The Board of Directors are pleased to present the Thirty-second Annual Report of theCompany and its audited financial statements (standalone and consolidated) for theFinancial Year ended 31st March 2018. The summarized financial results for theyear ended 31st March 2018 are given below:
| || |
| ||Year Ended 31st March 2018 ||Year Ended 31st March 2017 ||Year Ended 31st March 2018 ||Year Ended 31st March 2017 |
|Profit before Exceptional Items Interest Depreciation and Tax ||2176.62 ||1777.04 ||2807.92 ||2037.73 |
|Less: Exceptional Item ||- ||- ||- ||- |
|Profit before Interest Depreciation and Tax ||2176.62 ||1777.04 ||2807.92 ||2037.73 |
|Less: Interest ||538.03 ||562.30 ||559.42 ||574.56 |
|Profit before Depreciation and Tax ||1638.59 ||1214.74 ||2248.50 ||1463.17 |
|Less: Depreciation ||375.29 ||391.99 ||541.77 ||534.82 |
|Net Profit before Taxes ||1263.30 ||822.75 ||1706.73 ||928.35 |
|Less: Taxation (Including Deferred Tax) ||392.54 ||261.86 ||396.64 ||310.69 |
|Net Profit After Tax before Transfer to Minority Interest ||870.76 ||560.89 ||1310.09 ||617.66 |
|Less: Transfer to Minority Interest ||- ||- ||204.69 ||41.80 |
|Net Profit After Tax and Transfer to Minority Interest ||870.76 ||560.89 ||1105.40 ||575.86 |
|Add: Brought forward from previous year ||4561.99 ||4001.10 ||2766.72 ||2157.09 |
|Balance Available for Appropriations ||5432.75 ||4561.99 ||3872.12 ||2732.95 |
|Appropriations: || || || || |
|Transfer to General Reserve ||- ||- ||- ||- |
|Dividend ||120.18 ||- ||120.18 ||- |
|Dividend Distribution Tax ||24.46 ||- ||24.46 ||- |
|Transfer to Statutory Reserve/FCTR ||- ||- ||21.21 ||33.77 |
|Balance Carried over to Balance Sheet ||5288.11 ||4561.99 ||3706.27 ||2766.72 |
Note: Dividend and Dividend Distribution tax represent dividend declared at the 31stAGM held on 16th August 2017. No appropriation for dividend and dividenddistribution tax has been made in the Accounts for the dividend recommended for theFinancial Year 2017-18 pending approval by the Members at the ensuing Annual GeneralMeeting in line with Accounting Standard (AS) 4.
REVIEW OF FINANCIAL PERFORMANCE AND THE STATE OF COMPANY'S AFFAIRS
Your Company has continued to focus on profitability of operations by enhancing thegrowth and profitability in subsidiaries and streamlining manufacturing operations andservices which have all contributed to signifi cant increase in the prof tability.
Your Company recorded a revenue from operations of ' 17425.30 lakhs for the year ended31st March 2018 as against ' 14990.03 lakhs in the previous year. It achievedan EBITDA of ' 2176.62 lakhs (previous year ' 1777.04 lakhs) resulting in a net profitof ' 870.76 lakhs as against ' 560.89 lakhs in 2016-17 registering a growth of 22% and55% in terms of EBITDA and net profit respectively.
The Company's consolidated revenue from operations in the year under review aggregated' 22094.30 lakhs (previous year ' 18102.82 lakhs) on which it made EBITDA of ' 2807.92lakhs (previous year ' 2037.73 lakhs) and net profit (after transfer to MinorityInterest) of ' 1105.40 lakhs as against ' 575.86 lakhs in 2016-17 as Thejo HatconIndustrial Services Company (Thejo Hatcon) and Thejo Australia Pty Ltd (Thejo Australia)continued to grow in terms of turnover and proftability. Thus the EBITDA and net profithave shown a growth rate of 38% and 92% respectively. Thejo Hatcon has reported a prof i tof ' 247.48 lakhs and Thejo Australia ' 320.85 lakhs during the year as against a prof tof ' 82.03 lakhs and ' 165 lakhs respectively in the previous year.
The Board of Directors are pleased to recommend payment of dividend of 40% i.e. ' 4/-per equity share of ' 10/- each for the Financial Year ended 31st March 2018(previous year - 35%). The dividend amount of ' 137.34 lakhs (previous year - ' 120.18lakhs) together with dividend distribution tax of ' 27.95 lakhs (previous years - ' 24.46lakhs) will absorb a sum of ' 165.29 lakhs (previous year - ' 144.64 lakhs). The dividendpayment is subject to approval of the Members at the ensuing Annual General Meeting.
EMPLOYEES STOCK OPTION SCHEME
The Compensation / Nomination and Remuneration Committee of the Board inter aliaadministers and monitors the Employees' Stock Option Scheme of the Company which is inaccordance with the applicable SEBI Regulations.
During the year under review there were no material changes in the Employee StockOption Scheme 2015 of the Company and the Scheme is in compliance with the SEBIRegulations on ESOPs. Information in respect of options granted under Thejo Employee StockOption Plan 2015 is given in Note 25.10 forming part of the Financial Statements. As perRegulation 14 of SEBI (Share Based Employee Benefits) Regulations 2014 read with SEBIcircular dated 16th June 2015 the details of the ESOPs are uploaded on theCompany's website http://www.thejo-engg.com/invest/ESOPs2017.pdf
A Certif i cate from the Auditors of the Company as required under Regulation 13 ofSBEB Regulations is attached to the Board's Report.
