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Solitaire Machine Tools Ltd.

BSE: 522152 Sector: Engineering
NSE: N.A. ISIN Code: INE410A01013
BSE 00:00 | 01 Mar 23.85 0.10
(0.42%)
OPEN

24.35

HIGH

24.35

LOW

23.70

NSE 05:30 | 01 Jan Solitaire Machine Tools Ltd
OPEN 24.35
PREVIOUS CLOSE 23.75
VOLUME 3692
52-Week high 29.30
52-Week low 15.50
P/E 108.41
Mkt Cap.(Rs cr) 11
Buy Price 22.60
Buy Qty 5.00
Sell Price 23.85
Sell Qty 140.00
OPEN 24.35
CLOSE 23.75
VOLUME 3692
52-Week high 29.30
52-Week low 15.50
P/E 108.41
Mkt Cap.(Rs cr) 11
Buy Price 22.60
Buy Qty 5.00
Sell Price 23.85
Sell Qty 140.00

Solitaire Machine Tools Ltd. (SOLITAIREMACH) - Director Report

Company director report

To the Members

The Directors have pleasure in presenting before you the Twenty Eighth Annual Report ofthe Company together with the Audited Statements of Accounts for the year ended 31stMarch 2020.

FINANCIAL RESULTS:

The Standalone performance during the period ended 31st March 2020 has beenas under:

(Rs. in Lacs)

Particulars Year Ended 31st March 2020 Year Ended 31st March 2019 Year Ended 31st March 2018 Year Ended 31st March 2017 Year Ended 31st March 2016
Sales (Net) 1226.07 1559.64 1652.56 1834.07 1565.5
Other Income 32.93 29.03 41.56 31.51 26.8
(Increase)/ Decrease in stocks (351.59) (222.83) (28.85) (19.99) 179.04
Profit Before Taxation 103.09 207.95 248.45 305.95 169.54
Less:
Taxation 50.00 73.00 82.00 100.00 66.50
Excess/Short provision of tax relating to earlier years 2.18 7.32
Deferred Tax (15.16) (2.16) (24.51) 14.40 6.43
Net Profit after Tax 66.07 129.79 190.97 191.54 108.87
Add: Profit brought forward from 968.66 900.83 776.54 652.25 584.25
Previous Year
Profit available for appropriation 1034.73 1030.62 967.51 843.79 693.32
Less:
Proposed Dividend Including 61.52 61.52 68.33 54.50 40.87
Corporate tax
Less:
Other Comprehensive Income 0.87 0.44 (1.64) 12.75 0.00
Less: Loss of Shruchi Manufacturing Limited* 4.16
Balance Carried to Balance Sheet 968.18 968.66 900.83 776.54 652.25

*Shruchi Manufacturing Limited our wholly owned subsidiary now stands merged with theCompany after NCLT Mumbai Bench Order.

DIVIDEND:

Your Directors recommend dividend of Rs. 3406632/- which would be 7.5% on 4542176equity shares of Rs. 10/- each for the year ended March 31 2020 subject to members'approval.

OPERATIONS:

