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Stovec Industries Ltd.

BSE: 504959 Sector: Industrials
NSE: N.A. ISIN Code: INE755D01015
BSE 00:00 | 13 Jul 2531.55 -92.40
(-3.52%)
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2624.00

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NSE 05:30 | 01 Jan Stovec Industries Ltd
OPEN 2624.00
PREVIOUS CLOSE 2623.95
VOLUME 45
52-Week high 3874.95
52-Week low 2435.00
P/E 20.14
Mkt Cap.(Rs cr) 529
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2624.00
CLOSE 2623.95
VOLUME 45
52-Week high 3874.95
52-Week low 2435.00
P/E 20.14
Mkt Cap.(Rs cr) 529
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Stovec Industries Ltd. (STOVECINDS) - Director Report

Company director report

TO THE MEMBERS

Your Directors are pleased to present the 44th Annual Report and the AuditedFinancial Statement of the Company for the year ended December 31 2017.

1. FINANCIAL RESULTS

Particulars Current Year 31.12.2017 Previous Year 31.12.2016
(Rs. in Millions) (Rs. in Millions)
Revenue from Operations (net) 2100.82 1885.13
Other Income 38.49 39.48
(a) Total Income: 2139.31 1924.61
(b) Total Expenditure: 1687.00 1533.58
Gross Profit before Depreciation and Amortisation expenses 452.31 391.03
Less: Depreciation & Amortization expenses 59.81 51.25
Operational Profit/Profit Before Tax 392.50 339.78
Less: Current Tax 137.08 120.48
Deferred tax 0.29 (4.87)
(Excess)/Short provision of income tax of earlier years (Net) (0.86) 0.23
136.51 115.84
Profit After Tax 255.99 223.94
Add: Profit brought forward from previous year 571.57 425.54
Profit available for appropriation 827.56 649.48
Dividend on equity shares (Refer Note belew) - 64.73
Tax on Dividend - 13.18
Amount transferred to General Reserves. - -
Profit carried forward to Balance Sheet 827.56 571.57

Note: As per revised Accounting Standard (AS)-4 related to "Contingencies andEvents Occuring after the Balance Sheet Date" Proposed Dividend for the financialyear 2017 shall be accounted for after approval from Members of the Company at the ensuingAnnual General Meeting.

2. PERFORMANCE OVERVIEW

Standalone

In financial year 2017 despite challenging business environment your Companycontinued the growth momentum and attained a decent growth in revenue and profitability.Your Company has recorded standalone revenue from operations of Rs. 2100.82 Million(Previous year Rs. 1885.13 Million) a growth of about 11 % in comparison to prior year.The increase in revenue was contributed by growth in sales of almost all product lines andmore particularly Rotary Screen Printing Machine and Nickel Perforated Screens and wasdriven by increased market reach. The Company has achieved standalone Profit before tax ofRs. 392.50 Million (Previous year Rs. 339.78 Million) a growth of about 16 % incomparison to prior year.

Consolidated

The consolidated revenue from operations stood at Rs. 2129.66 Million (Previous yearRs. 1946.43 Million) an increase of about 9 % in comparison to prior year. The Company'sconsolidated Profit before tax for the financial year 2017 stood at Rs. 413.99 Million(Previous year Rs. 377.85 Million).

3. RESERVES AND SURPLUS:

The Company has not transferred any amount to General Reserves for the financial year2017.

4. DIVIDEND:

Considering the Company's financial performance the Board of Directors haverecommended payment of Final Dividend of Rs. 36/- per equity share having face value ofRs.10/- each (i.e. 360%) for the financial year ended on December 31 2017. This FinalDividend is subject to the approval of Members in the 44th Annual GeneralMeeting.

5. DIVESTMENT OF EQUITY INVESTMENT HELD IN WHOLLY OWNED SUBSIDIARY

Based on recommendation of Audit Committee the Board of Directors of the Company attheir meeting held on March 1 2018 have in-principle approved divestment of 100 % equityinvestment held by the Company in Atul Sugar Screens Pvt. Ltd. a Wholly Owned SubsidiaryCompany (Not a Material Subsidiary) and constituted Divestment Committee to finalize thesaid divestment.