CRISIL has retained the Fundamental Grade of 5/5 and has assigned the Current MarketPrice Grade of 3/5 for the equity shares of the Company under its SME IER (IndependentEquity Research) vide its latest report dated 2nd January 2018. The historicaldetails of Grades assigned to the Company by CRISIL under SME IER are given in the tablebelow:
|Date ||Nature of Report ||Fundamental Grade ||Current Market Price Grade (on the date of report) |
|02nd January 2018 ||H1FY18 Result Update ||5/5 ||3/5 |
|14th September 2017 ||H2FY17 Result Update ||5/5 ||2/5 |
|11th January 2017 ||H1FY17 Result Update ||5/5 ||5/5 |
|27th September 2016 ||Detailed Report ||5/5 ||4/5 |
|5th January 2016 ||H1FY16 Result Update ||5/5 ||3/5 |
|13th July 2015 ||H2FY15 Result Update ||5/5 ||3/5 |
|08th December 2014 ||Detailed Report ||5/5 ||4/5 |
|27th June 2014 ||H2FY14 Result Update ||5/5 ||3/5 |
|09th May 2014 ||Detailed Report ||5/5 ||3/5 |
Fundamentals Grading: 5/5 - Excellent Fundamentals Valuation Grading: 3/5 - CMP isaligned
REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS ENVIRONMENT
During the current Financial Year (FY 2017-18) most of the industries in the coresector concentrated on consolidating and increasing the existing capacity utilization andthere were no major domestic expansion projects. Steel sector one of the key sectorscatered by the Company was in the eye of the storm due to NPA issues that plagued some ofthe major players in the sector. RBI instructed the lending banks to refer some of thesemajor accounts for resolution under the Insolvency and Bankruptcy Code (IBC). This createduncertainty in terms of the operations of the banks in the immediate future casting adoubt on the further business prospects and liquidity issues arising out of pending duesfrom the NPA accounts. However with the steel sector looking upbeat on the back ofMinimum Import Prices being implemented for major steel products and upturn in thecommodities market the reference of some of the key steel sector companies for IBCresolution did not adversely affect on the whole the sector's business or liquidity.Contrarily it increased the business volume and improved the settlement of thereceivables. Moreover the Company began insisting on advances for further services to berendered and the same was well received by them. This helped the Company to get continuousorders from the major companies in the sector.
Internationally the mining industry in Western Australia is recovering from the lowswitnessed in FY17. This has helped our subsidiary in Australia to improve its performanceand profitability. We expect the trend to continue into FY 19. The oil prices have alsoincreased from the lower levels witnessed during FY17. This has helped the industries inSaudi Arabia to some extent which in turn has enabled Thejo Hatcon to increase itsturnover and proftability. The core sector industries of Brazil showed marginalimprovement which in turn enabled Thejo Brasil to report marginal profits.
The impact of recession is still casting its shadow on Chile. However we expect goodorders from our Chile subsidiary in FY 19.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The core sector industries to which the Company caters showed 4.2% growth during theyear under review. The Minimum Import Price which was implemented for major steelproducts improving commodity prices resulted in the sector performing well during FY 18.This helped the Company to get continuous orders from the major companies in the sectorduring FY 18. As mentioned earlier Steel sector one of the key sectors catered by theCompany saw some of its long-standing players being referred for resolution underInsolvency and Bankruptcy Code (IBC) due to NPA issues. The keen interest evinced byvarious top players in the industry to bag some of these assets showed the inherentstrength and potential in the industry. The IBC process once taken to logical conclusionis expected to pave the way for consolidation of the industry with the major players inthe industry consolidating their position.
The Company has focussed its attention on value added products and export markets. Thishas resulted in the Company increasing its exports considerably and showing growth inoverall product sales. On the back of improved economic environment the services businessregistered reasonable growth during the year. The Company continues to develop itsoverseas markets and focus on exports as the domestic growth is expected to be averagewith liquidity and cost pressures.
COMPANY PERFORMANCE AND KEY DEVELOPMENTS
As the Members are aware the Company is engaged in rubber and polyurethane-basedengineered products manufacturing marketing and servicing activities all under one roof.The services business caters to installation operation and maintenance of conveyor beltsand allied services such as belt splicing pulley lagging belt reconditioning and rubberlining. The products business centres around design development manufacture and supplyof Rubber and Polyurethane-based engineered products for belt cleaning spillage controlflow enhancement impact and abrasion protection and screening applications.
RESEARCH AND DEVELOPMENT
The approval of Department of Scientific and Industrial Research for the in-houseR&D Centre was renewed in April 2016. The R&D Centre is focussing on developingnew and innovative products as well as bringing about continuous improvement of existingproducts so as to meet the needs of the customers and to tap new markets. The sustainedefforts of Research and Development Team helped the Company to develop diverse productranges capable of withstanding some of the hardest working conditions in core sectorindustries.
As part of its policy of giving utmost importance to safety the Safety Department ofyour Company is continuously evaluating every process at its manufacturing as well as worksites and taking necessary steps for the safety of personnel as well as of properties. TheCompany conducts safety review on regular basis and takes appropriate steps based on thefindings.
