Your Directors are pleased to present the 15th Annual Report and the Audited FinancialStatements of the Company for the year ended 31st March 2019.
Financial performance of the Company for the year ended 31st March 2019 is summarizedbelow:
| || ||(Rs. in Lakhs) |
| ||Year ended 31st March 2019 ||Year ended 31st March 2018 |
|Revenue from operations ||53781 ||56645 |
|Other Income ||993 ||1174 |
|Total Revenue ||54774 ||57819 |
|Profit before Finance Cost Depreciation and Tax ||1406 ||1567 |
|Finance Cost ||723 ||688 |
|Depreciation ||179 ||174 |
|Profit Before Tax ||504 ||705 |
|Provision for Tax ||285 ||63 |
|Profit After Tax ||219 ||642 |
|Other Comprehensive Income ||(465) ||23 |
|Total Comprehensive Income for the year ||(246) ||665 |
|Opening Balance in Other Equity ||34649 ||34269 |
|Amount available for Appropriations ||34403 ||34934 |
|Appropriations || || |
|General Reserve ||-- ||-- |
|Dividend on Equity shares ||158 ||237 |
|Tax on Dividend ||33 ||48 |
|Balance carried to the Balance Sheet ||34212 ||34649 |
|Earnings per share (EPS) in Rs. ||0.55 ||1.62 |
REVIEW OF OPERATIONS
Building Materials Division
The Building Materials Business possesses the advantage of its presence in the marketspanning over several decades with a reasonable market share and customer base. Thisdivision has built its reputation as the most reliable partners for building materialsupplies with the best brands in industrial application of tubes steel pipes cementscables PVC pipes from Tata Steel JSW Jindal Steel & Power APL Apollo SAIL JainAstral Ajay Dalmia and Finolex as major sourcing channels. Further localised sourcingwith certain reputed suppliers supports the seamless delivery requirements of thecustomers. This business derives good strength from the business experts that provideinfrastructure solutions on need base to customers. The financial year 2018-19 being oneof the toughest years in the business with slump in economy resulted with many sectorsreeling under negative growth. The business environment is impacted due to sluggishgrowth liquidity crisis and very slow recovery from GST. However the Building materialbusiness through its uniqueness in diversity has adapted itself to changes with comfortand poise and the setback due to the risks posed by the economy have been mitigated to agreat extent.
This division achieved a total turnover of Rs.45555 lakhs with a net profit of Rs.82Lakhs against previous year turnover of Rs.48097 lakhs and a net profit of Rs.284 lakhs.While innovation and creativity are the focus points to enhance customer satisfactionconstant efforts from the sales team supported by the effective business strategies bymanagement have resulted in achieving the targets for the year 2018-19. Entry to newgeographies increasing the customer base in existing markets had presented necessarythrust to the business to remain buoyant despite the challenging environment in thebuilding materials industry. Constant endeavour to supplement the existing business withaddition of various new product portfolios that provide value addition to the businessstrengthening the current market share and focus on expansion to new markets is on theagenda.
Power & Control Systems Division
This division is into service manufacture and trading of Power & Control Systemsand units required for Power Cement Steel paper Petrochemical Refinery Fertilizercompanies and such other industries in the business of dealing with instrumentationproducts actuators and other controlling equipment. This business has partnership withglobal brands namely Woodward for Governors IMI Norgren for Power Products Eaton &ABB for Switch Gears and Danfoss for Drives and for Motors and vast experience of aboutthree decades and expertise in the field of Electric power management products. Providingsuperior quality service solutions that make power systems more efficient reliable andmanageable had enabled this business to reach great heights in the related market both inmany public and private sectors. Having reputation of being the exclusive authorisedservice provider in India for Woodward Governors of USA this division caters to the needsof diversified Customers. Competition from the OEM suppliers and lower priority from thecustomers for Capex are the major challenges for this business. This division's revenueduring the year under review was Rs.2973 Lakhs and net profit was Rs.477 Lakhs ascompared to revenue of Rs.3759 Lakhs and net profit of Rs.418 Lakhs in the previous year.Currently this division is catering to some African countries with service of Governors tocement Industry and established reputation as quality service providers. The managementchalked out plans for expansion of product portfolios and venturing into new markets.These measures coupled with command over the current market would enhance the turnoversubstantially.