6. SUBSIDIARY COMPANY

Atul Sugar Screens Private Limited ("ASSPL") is a Wholly Owned Subsidiary ofthe Company. The Company has not made any further equity investment in ASSPL during theyear. Your Company has obtained a certificate from the Statutory Auditors of the Companycertifying that the Company is in compliance with the Foreign Exchange Management(Transfer or issue of security by a person resident outside India) Regulations 2000 withrespect to the downstream investments made in Atul Sugar Screens Private Limited.

A Summary of Performance of ASSPL is provided below:

The revenue from operations of ASSPL during the financial year 2017 stood at Rs. 157.41Million (Previous year Rs. 162.02 Million). ASSPL recorded Profit before tax of Rs. 25.46Million (Previous year Rs. 37.41 Million).

Pursuant to the provisions of Section 129 (3) of the Companies Act 2013 ("theAct") a statement containing the salient features of financial statements of ASSPLin the prescribed Form AOC-1 is provided in Annexure-I forming part of this report.The Audited Financial Statements of ASSPL are available on the Company's website atwww.stovec.com and the same are also available for inspection at the registered office ofthe Company as per the details mentioned in the Notice of 44th Annual GeneralMeeting. Your Company will also make available these documents upon written request by anyMember of the Company interested in obtaining the same.

The Annual Audited Consolidated Financial Statements together with the Report ofAuditor's thereon forms part of this Annual Report.

7. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as required to be given under Section 134(3)(m) of the Act read with Rule8(3) of the Companies (Accounts) Rules 2014 is provided in Annexure II formingpart of this Report.

8. FIXED DEPOSITS

For the year ending December 31 2017 the Company has not accepted any depositsfalling within the purview of Section 73 of the Act and rules made there under.

9. CORPORATE GOVERNANCE

A separate report on Corporate Governance Compliance and a Management Discussion andAnalysis Report as required by SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") forms part of the Director's Report asAnnexure-III and IV respectively along with the required Certificate from thePracticing Company Secretary regarding compliance of the conditions of CorporateGovernance.

10. AUDIT COMMITTEE

The Company has in place an Audit Committee in terms of requirements of the Act readwith rules framed thereunder and Listing Regulations. The details relating to the AuditCommittee are given in the Corporate Governance Report forming part of this report. Therecommendations of Audit Committee were duly accepted by the Board of Directors.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors in its meeting held on November 3 2017 has appointed Mr.Guillaume Cornells Gerardus Roncken (DIN: 07973914) as an Additional Director on the Boardof the Company w.e.f November 3 2017 who holds office up to the date of the forthcomingAnnual General Meeting and is eligible for appointment as a Director of the Company. TheBoard welcomed Mr. Roncken on the Board of Directors of the Company. Mr. Eiko Ris (DIN:07428696) due to his other pre-occupations has resigned from the Board of Directors of theCompany and its Committee's w.e.f. November 3 2017. The Board placed on record itsappreciation for the contribution made by him in the growth of the Company.

At the 44th Annual General Meeting Mr. Dirk Wim Joustra (DIN: 00481154)retires by rotation and being eligible offers himself for re-appointment.

The Members at the 41st Annual General Meeting appointed Mr. Khurshed. M.Thanawalla (DIN: 00201749) and Mr. Marco Wadia (DIN: 00244357) as an Independent Directorsof the Company for a consecutive term of five years as per the requirement of the Act. Theabovenamed Independent Directors have furnished declarations to the Company confirmingthat they meet the criteria prescribed for Independent Directors under Section 149 (6) ofthe Act and Regulation 16(1)(b) of the Listing Regulations.

12. BOARD MEETING

During the financial year ended December 31 2017 six meetings of the Board ofDirectors were held. The details of the attendance of Directors at the Board Meeting arementioned in the Corporate Governance Report annexed hereto.