OPPORTUNITIES AND THREATS OPPORTUNITIES
The products as well as services offerings of the Company are intended for the coresector industries. The opportunities for the industry in which the Company operates areintertwined with the opportunities for core sector industries.
With steel sector showing positive momentum and other core sector industriesregistering reasonable uptrend the prospects of the core sector industries are expectedto be bright in the medium term. Moreover the Company has a balanced portfolio ofproducts and services which helps to moderate the impact of cyclicality experienced byits customers.
The Company continues its focus on Operations & Maintenance (O&M) Division asthe fulcrum for its entire domestic business in the long-term horizon. O&M contractswould become key of the Company's domestic business with services and products beingsupplied to customers as part of the O&M Contract in the long run. Currently theO&M sector is still bordering on manpower supply and viewed as commodity with pricepressure. There are only a few projects where O&M contracts are being given purelybased on performance parameters. During FY18 we have strengthened the senior managementteam of O&M with competent technical experts and consequently rejigged the businessprocess so as position the Division for O&M contracts involving higher value additionto customer rather than competing for manpower supply contracts. As a result the Divisiondid not bag any major orders during FY18 as major potential customers were looking morefor manpower supply oriented O&M contracts at low rates which carried low valueaddition and were not remunerative and commensurate with the ever increasing manpowercost. We expect good potential in O&M in the long term as the market matures.
On the export front the Company has shown considerable growth and it expects thegrowth momentum to continue. The Company believes that there will be good growth andreturns from exports in the medium term.
There are only limited number of organized players in the service segment in which theCompany operates. However competition from the unorganized sector is a challenge for theservices business of the Company. In Operation & Maintenance there is intensecompetition with manpower-based contracts being bagged by competition at lower pricesespecially during times of cyclical downturn.
Policy changes in respect of core sector industries will have a direct impact on thebusiness of the Company as it primarily caters to core sector industries in the domesticmarket.
International commodity prices and fortunes of the global mining industries will havean impact on the export prospects of the Company.
Outcome of IBC proceedings against key players of core sector industries will have animpact if the process is delayed by legal battles resulting in potential buyers losinginterest in acquiring some of these assets.
The prices of most of the raw materials used by the Company are highly volatile. Thevolatility is expected to continue in the near future as well. The Company is mitigatingthis risk by framing appropriate procurement and pricing policies.
The policy framework formulated by the Government during last year is expected tocreate a conducive environment for the growth of commerce and industry in our country.Consolidation of steel industries will show the path for consolidation in otherindustries. Goods and Services Tax (GST) is expected to have a major impact on the overallbusiness ecosystem especially with some of the key provisions like e-way bill reversecharge on supplies by unregistered dealers and modified GST returns beingdeferred/implemented in a phased manner. Key industrial legislations such as LandAcquisition Amendment Bill and Labour Code on Industrial Relations Bill will also have animpact on the industries.
The financial performance of the Company in the year under review has shown growthmomentum after two sluggish years. The Manufacturing Division has shown an increase inturnover and proftability on account of higher exports and focus on high margin products.The Services Division saw a better performance with increase in turnover and proftability partially off-set by lower growth of Operation and Maintenance. Trading Divisionshowed a marginal increase. Exports have shown a growth of about 25% compared to theprevious year. Your Company is expanding its business in the overseas markets through itssubsidiaries and branch which is expected to improve the export turnover further.
The production of moulded and extruded rubber products was 1028 tonnes during 2017-18registering a growth of 7% over the previous year (962 tonnes). The production ofadhesives during the year under review was 316 tonnes showing a growth of 14% over theprevious year (278 tonnes).
SEGMENT WISE PERFORMANCE
Your Company has 3 segments of revenue - Manufacturing Units Service Units and Others.Audited financial results of these segments are furnished in Note 25.4 forming part ofthe Financial Statements.
RISK AND CONCERNS
The Company has put in place Risk Management Policy and Procedures for identificationassessment management monitoring and minimization of risks. It has identified potentialrisks under various categories like Business Dynamics Operations LiquidityMarket/Industry Human Resources Systems and Disaster Management. The Company isperiodically reviewing the risks and their identification assessment monitoring andmitigation procedures. It does not perceive any major technological operational financial or environmental risks in the near future.
However volatility in commodity prices cases pending under Insolvency and BankruptcyCode relating to core sector players and constraints in infrastructure are causes forconcern in the near/medium future.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has adequate internal control systems combined with Delegation of Powersand periodical review of the process. The control system is also supported by internalaudits and management reviews of documented policies and procedures.
DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS
In order to enthuse the employee base and increase the linear relationship betweenperformance and reward increments/incentives and ESOP are being provided based onperformance. The Company continues to look at identify create and execute seamlesslyinitiatives which enhance productivity and efficiency.
During the year the Company as part of on-going exercise in skill upgradationdeputed different classes of its employees to programmes and seminars which will help themto add to their professional knowledge and skills.
The Company will invest as hitherto in people through various initiatives which enablethe workforce to meet the production and service expectations and challenges relatedthereto and to infuse positive enthusiasm towards the organisation.