Specialty Chemicals Division
This business is on a decent growth path for the last few years. The division had putin good efforts towards focused approach on the current customer base that supported forhigher turnover and addition of new customers from many business segments which in turncontributed to improve the turnover in the financial year 2018-19. This division caters todiversified businesses like Fertiliser Sugar Oil & Gas and Power generationindustries with manufacture of wide range of products like water treatment chemicalsdefoamers demulsifer colorants antiscaling agents anticaking agents biocides andwater proof chemicals. Revenue for 2018-19 was Rs.1158 Lakhs and net profit was Rs.239lakhs as compared to revenue of Rs.1098 lakhs and a net profit of Rs.211 Lakhs in2017-18. Revenue from operations in the new territories has supported the increasedturnover and strengthened the operations substantially. Road map to overseas market todiversify and to cater to the wide customer base as laid down last year has seen goodresults with many orders and some revenue generation in the current year. This year thedivision exported water treatment chemicals to Nigeria for a value of USD 50000. Furtherplans are in the pipe line for development of R & D facility for product enhancementand quality service so as to meet the customers' satisfaction.
Industrial Packaging Division
This division has performed well in the current year with 18% over last year due to theorders from customer in new geographies reached as a part of expansion plan and alsosupported by higher volumes from the existing customers. The division has forayed into newproduct portfolio by manufacture of 30/25/20 ltrs MS drums in addition to the traditional210 ltrs drums. This business faced major challenge due to volatile steel prices duringthe current fiscal coupled with intense competition from unorganised players. Thisdivision's growth despite the challenges can be attributed to the qualitative measuresinitiated by producing superior quality drums at affordable prices improved logisticsmanagement and higher productivity with lower manpower. Turnover stood at Rs.4124 lakhsas compared to Rs.3327 Lakhs in 2017-18. The net profit of this division has improvedover the previous year. This division registered a net profit of Rs.212 lakhs for the year2018-19 as against Rs.198 lakhs in the previous year. This division falls under MSMEcategory and is certified under BIS for all product categories as at the year end.
No operational income was posed during the year 2018-19 due to lack of new orders forboat building operations. However this division has been discussing with many customersfor orders. During the year Sicagen has been shortlisted as one of the manufacturers ofsuperior quality boats as per the proposed plan of Ministry of Fisheries to build boatsfor the fishermen for deep sea fishing. Sicagen is expecting to secure good orders in theensuing year from the Fisheries department.
Your directors are pleased to recommend a dividend of 40 paise per equity share (4% onequity capital of the Company) for the financial year 2018-19 despite multiple challengeslike volatility in raw material prices financial instability liquidity crisis and poordemand that prevailed for most part of the year. Total dividend is Rs.158 lakhs anddividend distribution tax amounts to Rs.33 lakhs. The dividend shall be paid to theeligible shareholders whose names appear in the Register of Members as on the record datefixed by the Board.
Disclosures under the Companies Act 2013
Pursuant to Section 134 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 the Company has complied with requirements and the details of which aredisclosed hereunder.
1. Extract of Annual Return
As per the Companies Act 2013 the details of extract of Annual Return which formspart of this report is posted on the Company's website www.sicagen.com.
2. Number of Board Meetings
The Board of Directors met 5 (five) times in the year 2018-19. The details of the Boardmeetings and the attendance of the Directors are given in the Corporate Governance Report.
3. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors reportthat:
(a) in the preparation of the Annual Accounts the applicable accounting standards havebeen followed and that no material departures have been made from the same.
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates which are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2019 and of the profit &loss account of the Company for year ended on that date.
(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and preventing and detecting fraud and otherirregularities. (d) they have prepared the annual accounts on a going concern basis.
(e) they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and effective.
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively.
4. Statement on declaration given by Independent Directors
The Company maintains the requisite number of Independent Directors as required underSection 149(4) of the Companies Act 2013 and Regulation 17 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The Independent Directors havesubmitted the declaration of independence as required under Section 149(7) of theCompanies Act 2013 confirming that they meet the criteria of independence as provided insub-Section(6) of Section 149 of the Act.
5. Remuneration Policy
The Company follows a policy on remuneration of Directors Key Managerial Personnel andSenior Management employees including criteria for determining qualification positiveattributes and independence of Directors. The following is the Remuneration Policy forDirectors.
(i). For Executive Directors
The remuneration of the Whole Time Directors shall comprise of a fixed component and aperformance linked pay as may be fixed by the Nomination and Remuneration Committee andsubsequently approved by the Board of Directors and Members. Performance Linked Pay shallbe payable based on the performance of the individual and the Company during the year.Remuneration trend in the industry and in the region academic background qualificationsexperience and contribution of the individual are to be considered in fixing theremuneration. These Directors are not eligible to receive sitting fees for attending themeetings of the Board and Committees.