The operation of the year has shown decline in sales and net profit. The year beganwith recession in industry and especially in auto industry. Auto industry is back bone ofmachine tool industry and month after month we saw decline. Customers were not ready toforecast expansion and those who had ordered machines could not lift them due toliquidity shortages. The inventory went up by 3.51 crores. The export market especiallyin USA was hit hard by low volume in aerospace industry. The recession was increasedworldwide by scare of Covid 19 from January 2020. Customers slowed down and stoppedvisiting for conducting trials on their ordered machines as well as new orders trickled inslowly. By early March Covid had practically total control of economy and then camelockdown. This was unprecedented unexpected and hard to foresee the outcome. Inspite allthese negative factors your company has remained profitable and continued to be debt freefor ninth year in a row. The company managed all the resources to maximize profit as bestas possible in the current scenario. Sporadic working loan was taken from bank resultsshow that our finance cost is only 0.2 % of our sales. Company invested Rs. 11.5 lacs inbalancing and upgrading of equipment and processes. Your company has been working long foradditional land for future expansion. Finally we were allotted close to 90000 sq. Ft. ofland in Halol GIDC at reasonable price. The land value is Rs. 1.35 crore. the firstinstalment was paid for Rs. 42.56 lacs. All new investments are made with cash accruedfrom operation and no loan was taken or the investments made in past were utilized. Thethrust for exports is continuing around the industrial world. During the year we bookedorders from Australia Mexico and UK. New sales representatives have been finalized inGermany and UK. The grinders are now being upgraded to meet European standards for salesin Germany and neighbouring countries. The efforts would show results in coming years. Wehad participated in exhibition in Thailand. Initial progress has been made. The IndianMachine Tool Exhibition IMTEX 2021 has been postponed from January to June 2021 in viewof Covid crisis. Similarly international exhibition are being postponed. During the yearwe saw upsurge in orders for rebuilding and CNC retrofitting as major percentage oforders. Few projects were completed and rest were carried forward to new year. New yearalso shows that rebuilding activity would continue and would help increase sales inspiteof slow down. Our PM Modiji's Atmanirbhar declaration would have good impact in future.Many tenders lost due to imported equipment procurement by gov't organisations would haveto be replaced with indigenous manufacturers. We can see shift from China to India forprocurement of parts by international customers. This would benefit in long run. Majorityof our exporting customers are upbeat about this opportunity. Company had a 100 % ownedsubsidiary Shruchi Manufacturing Limited for past several years. It was decided to mergeShruchi in to Solitaire to simplify accounting as well as reduce paperwork and cost.Shruchi Manufacturing Limited was merged in to Solitaire Machine Tools Limited by NCLTorder no. CP(CAA) NO.277/MB-II/2019.

The company continues with its own social responsibility program for our own employeesand their families. We had arranged rangoli competition drawing competitionentertainment program on children's day and distribution of education related items duringthe year. The company continues to train the employees for better skill. The equipment andprocess in plant are slowly being upgraded to reduce cost of manufacturing as well asimprove quality norms. The employees have worked well and understood the difficult timescompany was passing through during the year. Company thanks them for continued support.The company thanks all its customers for continued support and faith in meeting theirrequirements. The company has added sales associates in south and north India to supportcustomers and better understand their requirements. The company thanks its bankersvendors and various government bodies for their continued support.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

As required under Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion and Analysis Report is enclosedas a part of this report.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

Report on Corporate Governance and Management Discussion and Analysis Reports has beenincluded in the report. Your company has been practicing the principle of good CorporateGovernance over the year. The Board of Directors supports the broad principles ofCorporate Governance. In addition to the basic governance issues the Board lays strongemphasis on transparency accountability and integrity.

LISTING WITH STOCK EXCHANGES:

The Company confirms that it has paid the Annual Listing Fees for the year 2020-21 toBSE where the Company's Shares are listed.

DEMATERIALISATION OF SHARES:

89.28 % of the company's paid up Equity Share Capital is in dematerialized form as on31st March 2020 and balance 10.72 % is in physical form.

NUMBER OF BOARD MEETINGS HELD:

The Board of Directors duly met 5 times from 1st April 2019 to 31stMarch2020. The dates on which meetings were held are as follows:

S. No. Date
01 20th April 2019
02 18th May 2019
03 30th July 2019
04 09th November 2019
05 08th February 2020

DIRECTORS:

The Board of Directors are duly constituted. As per provisions of Companies Act 2013for retirement by rotation all executive directors are now liable to retire by rotation.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Clause 49 ofthe Listing Agreement.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:

a) In the preparation of the annual accounts for the year ended 31st March2020 the applicable accounting standards have been followed along with proper explanationrelating to material departures;

b) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitof the company for the same period;

c) The directors 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 for 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 in the company that are adequate andwere operating effectively.

f) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and these are adequate and are operating effectively.

COMMENTS ON AUDIT OBSERVATIONS:

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation adverse remark or disclaimer.

DISCLOSURE ON NON-APPLICABILITY OF MAINTENANCE OF COST RECORDS

The maintenance of Cost records as specified by the Central government under subsection (1) of Section 148 of the Companies Act 2013 is not applicable on the Company.

