Today's Top Gainer
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Middle East market where most of the products are sold has not witnessed a slowdown in construction and hence the demand for products has not reduced. Company is enjoying a healthy back order position for its products.
Domestic market penetration is increasing due to the awareness of "Made in India" approach of the Government from the end users of the product in Indian market.
Company has developed a new line of products for joining pipes of 2" and below. The new product line will contribute up to 20% of sales of the Company in the future years.
Mrs Panath Anitha, was appointed as Additional Director on 14.02.2015 and holds the said office till the date of the Annual General Meeting. A notice has been received from a member proposing her candidature for her reappointment.
Mr A.V. Palaniswamy, Director, who retires by rotation, and being eligible, offers himself for reappointment.
chief financial officer
Mr. J. Saravanan, M.Com., MBA, is the Chief Financial Officer of the Company.
Mr. S. Aravinthan, ACS, is the Company Secretary and Compliance officer of the Company.
subsidiaries, joint ventures and associate companies
The company does not have any Subsidiary, Joint Venture or Associate Company
COMPANYS PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE
The Company sustains to develop, manufacture and supply effective products to meet the customer requirements
The striving towards continuous improvement in total quality and keeping abreast of the latest technologies to enable the Company in achieving its goal.
The focus on training and development of the employees skills are the core areas in attaining the goal.
The ultimate benefit of these efforts has been aimed at enriching the value to the shareholders.
The environment and Community have to be recognized while moving towards the goal.
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 31st March 2015 and of the Profit of the company and the cash flow statement for the year ended 31.03.2015.
(iii) there have taken proper and sufficient care for the maintenance of adequate accounting records 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 for ensuring the orderly and efficient 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 financial information.
(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 financial Year ended 31st March 2015
number of board meetings conducted during the year under review
The Company had four Board meetings during the financial year under review as on 30.05.2014, 14.08.2014, 14.11.2014 and 14.02.2015
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.
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. No person less than the age of 21 years shall be appointed as the director of the Board. 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.
Managing Director, Company Secretary and Chief Financial Officer shall be the Key Management Personnel (KMPs) of the Company.
All persons who are Directors, KMPs, members of Senior Management and all the employees shall be abide by the code of conduct.
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 Boards performance, performance of the Chairman and other non-independent Directors.
3. The Board subsequently evaluated performance of the Board, the Committees and Independent Directors
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 provision is not applicable.
particulars of contracts or arrangements made with related parties
The particulars of Contracts or Arrangements made with related parties made pursuant to Section 188 are furnished in Annexure 1 and are attached to this report.
listing of shares in exchange and delisting
The shares are listed in Bombay Stock Exchange and will be continued to be listed in Bombay Stock Exchange which has extensive networking and the investors have access to on-line dealings with the companys securities across the country. The Company duly paid the necessary listing fees with Bombay Stock Exchange.
The companys shares have not been traded in Madras Stock Exchange for the past few years. Members approval has already been obtained for De-listing the Companys equity shares from Madras stock
Exchange. Moreover the Madras Stock Exchange in May last year, had made a request to SEBI to exit as bourse. Even among such situations, the Company duly paid the necessary listing fees with Madras Stock Exchange.
No Bonus Shares were issued and the Company has not bought back any of its securities during the year under review. The Company has not issued any Sweat Equity Shares and not provided any Employee Stock Option Scheme.
the details in respect of adequacy of internal financial controls
The Board is of the opinion that the Company has sound Internal Financial Controls commensurate with the nature and size of the business operations. The controls are in place and operate efficiently and no material weakness exists. A process is also in place to continuously monitor the existing controls and improving the same as and when needed.
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.
risk management policy
Potential risk for the business of the Company and methods to handle those risks have been reviewed and monitored regularly. Few risks and the steps taken for handling them have been detailed below:
1) Sourcing of Component
Components sourced from outside are not an attractive item to produce and hence outside sources of components may decline to accept the order from the Company due to increase in order for their profitable items from improving economic conditions in India and elsewhere.
Company has made arrangements with Holding Company and a related company for dedicated supply of components at competitive prices.
2) Market Risk
Middle East market could shrink in volume for the products if oil prices drop below viable levels for those countries to continue in building and infra structure development.
Company is expanding into other markets and increasing its presence in the domestic market substantially. Present share of sales of 10% in the domestic market will increase to 25% to 30% in the coming years.
3) Exchange rate
Since 90% of the cost of production involves domestically procured materials and services, strengthening of the rupee due to possible heavy inflow of foreign capital could affect the profitability of the company
Company will continue to expand in domestic market to maintain its sales and margins.
4) Chinese factor
Due to slowing Chinese economy and expanded manufacturing capacities, most Chinese companies involved in our product lines are entering the export markets including India and offering low prices to stay in business.