Your Directors confirm that to the best of their knowledge and belief applicableprovisions related to Secretarial Standards on Meetings of the Board of Directors issuedby The Institute of Company Secretaries of India and approved by the Central Governmenthave been complied with.

13. PERFORMANCE EVALUATION

The details of Annual Performance Evaluation of Individual Directors includingChairperson Board of Directors and Committees of Board of Directors are mentioned in theCorporate Governance Report.

14. CORPORATE SOCIAL RESPONSIBILITY

In accordance with Section 135 of the Act and Rules framed thereunder the Company hasconstituted a Corporate Social Responsibility ("CSR") Committee of Directors.The details of composition of CSR Committee are given in the Corporate Governance Report.The details of CSR policy and CSR spending by the Company as required under the Companies(Corporate Social Responsibility Policy) Rules 2014 have been provided as Annexure-V tothis report.

15. REMUNERATION POLICY

The details of the Remuneration Policy is mentioned in the Corporate Governance Report.A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 (as amended) is provided as Annexure VI forming part of this Report.

16. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope of Internal Audit is well defined in theorganization. The Internal Audit Report is regularly placed before the Audit Committee ofthe Board. The Management monitors and evaluates the efficacy and adequacy of internalcontrol systems in the Company its compliance with standard operating proceduresaccounting procedures and policies. Based on the report of Internal Auditors processowners undertake corrective action in their respective areas and thereby strengthening thecontrols continuously. Significant audit observations if any and corrective actionssuggested and taken are presented to the Audit Committee of the Board.

17. EXTRACTS OF ANNUAL RETURN

The extracts of Annual Return in Form MGT-9 as required under Section 92(3) of the Act(as amended) read with Rule 12 of the Companies (Management and Administration) Rules2014 (as amended) is available at the website of the Company at www.stovec.com athttp://www.spgprints.com/uploads/documents/Stovec/Reports-and-filings/3.-Annual-reports/Extracts-of-Annual-Return-2017.pdf.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

During the year under review all the Related Party Transactions were entered into bythe Company in the ordinary course of business and on arm's length basis. Hence reportingin Form AOC-2 is not applicable to the Company.

19. PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS

A statement providing particulars of Loans Guarantees or Investments under Section 186of the Act is provided as Annexure VII forming part of this Report.

20. VIGIL MECHANISM

As per the provisions of Section 177(9) of the Act the Company is required toestablish a Vigil

Mechanism for Directors and Employees to report genuine concerns. The Company has aWhistle

Blower Policy (also known as Vigil Mechanism) in place and the details of the WhistleBlower Policy are provided in the Report on Corporate Governance forming part of thisReport.

The Company has disclosed information about the establishment of the WhistleblowerPolicy on its website at www.stovec.com athttp://www.spgprints.com/uploads/documents/Stovec/Stovec- policies/Whistle BlowerPolicy.pdf.

21. RISK MANAGEMENT

The Company has formulated Risk Management Policy in order to monitor the risks and toaddress/mitigate those risks associated with the Company. The Board of Directors do notforesee any elements of risk which in its opinion may threaten the existence of theCompany.

22. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 (3)(c) and 134 (5) of the Act your directorsconfirm to the best of their knowledge and belief:

a) that in the preparation of the annual financial statements for the year endedDecember 31 2017 the applicable accounting standards have been followed and that nomaterial departures have been made from the same;

b) that such accounting policies have been selected and applied consistently andjudgment and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at December 31 2017 and ofthe profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken 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) that the annual financial statements for the year ended December 31 2017 have beenprepared on a going concern basis;

e) that proper internal financial controls are in place in the Company and that suchinternal financial controls are adequate and are operating effectively; and

f) that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.

23. POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has in place a Policy on Prevention of Sexual Harassment of Women atWorkplace in line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunder and InternalComplaint's Committee has also been set up to redress complaints regarding sexualharassment. During the year no complaint with allegations of sexual harassment wasreceived by the Company.