Certain statements in the Management Discussion and Analysis describing the Company'sviews about the Industry objectives and expectations etc. may be considered asforward looking statements.' The Company has tried to identify such statements byusing words such as expect' anticipate' hope' likely'plan' projected' and believe.' While making these statements theManagement has made certain assumptions which it believes are prudent. There is noguarantee that the assumptions would prove to be accurate. Actual results may differsubstantially or materially from those expressed or implied in the statements. The Companyundertakes no obligation to update any of the forward looking statements whether as aresult of any future events change in assumptions or for any other reason whatsoever.The forward looking statements are purely intended to put certain things in perspectivebased on the assumptions and estimates of the Management and in no way solicit investment.Members and others are requested to make their own judgment before taking any decision toinvest further in the shares of the Company.
INTERNAL FINANCIAL CONTROL SYSTEM
The Company has in place adequate internal fi nancial controls commensurate with itssize. During the year such controls were tested and no reportable material weaknesseswere observed.
As on the date of this Report the Company has four subsidiaries namely Thejo HatconIndustrial Services Company Kingdom of Saudi Arabia (Thejo Hatcon) with 51% shareholdingThejo Australia Pty Ltd. Australia (Thejo Australia) with 74% shareholding Thejo BrasilComercio E Servicos Ltda Brazil (Thejo Brasil) with 99.99% shareholding and ThejoEngineering LatinoAmerica SpA Chile (Thejo Chile) with 99.73% shareholding.
The Financial Statements contain the Audited Consolidated Financial Statements of theCompany for the Financial Year ended 31st March 2018. These Statements havebeen prepared as per Accounting Standard 21 issued by the Institute of CharteredAccountants of India.
PERFORMANCE OF SUBSIDIARY COMPANIES
Thejo Hatcon Industrial Services Company (Thejo Hatcon) is engaged primarily in rubberlining and related industrial services activities. During the period 01stApril 2017 to 31st March 2018 Thejo Hatcon achieved a turnover of SAR 8million (' 1385.46 lakhs) on which it made a net a profit of SAR 1.42 million (' 247.48lakhs).
Thejo Australia Pty Ltd (Thejo Australia) is a servicing Company primarily engaged inbelt splicing belt jointing maintenance and related activities. During the period 01stApril 2017 to 31st March 2018 Thejo Australia achieved a turnover of AUD6.86 million (' 3414.45 lakhs) with a profit of AUD 0.64 million (' 320.85 lakhs).
Thejo Brasil Comercio E Servicos Ltda (Thejo Brasil) is primarily engaged in selling ofmaterials used in core sector industries for bulk material handling mineral processingand corrosion protection. During the period 01st April 2017 to 31stMarch 2018 Thejo Brasil achieved a turnover of BRL 0.53 million (' 107.92 lakhs) withprofit of BRL 0.03 million (' 6.13 lakhs).
Thejo Engineering LatinoAmerica SpA (Thejo Chile) is primarily engaged in selling ofmaterials used in core sector industries for bulk material handling mineral processingand corrosion protection. During the period 01st April 2017 to 31stMarch 2018 Thejo Chile achieved a turnover of USD 0.73 million (' 473.46 lakhs) and hadincurred a loss of USD 0.14 million (' 87.48 lakhs).
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO
Particulars relating to conservation of energy technology absorption foreign exchangeearnings and outgo as prescribed under Sub-section 3(m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are given in Annexure 1 formingpart of the Board's Report
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Your Directors have constituted a Corporate Social Responsibility Committee (CSRCommittee) comprising Mr. K.J. Joseph Mr. Thomas John Mr. V.A. George and Mr. V.K.Srivastava as Members.
The Committee has been entrusted with the responsibility of formulating andrecommending to the Board a Corporate Social Responsibility Policy (CSR Policy)indicating the activities to be undertaken by the Company monitoring the implementationof the framework of the CSR Policy and recommending the amount to be spent on CSRactivities. The CSR Policy is provided in the Corporate Governance Report.
During the year 2017-18 the Company was required to incur CSR expenditure of ' 16.27lakhs being 2% of the average net prof ts for the immediately preceding three FinancialYears. In compliance with this requirement the Company spent ' 16.50 lakhs on eligibleprojects approved by the Board on the recommendation of the CSR Committee thus fullymeeting the CSR target for the year under review. A brief outline of the Company's CSRPolicy and projects undertaken is given in Annexure 2 forming part of the Board's Report.
EXTRACT OF ANNUAL RETURN
The Extract of Annual Return in Form No. MGT-9 as per Section 134 (3) (a) of theCompanies Act 2013 read with Rule 8 of Companies (Accounts) Rules 2014 and Rule 12 ofCompanies (Management & Administration) Rules 2014 is attached as Annexure 3 formingpart of the Board's Report and the extracts are uploaded on the Company's website.
NUMBER OF MEETINGS OF BOARD
Four meetings of the Board of Directors were held during the year. Particulars ofmeetings held and attended by each Director are detailed in the Corporate GovernanceReport which forms part of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors state that:
a) in the preparation of the annual accounts for the year ended 31st March2018 the applicable accounting standards have been followed and there are no materialdepartures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2018 and ofthe profit of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern' basis;
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal fi nancial controls are adequate and are operatingeffectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The policy of the Company on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a Directorand other matters provided under sub-section 3 of Section 178 of the Companies Act 2013adopted by the Board of Directors is given in the Corporate Governance Report forming partof the Board's Report.
The Auditors' Report for the year ended 31st March 2018 does not containany qualifi cation.
