Magna Eletrocasting Ltd Directors Report.
Your Directors have pleasure in presenting the 29th Annual Report and Audited Accounts of the Company for the year ended 31st March, 2019.
The highlights of the performance of your Company during the financial year 2018-19 are given hereunder;
(Rs in Lakhs)
|For the Financial year ended||31.03.2019||31.03.2018|
|Gross Profit before interest, depreciation, exceptional, extraordinary items and income tax||2073.93||1273.18|
|Profit before Exceptional & Extra-ordinary items||1501.68||787.54|
|Profit before tax||1501.68||787.54|
|Provision for Income tax||374.17||158.61|
|for Deferred tax||(12.21)||(57.25)|
|Profit for the period||1139.72||686.18|
The financial summary /highlights for the last five years is furnished vide Annexure A to this Report.
The Operating Revenue of the Company has increased by about 30% from Rs 9424.01 Lakhs to Rs 12292.39 Lakhs. The market, both domestic and export recorded substantial growth both in terms of tonnage and value. This was possible due to good market condition prevailing across all sectors, both locally and on the export front.
Consequent upon the increase in turnover from Rs 9424.01 Lakhs to Rs 12292.39 Lakhs, the Profit Before Tax has recorded a substantial increase from Rs 787.54 Lakhs in the previous year to Rs 1501.68 Lakhs in the current year. This was achieved inspite of spiralling raw material costs and other overheads. But strict control on costs and a favourable forex market enabled the Company to register an increase of 91% in Profit Before Tax.
The Wind Energy Division generated a revenue of Rs 520.79 Lakhs during the year as against Rs 507.89 Lakhs, in the previous year.
There has been no change in the nature of business of the Company.
OUTLOOK FOR CURRENT YEAR
During the year, your Company has developed 148 new products which includes proto parts and other
regular parts. Consequent upon this, your Company expects increase in sales during the current year.
The Company has also entered into new customer segments which will help to increase sales in the coming years.
The introduction of the BS VI standards will have an impact.
NEW PROJECTS IMPLEMENTED DURING THE YEAR
During the year under review, Sample coin conveying system was commissioned and this will reduce the processing time of castings. Further the Company has implemented the manufacturing of bricks and pavered stone from waste sand generated in foundry process.
As part of the cost reduction programme, we have identified a few key areas in operations, which will enable the Company to use alternate and abundantly available raw materials.
Being an environment friendly Company, we will be implementing the project for re-use or reclamation of Green Sand, which when implemented will result in reduction of waste-generation. Apart from being a eco-friendly project, this will also enable the Company, to conserve valuable natural resources.
The Company has received certification for ISO/TS 16949:2016 standards, Pressure Equipment Directive and the existing standards 97/23/EC has improved to 2014/68/EU and Marine Certificate under DNV GL Rules for Classification- Ships. Further the Company is in the process of obtaining ISO 14001:2015 Certification.
The Company has received "Best Casting Award" in IIF Conclave 2018 organised by Indian Institute of Foundrymen, Coimbatore
We are pleased to inform the Members that the Company continues to be debt free as at the reporting date.
TRANSFER TO RESERVES
The Company has transferred Rs 200 Lakhs to General Reserves during the year and an amount of Rs 3420.94 lakhs is retained in the Statement of Profit & Loss.
Your Directors are pleased to recommend, subject to the approval of the Shareholders, a Dividend at the rate of Rs 2.50 per share, i.e. at the rate of 25% for the year on the paid-up equity share capital of the Company. In addition, the Board has also recommended a Special Dividend at the rate of Rs 2.50 per share, i.e. at the rate of 25% for the year on the paid-up equity share capital of the Company to mark 25 years of operations of the Company. The total Dividend thus will amount to Rs 5.00 per share, i.e. at the rate of 50% for the year on the paid up equity share capital of the Company. The Dividend, if approved, will absorb an amount of Rs 276.20 Lakhs, inclusive of Corporate tax on Distribution of dividends.
The paid-up capital of the Company as at 31.03.2019 stood at Rs 4,58,22,000/- divided into 45,82,200 equity shares of Rs 10/- each. During the year under review, the Company has not made any fresh issue of shares
TRANSFER OF UNCLAIMED DIVIDEND TO EDUCATION AND PROTECTION FUND:
In terms of Section 124 & 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the Financial Year 2011-12 is due for remittance on 6th October, 2019 to the Investor and Education and Protection Fund established by the Central Government.