With the establishment of the dedicated facilities through associate companies, we expect our production cost to be lower in the coming months and stay competitive. We hope the "Make in India" policy of the Government will translate in to reduction in cost of inputs, service and infra structure costs related to manufacturing industries.
Maintaining the established quality standards, timely deliveries and service will enable us to keep our customer base and price alone may not be a factor.
5) Power cuts
We expect the power costs to increase in the coming years to sustain the state owned electricity departments. As a result being a power intensive component manufacturing set up, the cost of production might increase and may not be possible to pass the cost increase to the buyers.
Company will take steps to install renewable energy generation like wind mills or solar to offset the power cost increase.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
A Board level Committee of CSR has been constituted and the Board has adopted a CSR Policy as recommended by the Committee.
The Annual Report on the Companys CSR activities is furnished in Annexure 2 and attached to this report
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure 3 and is attached to this Report.
There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.
transfer of unclaimed dividend to investor eduction and protection fund
The Company has unclaimed dividend amounting to Rs 6,25,810/- No amount is required to be transferred to Investor Education and Protection Fund for this financial year.
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, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:
|Name of Directors/Key Management Personnel||Ratio to Median Remuneration (times)||% Increase / Decrease in Remuneration|
|Mr. A.V. PALANISWAMY, Managing Director||12.88||33.33|
|Mr. M LOGANATHAN||0.49||-|
|Mr. R ALAGAR||1.20||24.63|
|Mrs. PANATH ANITHA, Non Executive Director (w.e.f. 14.02.2015)*||0.35||-|
|Mr. J SARAVANAN, Chief Financial Officer (w.e.f. 01.10.2014)*||3.03||-|
|Mr. S. ARAVINTHAN, Company Secretary||4.68||17.46|
*Since this information is for part of the year, the same is not comparable.
iii) The percentage increase in the median remuneration of employees in the financial year : 9%
iv) The number of permanent employees on the rolls of the Company : 125
v) Explanation on the relationship between average increase in remuneration and company performance:
On an average, employees received an increase of 20.90% during the financial year 2014-15. The remuneration components include a fair proportion of fixed and variable pay. The increase in remuneration is in line with the market. In order to ensure that remuneration reflects Company performance, the performance pay is also linked to organization performance, apart from an individuals performance.
vi) Comparison of the remuneration of the key managerial personnel against the performance of the Company:
|Aggregate remuneration of key managerial personnel (KMP) in FY15||20,93,514|
|Remuneration of KMPs (as % of revenue)||0.42|
|Profit before Tax (PBT)||82,975,797|
|Remuneration of KMP (as % of PBT)||2.52|
vii) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:
|Particulars||As at 31.03.2015||As at 31.03.2014||% Increase|
|Closing price of share at NSE (Rs.)||74.90||5.83||1169.30|
|Market Capitalisation (Rs.)||6231.68||485.056||1169.30|
|Price Earnings ratio||11.90||1.71||593.83|
viii) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average increase in salaries of employees other than managerial personnel in 2014-15 was 20.90%. Percentage increase in the managerial remuneration for the year was 22%.
ix) Comparison of the each remuneration of the Key Managerial Personnel against the performance of the company:
|Mr, A.V. PALANISWAMY, Managing Director||Mr. J SARAVANAN, Chief Financial Officer||Mr. S. ARAVINTHAN, Company Secretary|
|Remuneration in FY15||13,00,000||3,05,703||4,52,811|
|Remuneration as % of Revenue||0.26||0.06||0.09|
|Profit before Tax (PBT)||82,975,797||82,975,797||82,975,797|
|Remuneration (as % of PBT)||1.57||0.37||0.55|
x) The key parameters for any variable component of remuneration availed by the directors:
xi) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year; and
xii) Affirmation that the remuneration is as per the remuneration policy of the company.
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, 2014 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.
M/s Krishaan & Co., Chartered Accountants, Chennai were appointed as Statutory Auditors of the Company from the conclusion of the Annual General Meeting held on 14.08.2014 until the conclusion of forth Annual General Meeting to be held after that meeting. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting.
secretarial audit report
Pursuant to the requirements of the Companies Act, 2013, the Company has appointed Mr M R L Narashimha, B.Com, ACS, Practicing Company Secretary (Cop No: 799) as the Secretarial Auditor for the financial year 2015 whose report on 29th May, 2015 is attached separately to this report. Annexure 4.
explanation or comments on 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 Auditor in their Report. The remarks made by the Practising Company Secretary in his report with respect to non-adoption of Code of Conduct of Insider Trading Regulations and non filing of Form MR1 with respect to appointment of CFO will be complied with.
disclosure of composition of audit committee and providing vigil mechanism and other committees of the board
(A) AUDIT COMMITTEE:
The Audit Committee of the Board comprises three directors, namely M. R. Alagar, Chairman, Mr A.V. Palaniswamy and Mr. M. Loganathan, members. The composition of Audit Committee meets the requirement of Section 177 of the Companies Act, 2013
Members of the Audit Committee have requisite financial and management expertise
(ii) Terms of reference
Recommendation for appointment, remuneration and term of appointment of the auditors of the Company.