M/s.Brahmayya & Co Chartered Accountants were appointed as Auditors at the 31stAnnual General Meeting of the Company held on 16th August 2017 to hold officeup to the conclusion of the 36th Annual General Meeting of the Company.
The Board appointed Mr. G. Porselvam Practising Company Secretary to conductSecretarial Audit for the Financial Year 2017-18. The Secretarial Audit Report of Mr. G.Porselvam for the Financial Year is attached as Annexure 4 to the Board's Report. TheSecretarial Audit Report does not contain any qualification reservation or adverseremark.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Particulars of Loans given Investments made and Guarantees given which are required tobe disclosed under Section 186 (4) of the Companies Act 2013 are given in Annexure 5forming part of the Board's Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties required to be givenunder Section 188 (2) of the Companies Act 2013 in Form No. AOC-2 are set out inAnnexure 6 forming part of the Board's Report.
COMMITTEES OF THE BOARD
Currently the Company has four Committees of the Board of Directors namely the AuditCommittee Compensation / Nomination and Remuneration Committee Corporate SocialResponsibility Committee and Shareholders' and Investors' Grievance Committee. The termsof reference of the Committees are provided in the Corporate Governance Report formingpart of the Boards' Report. The composition of the Committees is as follows:
|Name of the Committee ||Composition of the Committee ||Status |
|Audit Committee ||Mr. M. P. Vijay Kumar ||Independent Director Chairman |
| ||Mr. N. Ganga Ram ||Independent Director Member |
| ||Mr. A. Satyaseelan ||Independent Director Member |
| ||Mrs. Sujatha Jayarajan ||Independent Director Member |
|Compensation / Nomination and ||Mr. N. Ganga Ram ||Independent Director Chairman |
|Remuneration Committee ||Mr. V. K. Srivastava ||Independent Director Member |
| ||Mr. M. P. Vijay Kumar ||Independent Director Member |
| ||Mrs. Sujatha Jayarajan ||Independent Director Member |
|Corporate Social Responsibility ||Mr. V. K. Srivastava ||Independent Director Chairman |
|Committee ||Mr. K. J. Joseph ||Non-executive Director Member |
| ||Mr. Thomas John ||Non-executive Director Member |
| ||Mr. V. A. George ||Managing Director Member |
|Shareholders' and Investors' ||Dr. C. N. Ramchand ||Independent Director Chairman |
|Grievance Committee ||Mr. V. K. Srivastava ||Independent Director Member |
| ||Mr. K. J. Joseph ||Non-executive Director Member |
| ||Mr. Thomas John ||Non-executive Director Member |
All the recommendations made by the Audit Committee were accepted by the Board ofDirectors without any exception.
The Company has put in place Whistle Blower Policy and established the requisite VigilMechanism for employees and Directors for reporting concerns about unethical behaviouractual or suspected fraud or violation of law to a designated Committee. The Committeeconsists of Mr. M.D. Ravikanth Chief Financial Officer & Secretary Mr. S. Premjith -Vice President Services and Mr. Thomas K Abraham - Vice President HR & Admin. Thismechanism also provides for adequate safeguards against victimisation of reportingemployees. The Policy has been disseminated to all the employees through display on NoticeBoard and the Company's website.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Thomas John (DIN 00435035) Vice Chairman retires by rotation at the ensuingAnnual General Meeting and being eligible offers himself for reappointment.
Mr. Rajesh John (DIN 05161087) Whole-time Director retires by rotation at the ensuingAnnual General Meeting and being eligible offers himself for reappointment.
Mr. V.A. George (DIN 01493737) was appointed as Managing Director up to 14thJuly 2018 at the 27th Annual General Meeting held on 30th August2013. The Board of Directors on the recommendation of the Compensation / Nomination andRemuneration Committee have re-appointed Mr. V.A. George as Managing Director of theCompany for a period of 3 (three) years with effect from 15th July 2018subject to the approval of the Members.
Mr. N. Ganga Ram (DIN 00001246) Non-Executive Independent Director was appointed as anIndependent Director under Sections 149 and 152 read with Schedule IV and all otherapplicable provisions if any of the Companies Act 2013 for a term up to 31stMarch 2019 ("first term") at the 28th Annual General Meeting of theCompany. The Board of Directors on the recommendation of the Compensation / Nomination andRemuneration Committee have recommended re-appointment of Mr. N. Ganga Ram as anIndependent Director of the Company for a second term of 5 (five) consecutive years.
Mr. V.K. Srivastava (DIN 00611678) Non-Executive Independent Director was appointed asan Independent Director under Sections 149 and 152 read with Schedule IV and all otherapplicable provisions if any of the Companies Act 2013 for a term up to 31stMarch 2019 ("first term") at the 28th Annual General Meeting of theCompany. The Board of Directors on the recommendation of the Compensation / Nomination andRemuneration Committee have recommended re-appointment of Mr. V.K. Srivastava as anIndependent Director of the Company for a second term of 5 (five) consecutive years.
Mr. A. Satyaseelan (DIN 05158896) Non-Executive Independent Director was appointed asan Independent Director under Sections 149 and 152 read with Schedule IV and all otherapplicable provisions if any of the Companies Act 2013 for a term up to 31stMarch 2019 ("first term") at the 28th Annual General Meeting of theCompany. The Board of Directors on the recommendation of the Compensation / Nomination andRemuneration Committee have recommended re-appointment of Mr. A. Satyaseelan as anIndependent Director of the Company for a second term of 5 (five) consecutive years.