COMMENTS ON SECRETARIAL AUDITOR'S OBSERVATIONS:

There is no malafide intention on the part of company and delay if any in the matteris inadvertent and caused due to oversight. The Company is in process of complying all therequirements of the Companies Act 2013 and amended listing agreement.

AUDITORS:

Statutory Auditors:

M/s. Ajay Shobha & Co. (Firm Registration No.: 317031E) Chartered AccountantsMumbai were appointed as Statutory Auditors for financial year 2017-18 to 2021-22 at theAnnual General Meeting held on 29th July 2017. The requirement to place thematter relating to appointment of Auditors for ratification by members at every AnnualGeneral Meeting is done away with vide notification dated 7th May 2018 issuedby the Ministry of Corporate Affairs. Accordingly no resolution is proposed forratification of appointment of Auditors.

Secretarial Audit:

For ease of managing business operations we have appointed Vadodara based PracticingCompany Secretary M/s Kiri & Associates as the Secretarial Auditor for the Companywith effect from 09th November 2019. According to the provision of section 204of the Companies Act 2013 read with Rule 9 of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 the Secretarial Audit Report submitted by CompanySecretary in Practice is enclosed as a part of this report Annexure-A.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

a. CONSERVATION OF ENERGY:

The company's operations do not involve substantial consumption of power in comparisonto costs of production. However regulatory measures are there to ensure that theconsumption of power is within the norms.

b. TECHNOLOGY ABSORPTION:

The company has fully absorbed the technical know-how received from USA and Italy.

c. FOREIGN EXCHANGE EARNING AND OUTGO:

Foreign exchange earnings of the company during the year 2019-2020 were Rs. 97.06 Lacs(Previous Year Rs. 296.69 Lacs) while outgoings were Rs. 82.17 (Previous Year Rs. 98.59Lacs).

VIGIL MECHANISM/ WHISTLE BLOWER:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.smtgrinders.com under link http://www.smtgrinders.com/policies/.

RELATED PARTY TRANSACTIONS:

Related party transactions that were entered during the financial year were on an arm'slength basis and were in the ordinary course of business. There were no materiallysignificant related party transactions with the Company's Promoters Directors Managementor their relatives which could have had a potential conflict with the interests of theCompany. Transactions with related parties entered by the Company in the normal course ofbusiness are periodically placed before the Audit Committee for its omnibus approval andthe particulars of contracts entered during the year as per Form AOC-2 is enclosed asAnnexure-B.

The Board of Directors of the Company has on the recommendation of the AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 the Rulesthere under and the Listing Agreement. This Policy was considered and approved by theBoard has been uploaded on the website of the Company at www.smtgrinders.com under linkhttp://www.smtgrinders.com/policies/.

EXTRACT OF ANNUAL RETURN:

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

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

There are no Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 during the current Financial Year.

REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:

i. The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is furnished hereunder:

S. No. Name Designation Remuneration paid FY 19-20 Remuneration paid FY 18-19 Percentage Increase in remuneration from previous year Ratio/Times per Median of employee remuneration
1 Mr. Ashok Chairman & Rs. 1274509 Rs. 1280920 NIL 4.51
Sheth Managing
Director
2 Mr. Managing Rs. 1291790 Rs. 1294935 NIL 4.57
Hemandra Director
Badani
3 Mr. Harsh Whole Time Rs. 1145944 Rs. 1155108 NIL 4.06
Badani Director

ii. Percentage Increase in Median Remuneration of Employees in the Previous Year:

Total Employees in FY 2018-19 Median Remuneration of Employees in FY 2018-19 Total Employees in FY 2019- 20 Median Remuneration of Employees in FY 2019-20 Percentage Increase
81 278883 80 282395 1.26%

iii. Average percentage increase in Employee remuneration- 0.66%

iv. Average percentage increase in Managerial Remuneration- 0.00%

PARTICULARS OF EMPLOYEES

The total number of on roll employees in Company as on 31st March 2020- 76

Details of employees which are covered under Rule 5(2) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 is as follows:

A. Top ten employees in terms of remuneration:

Name of Employee Date of Commencem ent Date of Resig na- tion Total remuneration paid Qualification & Experience Designatio n Age Last employ ment Relation with Director
Ashok Sheth 10/09/1987 - Rs. 1274509 B.S-Mechanical Engineering USA with 50 Years of experience Chairman & MD 72 N.A Himself
Hemandra Badani 10/09/1987 - Rs. 1291790 B Com Graduate with 45 years of experience Vice Chairman and MD 67 N.A Himself
Harsh Badani 31/01/2006 - Rs. 1145944 B.E-Mechanical and MBA with 12 years of experience WTD 35 N.A Himself
N M B Khan 15/06/1992 - Rs. 667800 Commerce Graduate with 35 years of experience Dy. General Manager- Finance & Corporate affairs 57 KR Kanakiy a & Co. N.A.
M I Gohil 01/04/2001 - Rs.615707 ITI with 29 years of experience Assembly Manager 56 N.A. N.A.
M.A Bidiwala 09/11/1991 - Rs.606069 DME with 27 years of experience QC and Developme nt Manager 48 N.A. N.A.
Atul Modi 01/11/1996 - Rs.505968 M.Com with 22 years of experience Purchase Officer 52 Geeta Valves N.A.
Girish D Goswami 01/10/1995 - Rs. 484423 ITI with 25 years of experience Supervisor 47 N.A. N.A.
Indravadan A Patel 01/02/1996 - Rs 447982 ITI with 24 years of experience Sr. Marking & Scheduler 53 N.A N.A.
Ranjit D.Soni 01/06/1991 - Rs.447043 ITI with 29 years of experience Sr. Machinist 51 N.A N.A.

B. Employed throughout the year under review & were in receipt of remuneration inaggregate of not less than Rs. 10200000/- p. a. or Rs. 850000/- per month if employedfor part of the year: N. A.

C. Person who are getting more remuneration than MD WTD or manager and hold 2% or moreequity shares together with spouse and dependent children: N. A.

DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY:

The Company has been addressing various risks impacting the Company and the policy ofthe Company on risk management is provided elsewhere in this Annual Report in ManagementDiscussion and Analysis.

INTERNAL FINANCIAL CONTROLS

Your Company has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information.

DISCLOSURE REGARDING MSME SUPPLIERS

The Company has as on 31st March 2020 a total amount of Rs. 721180/- aspending for more than 45 days towards the payment of Micro and Small enterprise registeredunder Micro Small and Medium Enterprise Act 2006. The delay in payment was because ofNationwide lockdown due to Corona Virus Pandemic.

POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

The Company has zero tolerance for sexual harassment at workplace and has constitutedan Internal Complaints Committee against sexual harassment at the workplace in line withthe provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules there under. The Committee aims to provide protectionto employees at the workplace and prevent and redress complaints of sexual harassment andfor matters connected or incidental thereto with the objective of providing a safeworking environment where employees feel secure. The Company has not received anycomplaint of sexual harassment during the financial year 2019-20.

PERFORMANCE EVALUATION

The Company has devised a Policy for performance evaluation of the Board Committeesand other individual Directors (including Independent Directors) which include criteriafor performance evaluation of Non-executive Directors and Executive Directors. Theevaluation process inter alia considers attendance of Directors at Board and committeemeetings acquaintance with business communicating inter se board members effectiveparticipation domain knowledge compliance with code of conduct vision and strategy. TheBoard carried out an annual performance evaluation of the Board Committees IndividualDirectors and the Chairperson. The Chairman of the respective Committees shared the reporton evaluation with the respective Committee members. The performance of each Committee wasevaluated by the Board based on report on evaluation received from respective Committees.

The report on performance evaluation of the Individual Directors was reviewed by theChairman of the Board and feedback was given to Directors.

DETAILS OF FRAUDS REPORTED BY THE AUDITORS

No frauds have been reported by the auditors under sub-section 12 of section 143 of thecompanies Act 2013.

ACKNOWLEDGEMENT:

Directors take this opportunity to express thanks to various departments of the Centraland State Government Bankers Material Suppliers Customers and Shareholders for theircontinued support and guidance. The Directors wish to place on record their appreciationfor the dedicated efforts put in by Employees of the Company at all levels.

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