national fittings ltd Directors report

Your Directors have pleasure in presenting the Thirtieth Annual Report together with the Audited Balance Sheet & Profit and Loss Account for the year ended 31.03.2023.

FINANCIAL RESULTS

The operating results for the year 2022-2023 are given below :

Profit before Interest and Depreciation and Other adjustments		1105.42
Less : Interest	105.90
Depreciation	342.85	448.75
Net Profit before Tax		656.67
Provision for Tax :
Current Tax	116.29
MAT Credit	50.36
Deferred Tax (income) / expenses	50.99
		217.64
Net Profit after Tax		439.03
Amount brought forward from previous year		2578.35
Amount available for appropriation		3017.38
Appropriations
Dividend on Equity Shares		90.83
Other Comprehensive Income (Net of Tax)		14.08
Surplus carried over to Balance Sheet		2912.47

FINANCIAL PERFORMANCE:

The Companys gross income for the financial year ended 31st March, 2023 was Rs. 8748.82 lacs compared to Rs 6762.04 lacs in the previous year. The profit before tax for the Company is Rs. 656.67 lacs as against Rs. 167.26 lacs in the previous year. The depreciation for the year is Rs.342.85 lacs compared to Rs. 289.02 lacs in the previous year. After providing Taxation, the Companys net profit stands at Rs.439.03 lacs against Rs. 134.79 lacs in the previous year.

An amount of Rs 2912.47 lacs is to be carried over to Balance Sheet.

The Net worth of the company is at Rs. 5,494.72 lacs as on 31.03.2023 as against Rs. 5,160.61 lacs in the previous year.

DIVIDEND

The Board of Directors has recommended a dividend of Rs 1.50 per Equity shares on 90,83,182 Equity shares of Rs 10/- each aggregating to Rs 136.25 lacs for the financial year ended 31.03.2023, (Previous year Rs 90.83 lacs) which if approved by the shareholders in the ensuing Annual General Meeting will be paid to all the Equity shareholders, whose name appear in the Register of Members as on 07th

August, 2023.

PERFORMANCE:

Sales turnover of the company increased over previous year due to marginal increase in production and selling price. Better exchange rate for exports did not contribute due to withdrawal of certain export incentives and higher input power cost and raw material prices.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

TRENDS & DEVELOPMENT

Better utilisation of the manufacturing capacity did not materialise due to slow down in the pump and automotive sectors. Company is proposing to add a series of valves to complement the fittings line and has acquired the designs drawings and certain toolings from a company to which this product line did not fit into their main business activity. Company expects to increase its sales from this line from the second quarter of the forthcomming year.

SIGNIFICANT CHANGES

Operating profit and net profit margin increased over previous year due to increase in selling prices in the export and domestic markets.

Capital expenditure to the extent of 6.0 Crores were done during the year in the infrastructure and acquisition of Valve design, drawings and tooling.

Debtors, Inventories, turnover ratio, current sale ratio and debt equity ratio has not changed significantly over the previous year.

As indicated above Return on Net Worth was also affected compared to previous year. Ratios are detailed in Note 2.30 of the Notes to the Financial Statements.

RISK MANAGEMENT

Company has been reviewing the various risks constantly and taking steps to avoid their impact on performance.

1) Market Risk

Company continues to face severe competition from Chinese manufactures in export and domestic markets. In the export market company is able to maintain market share due to the development of large size fittings in which the Chinese are not competitive and non-availability

In the domestic market company through distribution network has been convincing the infrastructure project consultants to implement the ‘Make in India promotion by Government of India.

2) Manpower

Non-availability of skilled manpower remains a challenge and company in taking steps to mechanise more of the production operation. More of the operations are being evaluated to sub contract to family run small businesses.

3) Raw Material

Raw Material prices remain high compared to International prices and the company is constantly evaluating the production methods to improve yields and reduce process rejection.

4) Exchange Risk

Present exchange rate is favourable to the company and we expect it to remain the same during the current year.

Company will continue to increase domestic market for the fittings and newly developed Valve line in the domestic market to offset against any impact from exchange rate fluctuation.

DIRECTORS

Mrs Susheela Balakrishnan was appointed as the Director of the Company under the category of Non-

Executive Independent Director with effect from 10.02.2023

Mr Chenniappan Selvakumar was re-appointed as the Non-Executive Independent Director with effect from 14.12.2022

Mrs Arjunaraj Dhananjayan has resigned from his Directorship with effect from 10.02.2023 Mr Jayaram Govindarajan, Director, who retires by rotation, and being eligible, offered himself for reappointment.