Mr. M.P. Vijay Kumar (DIN 05170323) Non-Executive Independent Director was appointedas an Independent Director under Sections 149 and 152 read with Schedule IV and all otherapplicable provisions if any of the Companies Act 2013 for a term up to 31stMarch 2019 ("first term") at the 28th Annual General Meeting of theCompany. The Board of Directors on the recommendation of the Compensation / Nomination andRemuneration Committee have recommended re-appointment of Mr. M.P. Vijay Kumar as anIndependent Director of the Company for a second term of 5 (five) consecutive years.
Dr. C. N. Ramchand (DIN 05166709) Non-Executive Independent Director was appointed asan Independent Director under Sections 149 and 152 read with Schedule IV and all otherapplicable provisions if any of the Companies Act 2013 for a term up to 31stMarch 2019 ("first term") at the 28th Annual General Meeting of theCompany. The Board of Directors on the recommendation of the Compensation / Nomination andRemuneration Committee have recommended re-appointment of Dr. C. N. Ramchand as anIndependent Director of the Company for a second term of 5 (five) consecutive years.
A brief resume of these Directors together with related information is given in theNotice convening the ensuing Annual General Meeting. The Board recommends theirappointment / re-appointment as Directors of the Company.
The Company has received declarations from all the Independent Directors of theCompany confi rming that they meet the criteria of independence as prescribed underSection 149(6) of the Companies Act 2013. None of the Independent Directors will retireby rotation at the ensuing Annual General Meeting.
A formal annual evaluation is required to be made by the Board of its own performanceand that of its Committees and individual Directors. Section 179(2) of the Companies Act2013 requires the Compensation / Nomination and Remuneration Committee to carry outevaluation of every director's performance. Schedule
IV of the Companies Act 2013 states that the performance evaluation of the IndependentDirectors is to be done by the Board of Directors excluding the Director being evaluated.
Accordingly the Board of Directors carried out annual performance evaluation of theBoard Board Committees Individual Directors and Chairperson during the year underreview. The Compensation / Nomination and Remuneration Committee carried out evaluation ofevery Director's performance. Similarly the performance of the Non-Independent Directorsand of the Board as a whole was evaluated by the Independent Directors at a separateMeeting held by them. The evaluation of all the Directors made was on the basis of thecriteria and framework adopted by the Compensation / Nomination and RemunerationCommittee.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said Rules isattached as Annexure 7a to the Board's Report.
Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are also attached as Annexure 7b to the Board's Report.
Your Company has voluntarily complied with the requirements of Corporate Governance tothe maximum extent possible. A report on Corporate Governance is attached as Annexure 8 tothe Board's Report.
Your Directors state that there were no transactions in respect of the following itemsduring the year under review requiring disclosure or reporting:
1. Deposits covered under Chapter V of the Companies Act 2013.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to the employees of the Companyunder any scheme.
4. Receipt of remuneration or commission by the Managing Director or the Whole-timeDirectors of the Company from any of its subsidiaries.
5. Significant or material orders passed by the Regulators or Courts or Tribunals whichimpact the going concern status and Company's operations in future.
Your Directors further state that during the year under review there was no case fledpursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
The Directors wish to thank the Company's Bankers for their continued support. TheDirectors also wish to thank the Company's customers and stakeholders for their patronage.
Your Directors place on record their appreciation of the good work done by theemployees of the Company at all levels.
| || ||For and on behalf of the Board |
| ||KJJOSEPH ||THOMAS JOHN ||V.A. GEORGE |
|Place : Chennai ||Chairman ||Vice Chairman ||Managing Director |
|Date : 28th May 2018 ||DIN 00434410 ||DIN 00435035 ||DIN 01493737 |
ANNEXURE 1 TO BOARD'S REPORT
[Particulars pursuant to the Companies (Accounts) Rules 2014]
A) CONSERVATION OF ENERGY
i. Steps taken or impact on Conservation of Energy
- Ensuring optimum utilisation of energy and maximum possible savings of energy.
- Avoiding any known wastages of energy by monitoring and reviewing energy usage.
ii. Steps taken by the Company for utilising alternate sources of energy
- Improved efficiency by use of diesel generators in case of emergency and as stand-by.
- Manufacturing unit met a major portion of the energy requirement from wind energy.
iii. Capital Investments on energy conservation equipment
During the Financial Year your Company has not invested in any energy conservationequipment.
B) TECHNOLOGY ABSORPTION
a) The Company has not absorbed any new technology during the Financial Year.
b) Specific areas in which R&D carried out by the company
- Development of new innovative products.
- Evaluation and usage of new raw materials.
- Improvement of existing products and processes.
- Development of methods to achieve uniformity and consistency in product quality andperformance by improved process controls.
- Productivity improvement and methods for reduction in energy consumption.
c) Benefits derived as a result of R&D
- Meeting the ever-changing product performance requirements of the market bydeveloping suitable products to cater to these stringent requirements on a continuousbasis.
- Improving the field service performance of existing products to surpass the qualityof competitive products.
- Evaluating new and innovative raw materials for possible adoption and incorporationinto the relevant products.