24. REPORTING OF FRAUDS

There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment.

25. STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Act read with the Companies (Audit andAuditor's) Rules 2014 M/s. Deloitte Haskins & Sells LLP Chartered Accountants (FirmRegistration No. 117366W/W-100018) were appointed as Statutory Auditors of the Company fora consecutive term of 5 years to hold office from the conclusion of 43 Annual GeneralMeeting until the conclusion of 48th Annual General Meeting subject toratification of their appointment by Members at every subsequent Annual General Meeting.

A Certificate from Statutory Auditors has been received to the effect that theirappointment as Statutory Auditors of the Company if ratified at ensuing Annual GeneralMeeting would be according to the terms and conditions prescribed under Section 139 ofthe Act and rules framed there under. A resolution seeking ratification of theirappointment forms part of the Notice convening the 44th Annual General Meetingand the same is recommended for consideration and approval of Members.

26. COST RECORDS AND COST AUDITORS

The Board of Directors on the recommendation of the Audit Committee have appointed M/sDalwadi and Associates Cost Accountants (Firm Registration No.000338) as its CostAuditors to audit the cost records of the Company for the financial year 2018 at aremuneration as mentioned in the Notice convening the 44th Annual GeneralMeeting. A certificate has been received from the Cost Auditors to the effect that theirappointment as Cost Auditors of the Company if made would be in accordance with thelimits specified under Section 141 of the Act and Rules framed thereunder. A resolutionseeking Member's approval for the remuneration payable to Cost Auditors forms part of theNotice convening 44th Annual General Meeting of the Company and the same isrecommended for the consideration and approval of Members. The Company had filed CostAudit Report for financial year ended December 31 2016 on June 9 2017 which is withinthe time limit as prescribed under The Companies (Cost Records and Audit) Rules 2014 (asamended).

27. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Sandip Sheth & Associates Practicing Company Secretaries (COP No.4354) for conducting Secretarial Audit of the Company for the financial year ended onDecember 31 2017. The Secretarial Audit Report is provided as Annexure-VIII tothis report.

28. AUDITORS REPORT

There are no qualifications reservations or adverse remarks made by M/s. DeloitteHaskins & Sells LLP Chartered Accountants Statutory Auditors in their audit reportand by M/s. Sandip Sheth & Associates Practicing Company Secretaries SecretarialAuditors in their secretarial audit report and therefore need not require any commentsunder section 134(3)(f) of the Act.

29. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY FROM THE END OF FINANCIAL YEAR AND TILL THE END OF THIS REPORT.

There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the Financial Year of theCompany to which the Financial Statements relate and the date of this Report.

30. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

As on date of this report there are no significant and material orders passed by theRegulators or Courts or Tribunals impacting the going concern status and operations of theCompany in future.

31. PARTICULARS OF EMPLOYEES

Your Directors place on record their deep appreciation for the contribution made by theemployees of the Company at all levels.

The information on employees particulars as required under Section 197 (12) of the Actread with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 (as amended) is provided in the Annexure forming partof the Report. In terms of Section 136 of the Act the Report and Financial Statements arebeing sent to the

Members and others entitled thereto excluding aforesaid Annexure. The said informationis available for inspection by the Members at the Registered Office of the Company as perthe details mentioned in the Notice of 44th Annual General Meeting on anyworking day of the Company (i.e. except Saturday Sunday and Public Holidays) up to thedate of the 44th Annual General Meeting. Any Member interested in obtaining acopy of the same may write to the Company Secretary of the Company.

32. ACKNOWLEDGEMENT

The Board of Directors express its deep sense of appreciation for the contributionco-operation and confidence reposed in the Company by SPGPrints B.V. - the Parent Company.The Board of Directors also extend its gratitude to its valued shareholders employeescustomers bankers suppliers and other stakeholders for their continued co-operation andsupport.

For and on behalf of Board of Directors
Sd/-
Date: March 1 2018 K.M.Thanawalla
Place: Ahmedabad Chairman
DIN: 00201749