Mr A V Palaniswamy was re-appointed as the Managing Director with effect from 01.01.2024 Mrs Panath Anitha was re-appointed as the Whole Time Director with effect from 01.04.2024

KEY MANAGEMENT PERSONNEL

The following persons are the Key Management Personnel as per the provisions of the Companies Act, and rules made there under:-

Mr A V Palaniswamy	Managing Director
Mrs Panath Anitha	Whole Time Director
Mr Jayaram Govindarajan	Whole Time Director
Mr J Saravanan	Chief Financial Officer
Mr S Aravinthan	Company Secretary

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors further report that

(i) in the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departures;

(ii) the accounting policies selected have been applied consistently, prudent judgments and estimates have been made to give a true and fair view of the state of affairs of the company as at 31.03.2023 and of the Profit of the company and the cash flow statement for the year ended 31.03.2023.

(iii) they have taken proper and sufficient care for the in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

(v) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. Internal financial control means the policies and procedures adopted by the Company forensuringtheorderlyandefficient conduct of its business including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financialinformation.

(vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CODE OF CONDUCT

All Directors and Senior Management of the Company have affirmed Compliance with the Code of Conduct of National Fittings Limited for the financialYear ended 31st March 2023.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

NUMBER OF BOARD MEETINGS

During the year, 4 (Four) Board Meetings were convened and held, the details of which are given in the

Corporate Governance Report.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR, KEY MANAGEMENT PERSONNEL AND OTHER EMPLOYEES

The Company shall have such person on the Board who complies with the requirements of the Companies

Act, 2013. Directors/KMPs shall be persons of sound integrity and honesty, apart from knowledge, experience etc in the respective fields. Composition of the Board shall be in compliance with the requirements of the Companies Act, 2013. No person less than the age of 21 years shall be appointed as the director of the Board.

The Executive Directors are paid with remuneration as approved by the members but are not paid sitting fees. Independent directors are not entitled for ESOPs.

MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

1. Nomination and Remuneration Committee of the Board prepared and sent through its Chairman draft feedback form for evaluation of the Board and Independent Directors.

2. Independent Directors at a meeting of themselves considered and evaluated the performance of the Board, performance of the Chairman and other Non-Independent Directors.

3. The Board subsequently evaluated performance of the Board, the Committees and Independent Directors.

SHARES

There was no issue of fresh Equity Shares during the financial year. No Bonus Shares were issued.

The Company has not issued any Sweat Equity Shares and not provided any Employee Stock Option Scheme. The Company has not Bought Back any of its securities during the year under review.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The company does not have any Subsidiary, Joint Venture or Associate Company.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 a statement containing salient features of the Financial Statements of your Companys Subsidiaries, Associates and Joint Ventures in Form AOC-1 is attached to the Financial Statements of your Company as Annexure 1. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review are given in para 2.2 of Notes forming part of the financial statements.

There were no loans, guarantees made by the Company under Section 186 of the Companies Act, 2013 during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

There were no materially significant related party transactions entered by the Company with its Promoters, Directors, Key Management Personnel and other persons which may have a potential conflict interest of the Company.

All the related party transactions that were entered during the financial year were in the ordinary course of the business of the Company

All the related party transactions are placed before the Audit Committee for approval. Required disclosures are made to the Committee on quarterly basis in terms of the approval of the Committee.

The Policy on materiality of related party transactions and also on dealing with the related party transactions as approved by the Audit Committee and Board of Directors is uploaded on the Companys web-site and the link for the same is https://www.nationalfitting.com.

The particulars of Contracts or Arrangements with the related parties made under Section 188 of the Companies Act, 2013 are furnished in Annexure 2 and are attached to this report.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

The Company has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. The Company also assures that internal controls are operating effectively.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of the report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Amount prescribed for CSR Expenditure during 2022-23 is Nil

The company spent Rs 14.33 lacs in this financial year as CSR activities. Amount unspent is Rs. Nil

In 2023-24 Rs 7.24 lacs has been prescribed for CSR Expenditure. Details are attached separately to this report in Annexure 3

EXTRACTS OF ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with corresponding rules, the extract of the Annual Return as at 31st March, 2023 in Form MGT 9 is hosted on the website www.nationalfitting.com

LEGAL COMPLIANCE passed by the regulators or courts or tribunals impacting Therewerenosignificant the going concern status and companys operations in future.

CORPORATE GOVERNANCE

Your Company is in compliance with the Corporate Governance guidelines, as laid out in the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations).

All the Directors and the Senior Management personnel have affirmed in writing their compliance with and adherence to the CodeofConductadoptedbytheCompany.Acertificatewas received from the Managing Director in terms of SEBI Listing Regulations on the compliance declarations received from the Directors and the Senior Management personnel.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to SEBI Listing Regulations and have certified the compliance, as required as Annexure 4 to Regulations. TheCertificate this Report.

The Chief Executive Officer and Chief Financial Listing Regulations is attached as Annexure 5 to this Report.