- Introduction of new methods and systems for improved productivity and reduction inenergy consumption.
d) Expenditure on R&D Rs. in lakhs
|Particulars ||2017-18 |
|Capital ||3.60 |
|Revenue (excluding depreciation) ||111.65 |
|Total ||115.25 |
|Total R&D expenditure as a % of total turnover ||0.66% |
C) FOREIGN EXCHANGE EARNINGS AND OUTGO a) Payments in foreign currency towards Imports
|Imports at CIF Value ||2017-18 ||2016-17 |
|Raw Materials and Traded Goods ||332.26 ||380.33 |
|Capital Goods ||40.44 ||33.34 |
|Total ||372.70 ||413.67 |
|b) Payments in foreign currency towards Expenditure ||Rs. in lakhs |
|Expenditure in foreign currency ||2017-18 ||2016-17 |
|Professional and consultation fees ||9.11 ||8.93 |
|Foreign Tour ||10.17 ||10.01 |
|Salaries & Incentives of Perth Branch ||388.00 ||259.04 |
|Other Expenditure of Perth Branch ||251.63 ||224.48 |
|Others ||52.31 ||56.46 |
|Total ||711.22 ||558.92 |
|c) Earnings in foreign currency on Accrual basis || ||Rs. in lakhs |
|Earnings in foreign currency ||2017-18 ||2016-17 |
|Exports - Products ||2714.36 ||2267.07 |
|Exports - Services ||146.56 ||26.63 |
|Total ||2860.92 ||2293.70 |
|d) Net Gain or Loss on Foreign Currency Translation ||Rs. in lakhs |
|Description ||2017-18 ||2016-17 |
|Profit/(Loss) on Foreign Currency Translation ||24.62 ||(23.43) |
ANNEXURE 5 TO BOARD'S REPORT
[Pursuant to Section 186 of the Companies Act 2013]
DETAILS OF LOANS GIVEN INVESTMENT MADE OR GUARANTEE GIVEN OR SECURITY PROVIDED UNDERSECTION 186 (4) OF THE COMPANIES ACT 2013
The particulars of loans given as at 31st March 2018 are as follows: Rs. inlakhs
|Name of the Company ||As at 31st March 2018 ||Purpose |
|Thejo Hatcon Industrial Services Company Saudi Arabia ||156.94 ||Working Capital Requirement |
The details of investments made during the Financial Year are as follows:
|Name of the Company and Country ||During FY 17-18 ||As at 31st March 2018 |
|Thejo Hatcon Industrial Services Company Saudi Arabia ||- ||333.72 |
|Thejo Australia Pty Ltd Australia ||- ||1202.45 |
|Thejo Brasil Comercio E Servicos Ltda Brazil ||- ||76.24 |
|Thejo Engineering LatinoAmerica SpA Chile ||- ||341.66 |
The details of guarantee given as at 31st March 2018: Nil
ANNEXURE 6 TO BOARD'S REPORT
[Pursuant to Clause (h) of Sub-section (3) of Section 134 and Section 188 of theCompanies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014]
The particulars of Contracts or arrangements entered into by the Company with relatedparties under Section 188 of the Companies Act 2013 are as follows:
1. Details of contracts or arrangements or transactions not at arm's length basis:
There were no contracts or arrangements entered into by the Company with the relatedparties during the Financial Year 2017-18 which were not at arm's length.
2. Details of material contracts or arrangements or transactions at arm's length basis:
The details of material contracts or arrangements or transactions at arm's length basisduring the Financial Year 2017-18 are as follows: Rs. in lakhs
|Name of related Party ||Nature of relationship ||Duration ||Nature of Contract & Salient Terms if any ||Amount |
|Thejo Hatcon Industrial Services Company Saudi Arabia ||Subsidiary ||Based on Orders ||Purchases & Sales ||321.09 |
|Based on Repayment Schedule ||Loan Repayment ||(41.96) |
|Till repayment of loan ||Interest charged ||18.57 |
|Thejo Australia Pty Ltd Australia ||Subsidiary ||Based on Orders ||Purchase & Sales ||5.92 |
|Based on Repayment ||Loan Repayment ||(494.94) |
|Till repayment of loan ||Interest charged ||52.73 |
|Based on requirement ||Other Income ||0.97 |
|Based on requirement ||Expenses Reimbursement ||27.26 |
|Thejo Brasil Comercio E Servicos Ltda Brazil ||Subsidiary ||Based on Orders ||Purchase & Sales ||35.83 |
|Thejo Engineering LatinoAmerica SpA Chile ||Subsidiary ||Based on Orders ||Purchase & Sales ||347.79 |
|Mr. V. A. George Managing Director ||Key Managerial Personnel ||14th July 2018 ||Remuneration ||48.00 |
|Mr. Manoj Joseph ||Executive Director ||19th June 2020 ||Remuneration* ||42.37 |
|Mr. Rajesh John ||Executive Director ||15th January 2022 ||Remuneration* ||36.49 |
|Mr. M. D. Ravikanth CFO & Secretary ||Key Managerial Personnel ||Not Applicable ||Remuneration* ||24.16 |
|Mrs. Rosamma Joseph ||Relative of Director ||Not Applicable ||Remuneration ||12.09 |
|Mrs. Celinamma John ||Relative of Director ||Not Applicable ||Remuneration ||11.95 |