Discussion and review of periodic audit reports and discussion with external Auditors about the scope of audit including the observations of Auditors.
Review and monitor the auditors independence and performance
Approving Internal Audit Plans and reviewing efficacy of the function.
Overseeing Financial Reporting Process
Reviewing periodic financial results, financial statements and auditors report thereon.
Approval or modification of transaction of the company with related parties
Scrutiny of inter-corporate loans and investments
Evaluation of internal financial controls and risk management systems.
Valuation of undertakings or assets of the Company.
The committee met 4 times during the period on the following dates: 30.05.2014, 14.08.2014, 14.11.2014 and 14.02.2015
The Statutory Auditors, Internal Auditor and the Chief Financial Officer are invited to attend and participate at meetings of the Committee.
The Company has established a vigil mechanism and overseas through the committee the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company.
(B) SHAREHOLDERS RELATIONSHIP COMMITTEE
The Shareholders / Investors Grievances Committee have been reconstituted as Shareholders Relationship Committee in line with Section 178 (5) of the Companies Act, 2013 and are headed by Mr M Loganathan, Non-Executive Director.
The Committee monitors redressal of complaints received from shareholders/investors with respect to transfer of shares, non-receipt of dividend, non-receipt of Annual Report etc. The Committee also take note on number of transfers processed, issue of fresh share certificates, dematerialization of share certificates, report about top shareholders, share holding pattern etc.
There were no complaints received for this financial year. No instrument of transfers was pending on 31st March, 2015. All the communication received from shareholders was satisfactorily complied with, within the stipulated time.
During the year the Committee was met 6 times.
S Aravinthan, Company Secretary is the Compliance Officer.
The Company has appointed M/s. SKDC Consultants Limited, Coimbatore as Share Transfer Agent. Transfer/transmissions, issue of duplicate certificates etc as well as requests for de-materialization are approved/ confirmed, as the case may be, within the prescribed period through the above Share Transfer Agent. No valid transfer request remained pending for transfer to the transferees as on 31.03.2015.
(C) NOMINATION AND REMUNERATION COMMITTEE
The Company has a Remuneration Committee consists of Mr R Alagar, Independent Director, Mr M Loganathan, Independent Director and Mr A V Palaniswamy, Non-Independent Director as members. Functions of the remuneration committee are
1) Level and composition of remuneration which is reasonable and attractive to retain and motivate quality directors
2) Monitoring the performance and remuneration of the directors, key managerial personnel and other employees of the Company.
The Remuneration of Whole Time Director is determined by the Remuneration Committee consists of only Non-Executive Directors. The recommendation of the remuneration committee are considered and approved by the Board subject to the approval of the Shareholders.
The company has not paid any remuneration to any of its Non Executive Directors, except the Sitting Fees for attending the meetings of the Board of Directors and Audit Committee
By Virtue of the Circular CIR/CFD/Policy Cell/7/2014 Dated 15.9.2014 issued by Securities Exchange Board of India, for companies having Equity Share Capital not exceeding Rs.10 Crores and Net Worth not exceeding Rs.25 Crore the submission of Corporate Governance Report as stipulated in clause 49 of the Listing Agreement is not mandatory.
Since the Paid Up Equity Capital of the Company is only Rs. 8.32 Crores and Net Worth is Rs.18.20 Crore, the company is not required to submit Corporate Governance along with Directors Report.
However your Board of Directors assure the members that the Company continues to maintain highest Standards of Integrity, transparency in operations, excellence in service to all share holders and strong Corporate Governance Standards.
The Board of Directors assure that the Corporate Governance Standards as stipulated in the Companies Act, 2013 have been fully complied with.
conservation of energy
a) On the assumption that power cut will be lifted and that power interruptions will be substantially reduced, the company is proposing to replace the existing power intensive, less efficient machines with newer CNC machines.
b) Continuous melting operation will reduce the existing power consumption per ton of metal considerably.
c) The molding operation will be continuous and this will reduce power consumption per ton of castings.
Technology to produce the items has been developed by the company indigenously. Company has developed new designs for the products to reduce the cost and will introduce these products after obtaining approvals from various international testing agencies.
foreign exchange earnings and outgo
|Foreign exchange inflow||(actual)||: Rs. 38,97,42,889/-|
|Foreign exchange used||(actual)||: Rs. 98,76,456/-|
Relationship with the employees/labour was cordial during the year under review.
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/- M. LOGANATHAN|
|Date : 29.05.2015||DIN No. 01817391||DIN No. 01936839|