(ii). For Non-Executive Directors
The Non-Executive Directors will be paid sitting fees for attending the Board andCommittee Meetings as per the stipulations in the Act and the Articles of Association ofthe Company and as recommended by the Nomination and Remuneration Committee. Differentscales of sitting fee may be fixed for each category of the directors and type of meeting.However the fees payable to the Independent Directors and Woman Directors shall not belower than the fee payable to other categories of directors. In addition to this thetravel and other expenses incurred for attending the meetings are to be met by theCompany. Subject to the provisions of the Act and the Articles of Association the Companyin General Meeting may by special resolution sanction and pay to the Directorsremuneration not exceeding 1% of the net profits of the Company computed in accordancewith the relevant provisions of the Act. The Company shall have no other pecuniaryrelationship or transactions with any Non-Executive Directors.
6. Explanation of Board on qualification of statutory auditors & secretarialauditor if any
During the year ended 31st March 2019 there was no qualification reservation oradverse remark made by the statutory auditor on the financial statements of the companyand by the Practicing Company Secretary in their respective reports.
7. Particulars of loans guarantees or investments given or made by the Company
During the year 2018-19 the Company has not given any loan guarantee and/or providedany security in connection with the loan to any person/body corporate except the loans tothe parties covered in the register maintained under Section 189 of the Companies Act2013. The Company has made additional investments to the extent SGD 1 million (SingaporeDollar One Million only) in the equity capital of wholly owned subsidiary CompanyM/s.Wilson Cables Private Ltd Singapore and Rs.4000 (Rupee Four Thousand Only) in theequity capital of AM Foundation a Not- For- Profit entity.
8. Related Party Transactions
The related party transactions entered into with related parties are on arm's lengthbasis and in compliance with the applicable provisions of the companies act and thelisting agreement. There are no materially significant related party transactions made bythe company with promoters directors or key managerial personnel etc. which may havepotential conflict of interest with the interest of the company at large.
All the related party transactions were placed before the Audit Committee and the Boardspecifying the nature value and terms and conditions of the transactions. In principleapproval is obtained for the transactions which are foreseen and are repetitive innature.
9. Amount transferred or proposed to be transfered to any reserves
The Company has not transferred or proposed to transfer any amount to any reserves asthere is no necessity to transfer such amount as required under the Companies Act 2013.
10. Material changes and commitments if any affecting the financial position of theCompany
There are no material changes and commitments affecting the financial position of thecompany between the end of the financial year 31st March 2019 and the date of this report.
11. Transfer of unclaimed dividend/Shares to the Investor Education and Protection Fund
As required under the provisions of Section 124 and other applicable provisions ofCompanies Act 2013 and the rules and amendments made thereunder the Company is requiredto transfer the dividends that remain unpaid/ unclaimed for a period of 7 (seven) years toInvestor Education and Protection Fund (IEPF) and also all the equity shares in respect ofwhich unpaid/unclaimed dividend pertaining to those shares remains unclaimed/unpaid for aperiod of seven consecutive years to an IEPF account administered by the CentralGovernment. On transfer of the amounts to IEPF account no claim shall lie in respect ofthose amounts against the Company. During the year the Company has already transferredthe unclaimed dividend amount of Rs.9.82 Lakhs pertaining to the financial year 2010-11 toIEPF account. The Company is also in the process of transfer of shares in respect of whichunclaimed dividend has been transferred to IEPF account. As on 31st March 2019 an amountof Rs.9.91 Lakhs pertaining to the financial year 2011-12 which was lying in theunclaimed dividend account of the Company is required to be transferred to the IEPFaccount on 4th October 2019. Members who have so far not encashed their dividendwarrant(s) or those yet to claim their dividend amounts pertaining to the financial year2011-12 may write to the Company/RTA (Cameo Corporate Services Limited) for claiming thesame before transfer to the IEPF account.
12. Particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo
Particulars required to be disclosed under Section 134 of the Companies Act 2013 readwith the Rule 8(3) of the Companies (Accounts) Rules 2014 relating to conservation ofenergy technology absorption foreign exchange earnings and outgo are given in AnnexureI which forms part of this Report.
13. Risk Management Committee
During the year the Risk Management Committee constituted by the Board has beendissolved as it is no longer required and also not applicable to the Company.
14. Composition of Audit Committee
During the year the Audit Committee has been reconstituted and it comprises ofMrs.Sashikala Srikanth as Chairman Mr.B.Narendran Mr.S.Radhakrishnan andMr.R.Chandrasekar as members. More details on the Audit Committee are given in theCorporate Governance Report.
