitte Haskins & Sells CharteredAccountants as the Statutory Auditors for a five-year period and on terms of remunerationas set out in the resolution contained in the Notice of the ensuing Annual GeneralMeeting. Mr. B Venkateswar was appointed as Cost Auditor for audit of the Cost Accountingrecords of the Company for the year ended 31 March 2019. A resolution seeking Members'ratification of the Remuneration payable to Cost Auditor is included in the AGM noticedated 2 May 2018. The Cost Audit report will be filed within the stipulated period. TheDirectors thank all Customers Vendors Banks State Government and Investors for theircontinued support to your Company's performance and growth. The Directors also wish toplace on record their appreciation of the contribution made by all the employees of theCompany in delivering the good performance during the year.

On behalf of the Board
Coimbatore L Ramkumar
02 May 2018 Chairman
DIN-00090089