Further, pursuant to Section 124(6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, 8624 Equity Shares of Rs 10/- each on which dividend had remained unclaimed for a period of 7 years have been transferred to the credit of Demat Account identified by the IEPF Authority during the year under review.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in Form MGT-9 is furnished in Annexure B and forms part of this report.
BOARD MEETINGS CONDUCTED DURING THE PERIOD UNDER REVIEW
The details of meetings of Board of Directors and Committees thereof and the attendance of the Directors in such meetings have been enumerated in the Corporate Governance Report.
STATEMENT ON COMPLIANCE WITH SECRETARIAL STANDARDS
The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to requirement of Section 134(3)(c) of the Companies Act 2013, with respect to DirectorsRs Responsibility Statement, it is hereby confirmed that -
a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departure from those standards;
b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets 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 the Company and that such internal financial controls are adequate and were operating effectively; and
f) The Directors have devised proper system to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively;
COMPLIANCE WITH REQUIREMENT UNDER SECTION 143(12) OF THE COMPANIES ACT, 2013:
There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit.
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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
COMPANYS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and employees of the Company. The detailed Remuneration Policy can be accessed on the Companys website at the link HREF="http://www.magnacast.com/financial/383.pdf">http://www.magnacast.com/financial/383.pdf and the salient features of Remuneration policy of the Company:
i. Formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration of Directors, key managerial personnel and other employees.
ii. Formulation of criteria for evaluation of performance of Independent Director and the Board
iii. Devising a policy on Board diversity and succession plan
iv. Identify persons who are qualified to become Director and persons who may be appointed in Key Managerial and Senior Management positions in accordance with the criteria laid down in this policy.
v. Recommend to the Board, appointment and removal of Director, KMP and Senior Management Personnel.
vi. Identify whether to extend or continue the term of appointment of the Independent Director on the basis of the report of their performance evaluation.
vii. To formulate any other policies and or schemes for the benefit of employees of the Company.
COMMENTS ON AUDITORS REPORT:
There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. Srikishen & Co, Statutory Auditor and Sri.M.D.Selvaraj, proprietor of MDS & Associates, Secretarial Auditor in their respective reports.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provisions are not applicable.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered into with related parties as defined under the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 during the financial year 2018-19 were in the ordinary course of business and on an arms length basis. The particulars of material related party transactions is provided in the Form AOC-2 and annexed to the Boards Report as Annexure-C.
The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the Companys website and may be accessed through the link at HREF="http://www.magnacast.com/financial/385.pdf">http://www.magnacast.com/financial/385.pdf
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial year ended 31st March, 2019 relate and the date of the report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure D and is attached to this report.
RISK MANAGEMENT :
The Company continues to focus on the Risk areas identified by the Company. These can be classified under (a) Economic risks (b) Marketing risks and (c) Financial risks. The Company continues to focus attention on the risk areas identified and in case of any adverse situation, suitable mitigation steps are taken. The Company also established risk management plan and assessment and the same has been reviewed by the Audit Committee and the Board on periodical basis.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Board had formed a Corporate Social Responsibility Committee of Board of Directors comprising of Sri.C.R.Swaminathan, Dr.R.Nandini and Sri.N.Krishna Samaraj. The CSR policy of the Company deals with allocation of funds, activities, identification of programs, approval, implementation, monitoring and reporting mechanisms under the policy.
As part of the initiatives under CSR for the year 2018-19, the Company has undertaken projects in the areas of Healthcare, Environment and Women/Children Welfare etc,. These projects are by and large in accordance with Schedule VII of the Companies Act, 2013.
The details of CSR activities for the year are furnished separately vide Annexure E to this Report. The policy relating to CSR has been displayed on the Companys website and can be accessed at HREF="http://www.magnacast.com/financial/223.pdf">http://www.magnacast.com/financial/223.pdf
ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Companies Act, 2013, the Board of Directors evaluated the annual performance of the members of the Board and its Committees vis a vis the nature of business of the Company, its performance during the year and the contribution of each of the Directors based on the criteria laid down by the Nomination and Remuneration Committee.
The Independent Directors held a meeting during the year and inter-alia, reviewed the performance of the Non-Independent Directors and the Board as a whole and assessed the quality, quantity and timeliness of flow of information between the Company and the Board.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Sri.J.Vijayakumar, Director, retires by rotation at the Annual General Meeting and being eligible, offers himself for reappointment. Your Directors recommend his re-appointment.
The present term of the Independent Directors of the Company expires at the ensuing Annual General Meeting. The Independent Directors viz., Sri. C. R. Swaminathan, Sri.K. Gnanasekaran, Dr. R. Nandini and Dr. Jairam Varadaraj, are eligible for re-appointment for a further term of 5 years. Your Directors recommend the re-appointment of Independent Directors for your approval. Necessary special resolution(s) will be placed for the approval of Members.