|Mr. Manesh Joseph ||Relative of Director ||Not Applicable ||Remuneration* ||27.63 |
* Note: Remuneration excludes retirement benefits
| || || |
For and on behalf of the Board
| ||KJJOSEPH ||THOMAS JOHN ||V.A. GEORGE |
|Place : Chennai ||Chairman ||Vice Chairman ||Managing Director |
|Date : 28th May 2018 ||DIN 00434410 ||DIN 00435035 ||DIN 01493737 |
ANNEXURE 7a TO BOARD'S REPORT
[Pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014]
i. The details of remuneration of each Director and KMP during the Financial Year2017-18 the percentage increase in remuneration of each Director and KMP and ratio of theremuneration of each Director to the median remuneration of the employees for theFinancial Year 2017-18 are as follows:
|Name of the Director / KMP ||Remuneration of Director / KMP for the F.Y 2017-18 (Rs. in lakhs) ||% increase in Remuneration in the F.Y. 2017-18 ||Ratio of Remuneration of each director to median remuneration of employees ||Remuneration of Director / KMP for the F.Y 2016-17 (Rs. in lakhs) |
|Mr. K. J. Joseph ||1.50 ||50.00 ||0.64 ||1.00 |
|Mr. Thomas John ||1.95 ||50.00 ||0.83 ||1.30 |
|Mr. V. A. George ||48.00 ||17.07 ||20.34 ||41.00 |
|Mr. Manoj Joseph ||49.38 ||34.22 ||20.92 ||36.79 |
|Mr. Rajesh John ||41.69 ||78.16 ||17.67 ||23.40 |
|Mr. N. Ganga Ram ||2.85 ||216.67 ||1.21 ||0.90 |
|Mr. V. K. Srivastava ||2.40 ||60.00 ||1.02 ||1.50 |
|Mr. A. Satyaseelan ||2.55 ||50.00 ||1.08 ||1.70 |
|Mr. M. P. Vijay Kumar ||2.85 ||58.33 ||1.21 ||1.80 |
|Dr. C. N. Ramchand ||1.50 ||15.38 ||0.63 ||1.30 |
|Mrs. Sujatha Jayarajan ||2.85 ||216.67 ||1.21 ||0.90 |
|Mr. M. D. Ravikanth ||27.47 ||24.35 ||Not Applicable ||22.09 |
ii. The median remuneration of employees of the Company for the Financial Year was '2.36 lakhs.
iii. There was an increase of 15.69% in the median remuneration of employees in theFinancial Year.
iv. There were 1171 permanent employees on the rolls of the Company as on 31stMarch 2018.
v. Average percentage increase made in the salaries of employees other than themanagerial personnel in the last Financial Year i.e. 2017-18 was 17.22% whereas themanagerial remuneration increased by 37.43% (from ' 101.19 lakhs in 2016-17 to ' 139.07lakhs in 2017-18).
vi. It is hereby affirmed that the remuneration paid is as per the Remuneration Policyfor Directors Key Managerial Personnel and other Employees.
ANNEXURE 7b TO BOARD'S REPORT STATEMENT OF PARTICULARS OF EMPLOYEES:
During the Financial Year no employee received remuneration in excess of the limitsprescribed under Section 197(12) of the Companies Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
Details of top ten employees in terms of remuneration drawn during the year.
|Name ||Designation ||Remuneration* (? in lakhs) ||Nature of Employment ||Qualification ||Experience (Years) ||Date of employment commencement ||Age ||Previous Employment |
|M. G Baskar ||Sr. Vice President (Head - O&M Division) ||31.02 ||Regular ||B.E. Mech Exec MBA ||25 ||02-11-2016 ||48 ||FL Smidth Private Limited |
|Manesh Joseph ||Senior VP - Manufacturing ||27.63 ||Regular ||B.com ||21 ||02-01-2012 ||44 ||Own Business |
|M.D. Ravikanth ||CFO & Secretary ||24.16 ||Regular ||CAACS ||15 ||03-03-2008 ||38 ||India Cements Capital Limited |
|D. Ravichandran ||VP - Corrosion Protection Division ||22.79 ||Regular ||DME ||34 ||01-07-1997 ||52 ||MIL Industries Limited |
|G. Radhakrishnan ||Head - Commercial & Receivables ||21.54 ||Contractual ||M.A. PGDGC ||41 ||11-04-2016 ||66 ||India Cements Capital Limited |
|S. Sathish ||VP - Commercial ||19.49 ||Regular ||B.Com PG-Man- agement ||21 ||01-11-2011 ||46 ||Spectra Management |
|S. Premjith ||VP - Services ||19.30 ||Regular ||B.Com PGDPM ||18 ||05-01-2005 ||45 ||Radhakrishna Hospitality Services Private Limited |
|Thomas K. Abraham ||VP - HR & Admin ||17.76 ||Regular ||M. A. (Economics) PGDPMIR ||28 ||01-03-2008 ||50 ||India Cements Capital Limited |
|B. Vivekanandan ||Head - Operations O&M Division ||17.27 ||Regular ||BE ( Mech) ||24 ||06-11-2014 ||46 ||Tecpro Systems Limited |
|S. Venkataramanan ||DGM - Business Development ||16.32 ||Regular ||DEEE ||28 ||09-10-2009 ||47 ||Hofincons Infotech & Industrial Services Private Limited |
* - Excluding Retirement benefits
None of the above employees are related to any of the Directors of the Company exceptMr. Manesh Joseph who is related to Mr. K.J. Joseph Chairman as son and to Mr. ManojJoseph Director Marketing as brother.