15. Evaluation of Board
Pursuant to the provisions of Section 134 of the Companies Act 2013 read with ScheduleIV of the Act and also in line with Regulation 25 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Independent Directors of the Company met on13th February 2019 without the attendance of Non-Independent Directors and Membersof Management and reviewed the performance of Non-Independent Directors and the Board as awhole. They also reviewed the performance of the Chairperson. Evaluation of the Board wascarried out through a structured evaluation process covering various aspects of theBoard's functioning such as composition of the Board & Committees competenciesduties and responsibilities attendance value of contribution made to the Company'sprogress etc.
16. Corporate Social Responsibility (CSR)
Pursuant to the provisions of Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 the Company has to spendat least 2% of last three years of its average profit before tax for carrying outappropriate CSR activities as referred under Schedule VII of the Act. The Company hasconstituted a CSR Committee and framed a policy for implementation of CSR initiatives. TheCompany through a Not-For-Profit entity formed under Section 8 of the Companies Act2013 is carrying out necessary CSR projects at various places. A report on CSR activitiesforming part of this report is attached herewith as separate Annexure II.
17. Vigil Mechanism
Pursuant to the provisions of Section 177 (9) of the Companies Act 2013 read with theRule 7 of the Companies (Meetings of Board and its powers) Rules 2014 and Regulation 22of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Companyhas established a vigil mechanism for its directors and employees to report theirgrievances or genuine concerns about unethical behaviour actual or suspected fraud orviolation of the Company's code of conduct. In order to prevent fraudulent activities andalso to ensure a corruption free work environment a detailed Whistle Blower policy hasbeen laid down by the Board. Brief details of the Whistle Blower policy are given in theCorporate Governance Report.
18. Internal Complaints Committee
The Company has constituted an Internal Complaints Committee to prevent and prohibitany form of sexual harassment at workplace and provide redressal for woman employees asrequired under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. During the year there was no event affecting any of the womenemployees on account of any sexual harassment at the work place.
19. Compliance with Secretarial Standards
The Company has devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of Indiaand that such systems are adequate and operating effectively.
20. Particulars required under Section 197(12) of the Companies Act 2013 read withRule 5(1)(2)&(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014
The particulars required under Section 197(12) read with Rule 5(1)(2)&(3) of theCompanies (Appointment and remuneration of Managerial Personnel) Rules 2014 are given inAnnexures III & IV and form part of this Report.
21. Corporate Governance Report
A Report on Corporate Governance as stipulated under Schedule V of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of this AnnualReport. The requisite certificate from a Practicing Company Secretary confirmingcompliance with the conditions of Corporate Governance as required under the aboveRegulation is attached to this Report.
22. Management Discussion & Analysis Report
Management Discussion & Analysis Report for the year under review as stipulatedunder Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is attached along with this report.
Mr.Ashwin C Muthiah Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-election. Due to personalreasons Mr.Sunil Deshmukh and Mr.Harish Chandra Chawla have resigned from thedirectorship of the Company on 3rd August 2018 and 6th August 2018 respectively.Mr.Devidas Mali resigned from the Whole time Directorship of the Company w.e.f 28thNovember 2018.
Mr.S.Radhakrishnan and Mr.R.Chandrasekar were appointed as additional Directors w.e.f9th August 2018 and Mr.M.Rajamani and Mr.S.R.Ramakrishnan were also appointed asadditional Directors w.e.f 28th November 2018 and 1st December 2018 respectively.
Mr.R.Chandrasekar was inducted as Whole Time Director for a period of 3 years w.e.f28th November 2018.
(a). Statutory Auditors
At the 13th Annual General Meeting (AGM) M/s.SRSV & Associates CharteredAccountants were appointed as statutory auditors of the Company for a period of 5 yearsand they will hold office until the conclusion of 18th AGM as per Section 139 of theCompanies Act 2013 read with the Companies (Audit & Auditors) Rules 2014. M/s.SRSV& Associates Chartered Accountants Chennai have also confirmed that the appointmentis within the limits as specified under the Companies Act 2013. Consequent to theamendment made in the provisions of Section 139 of the Act the ratification of statutoryauditors' appointment at this AGM does not arise.
(b). Cost Auditor
Pursuant to Section 148 of the Companies Act 2013 read with the amended rules thereofthe Board of Directors on recommendation of the Audit Committee has appointedMr.J.Karthikeyan Cost Accountant as Cost Auditor of the Company for the financial year2019-20 to carry out necessary cost audit in respect of manufacturing activities of theCompany such as specialty chemicals division drums manufacturing division and governorservices division etc. The Board has recommended the remuneration payable to the aboveCost Auditor for ratification of shareholders at the ensuing Annual General Meeting.