Key Managerial Personnel of the Company as required pursuant to Section 2 (51) and 203 of the Companies Act, 2013 are
|Sri. N. Krishna Samaraj||Managing Director,|
|Sri. M. Malmarugan||Chief Executive Officer (w.e.f. 01.04.2019)|
|Sri. R. Ravi||Chief Financial Officer and|
|Smt. Sangeetha. C||Company Secretary.|
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiaries, Joint ventures or Associate Companies.
During the year, the Company did not accept or renew any fixed deposits and no fixed deposits remained unclaimed with the Company as on 31st March, 2019.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATION IN FUTURE
There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operation in future.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit Committee of the Board periodically reviews the Internal Financial Control Systems and their adequacy and recommends corrective action as and when necessary to ensure that an effective internal control mechanism is in place.
The directors confirm that the Internal Financial Control (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Control is annexed with the Auditors Report.
M/s. Srikishen & Co, Chartered Accountants, (FRN 004009S) Chartered Accountants, Coimbatore were appointed as the Statutory Auditors of the Company for a period of five years at the 26th Annual General Meeting of the Company held on 15th September 2016. The Company has received a certificate from the Statutory Auditors to the effect that their appointment as the Statutory Auditors of the Company, would be within the limits prescribed under Section 139 of the Companies Act, 2013.
The Board has appointed Sri.M.D.Selvaraj of M/s. MDS & Associates, Company Secretaries in Practice, Coimbatore as the Secretarial Auditors of the Company for the year 2019-20 to carry out the Secretarial Audit, pursuant to the provisions of Section 204 of the Companies Act, 2013.
The report of the Auditors for the financial year 2018-19 is annexed as Annexure F to this Report.
The Board of Directors on the recommendation of the Audit Committee, has appointed M/s.SBK & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2019-20. Pursuant to Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable for the year 2019-20 to the Cost Auditors of the Company is subject to ratification by the Shareholders at the ensuing Annual General Meeting. The Board recommends their remuneration.
DISCLOSURE ON MAINTENANCE OF COST RECORDS:
The maintenance of cost record as specified by the Central Government under Section 148(1) of the Companies Act, 2013 is applicable to the Company and accordingly the cost accounts and records are made and maintained.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company has been continuously focusing its attention on nurturing the talent of its employees by recognizing their performance and creating enough opportunities for their growth in the Company. This has ensured to retain talent within the organization.
The relationship between the management and the employees at all levels during the year under review has been cordial and productive.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to define the policy and redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee or third parties during the Financial Year 2018-19.
PARTICULARS OF EMPLOYEES
Statement pursuant to Section 134 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975 and Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to Annexure G attached to this report.
A report on Corporate Governance is annexed and forms part of this report. The Company has complied with the conditions relating to Corporate Governance as stipulated in Regulation 27 of SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015.
The Audit Committee of the Board of Directors has been duly constituted in accordance with the provisions of Section 177 of the Companies Act, 2013. Details relating to the composition, meetings and functions of the Committee are set out in the Corporate Governance Report forming part of this Annual Report. The Board has accepted the Audit Committee recommendations during the year whenever required and hence no disclosure is required under Section 177(8) of the Companies Act, 2013 with respect to rejection of any recommendations of Audit Committee by the Board.
As required under Regulation 33 (2) (a) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015, the Managing Director and the Chief Financial Officer of the Company have furnished necessary certificate to the Board on the Financial Statements presented.
VIGIL MECHANISM AND WHISTLE BLOWER POLICY
The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behavior or any violation of the Companys Code of Conduct. During the year under review, there were no complaints received under this mechanism. The policy can be accessed on the Companys website at HREF="http://www.magnacast.com/">http://www.magnacast.com/ financial/379.pdf
Your Directors thank the shareholders, customers and suppliers for their continued support during the year. The Directors wish to place on record their appreciation of the support and co-operation extended by the Companys Bankers M/s. Corporation Bank and M/s. Indian Bank, the various Government Agencies and in particular the Tamil Nadu Electricity Board and the employees of the Company at all levels.
We pray for the grace of the Almighty for further growth of the Company.
|By order of the Board|
|For MAGNA ELECTRO CASTINGS LIMITED|
|Place : Coimbatore.||C.R.Swaminathan||N. Krishna Samaraj|
|Date : 30th May, 2019||Director||Managing Director|