Related Party disclosures/transactions are detailed in Note 2.31 of the Notes to the financial

SEXUAL HARASSMENT

Company has a policy on prohibition, prevention and redressal of sexual harassment of women at work place and matters connected therewith.

Company has constituted an Internal Control Committee for prevention of sexual harassment of women at work place.

During the year ended 31st March, 2023 no complaint was received under the policy.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has unclaimed dividend amounting to Rs. 76,51,422/-

a) Pursuant to Rule 6 (12) of IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 the dividend entitlement on the shares transferred to IEPF authority on dividend paid for the financial year 2021-22 amounting to Rs. 3,92,580/- have been transferred to the Investor Education and Protection Fund in this financial year.

b) Pursuant to the provisions of Section 124 (5) of the Companies Act, 2013, unclaimed dividend of Rs 7,57,361/- which remained unpaid or unclaimed for a period of 7 years and have been transferred to the Investor Education and Protection Fund in this financial year.

The details of the unpaid and unclaimed dividend lying with the Company have been uploaded on the website of Ministry of Company Affairs.

c) Pursuant to the provisions of Section 124 (6) of the Companies Act, 2013, 7,502 equity shares for which dividend remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund in this financial year.

DEPOSITS

The Company has neither accepted nor renewed any deposits during the financial year.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) & (ii) The ratio of the remuneration of each Director to the median and mean remuneration of the employees of the Company for the financial year and the percentage increase in remuneration of each director, Chief Financial Officer, Company Secretary or Manager, if any, in the ChiefExecutive financial year:

Name of Directors/Key Management Personnel	Ratio to Median Remuneration (times)	% Increase / Decrease in Remuneration
Mr A V Palaniswamy, Managing Director	6.89	2.76
Mr Jayaram Govindarajan	8.56	8.71
Mr. Dhananjayan	0.09	100
Mr. Selvakumar	0.37	33.33
Mr R Alagar	0.81	27.94
Mrs A Panath Anitha	1.90	8.98
Mr J Saravanan (Chief Financial Officer)	3.25	6.26
Mr S Aravinthan (Company Secretary)	2.64	6.04

iii) The percentage increase in the median remuneration of employees in the financial year: 21.45% iv) The number of permanent employees on the rolls of the Company: 166

v) The increase in employees cost for the financial year 2022-23 was 15.80%

vi) The average increase in salaries of employees other than managerial personnel in 2022-23 was 16.45%. Percentage increase in the managerial remuneration for the year was 6.26%

vii) The Company affirms that remuneration is as per the remuneration policy of the Company.

The information required under Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2015 are given below:

During the period under review, there was no employee drawing remuneration in excess of the limits prescribed under Section 197 of the Companies Act, 2013 and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

STATUTORY AUDITORS

M/s Krishaan & Co Chartered Accountants, Chennai were appointed as Statutory Auditors of the Company from the conclusion of the 29th Annual General Meeting held on 23.09.2022 until the conclusion of 34th Annual General Meeting.

The report of the Statutory Auditors for financial year ended 31st March, 2023 is given along with the

Financial Statements, which are annexed to and forms part of this report.

SECRETARIAL AUDITOR

Pursuant to the requirements of the Companies Act, 2013, the Company has appointed Mr. M R L Narasimha, B.Com, FCS, Practicing Company Secretary (Cop No: 799) as the Secretarial Auditor forthefinancialyear 2022-23 whose report on 22nd May, 2023 is attached separately to this report. Annexure 6.

EXPLANATION OR COMMENTS OR QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualifications,reservations or adverse remarks made by the Statutory Auditors in their report and there were no qualifications, reservations or adverse remarks made by the Practicing Company Secretary in the Secretarial Audit Report.

CONSERVATION OF ENERGY

Company has replaced the older make furnaces with new power saving units and processes are being monitored to reduce power consumption. Company continues to buy renewable energy.

TECHNOLOGY ABSORPTION

Company is proposing to increase capex for development of new products to utilize the existing infrastructure and testing facilities to international standards.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange inflow (actual)	: Rs. 56,60,91,841/-
Foreign exchange used (actual)	: Rs. 18,54,187/-

INDUSTRIAL RELATIONS

Relationship with the employees/labor was cordial during the year under review.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank M/s. Bank of India for the support extended during the period. Your Directors also wish to thank all the suppliers, employees, Government Departments/Agencies and others for their valuable contribution and assistance during the year.

	FOR AND ON BEHALF OF THE BOARD
Place : Coimbatore	Sd/- A.V. PALANISWAMY Sd/-	JAYARAM GOVINDARAJAN
Date : 22.05.2023	DIN No. 01817391	DIN No. 02178416
	Managing Director	Whole time Director