(c). Secretarial Auditor
The Company has appointed Mr.R.Kannan Practicing Company Secretary to carry outnecessary secretarial audit for the financial year 2019-20 as required under Section 204of the Companies Act 2013. As required under Section 204 of the Act the SecretarialAudit Report issued by Mr.R.Kannan Company Secretary in practice is given in the AnnexureV.
d). Internal Auditors
M/s.Sundar Srini & Sridhar Chartered Accountants Chennai who was appointed asInternal Auditors of the Company for the financial year 2018-19 have conducted necessaryinternal audit as required under Section 138 of the Companies Act 2013 read with theRule 13 of the Companies (Accounts) Rules 2014. During the year the Board hasre-appointed M/s.Sundar Srini & Sridhar Chartered Accountants as Internal Auditorsfor the upcoming financial year 2019-20.
25. Internal Control System
The Company has a proper and adequate internal control system to ensure that all theassets of the Company are safeguarded and protected against any loss that all thetransactions are properly authorized and recorded and Information provided to managementis reliable and timely. The Company ensures adherence to all statues. The strong androbust internal control system is in place with appropriate policies and procedures toensure the achievement of operational and strategic goals compliance with policies rulesand regulations prevention and detection of frauds and errors accuracy and completenessof accounting records and economical and efficient use of resources.
The Company has engaged a firm of external consultants for the internal auditorfunction to continuously monitor the effectiveness of internal controls. Audits areconducted on an ongoing basis and all significant deviations are brought to the notice ofthe Audit Committee. Corrective action is recommended for implementation by the auditcommittee. All these measures do facilitate timely detection of any irregularities andprovide early remedial steps. The Audit Committee approves the audit plan assigned to theinternal auditors and the audit plan is reviewed annually. Further the Audit Committeealso reviews the quarterly reports submitted by internal auditors critically and allmaterial deviations are seriously viewed.
26. Fixed Deposit
The Company has not invited or accepted any deposits during the year.
27. Issue of shares
The Company has not issued and allotted any kinds of securities during the year.
28. Dematerialization of Equity Shares
As at 31st March 2019 38279053 equity shares representing 96.73% of the paid-upshare capital of the Company have been dematerialized. The shareholders holding shares inphysical form are advised to dematerialize their equity shares to avoid the risksassociated with holding the share certificates in physical form.
29. Subsidiary & Associate Companies
Pursuant to Section 136 of the Companies Act 2013 which has given exemption fromattaching the annual reports of subsidiary companies along with the annual report of theCompany the copies of balance sheet profit and loss account report of Directors &Auditors and other related information of South India House Estates & Properties LtdWilson Cables Private Ltd Danish Steel Cluster Private Ltd (Subsidiary Companies) WilsonFar East Private Ltd Singapore (became a step down subsidiary of Wilson Cables PrivateLtd during the year) and Edac Automation Ltd (Associate Company) are not attached withthis annual report. Hence a statement containing the salient features of the financialstatements of the aforesaid Subsidiary Companies/Step down Subsidiary/ Associate Companyfor the year ended 31st March 2019 is attached with the consolidated accounts section.
The Company shall make available the annual accounts of the aforesaid subsidiaryCompanies and Associate Company to the shareholders of the Company upon their request. Theannual accounts of the said subsidiary Companies and Associate Company shall also be keptavailable for inspection by any member at the Registered office of the Company.
In accordance with Rule 5 of Companies (Accounts) Rules 2014 a statement containingthe salient features of the Financial Statements of the Subsidiaries and Associate isattached in Form AOC-1 as separate Annexure.
30. Consolidated Financial Statements
In accordance with Indian Accounting Standard (Ind AS) 110 of Institute of CharteredAccountants of India and Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the consolidated financial statements are prepared by theCompany. The audited consolidated financial statements together with auditors' report forthe financial year ended 31st March 2019 are attached with this annual report. In terms ofthe explanations given in Ind AS 28 the financial statement of Associate Company namelyEdac Automation Ltd wherein the Company holds 49.99% equity stake has not been takeninto account for consolidation as the Company has no significant influence over theaforesaid Associate Company.
Your Directors take this opportunity to express their gratitude to Company's BankersNBFCs Customers Suppliers Govt. Departments and other business associates for theirunstinted support extended to the Company. Your Directors wish to place on record theirappreciation of the efficient and dedicated services rendered by the employees at alllevels across the Company. We are sincerely grateful to all the shareholders for theirconfidence faith and support in the endeavours of the Company.
| ||For and on behalf of the Board |
|Place : Chennai ||Ashwin C Muthiah |
|Date : 22nd May 2019 ||Chairman |