roto pumps ltd share price Directors report

The Company has a robust track record of rewarding its shareholders with a generous dividend pay-out. In view of the financial performance during the year under review, the Board of Directors in its meeting held on May 23, 2023 recommend a dividend of Rs.3.15/- per equity share of Rs.2/- each, i.e. 157.50% for the financial year ended March 31, 2023. The final dividend, if approved by the shareholders of the Company at ensuing Annual General Meeting, would involve cash outflow of Rs.494.67 lakhs. As per the prevailing provisions of the Income Tax Act, 1961, the dividend, if declared, will be taxable in the hands of the shareholders at the applicable rates.

The dividend pay-out is in accordance with the Companys Dividend Distribution Policy. The Policy is available on the Companys website https://www.rotopumps.com/investors/ policies/.

During the year under review, there was no change in the share capital of the Company. As on 31^st March, 2023 the paid-up share capital of the Company was Rs. 314.08 lakhs. The Company has not issued shares with differential voting rights. It has neither issued employee stock options nor any sweat equity shares and does not have any scheme to fund its employees to purchase shares of the Company.

In terms of the provisions of Section 124(5) of the Companies Act, 2013 and Rule 3 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, un-claimed dividend relating to financial year 2014-15 has been remitted to the Investor Education and Protection Fund (IEPF) established by the Central Government. This involved transfer of Rs.183,714.60/- unclaimed dividend and 7,309 related shares on which dividend had been unclaimed for seven consecutive years.

The un-claimed dividend for further years would become due for transfer to IEPF as per below details:

Further, in terms of the provisions of Section 124(6) of the Companies Act, 2013, and Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, shares related to the dividend, which would be transferred to Investor Education and Protection Fund as stated above, on which dividend for consecutive seven years remained unclaimed / unpaid, would also become due for transfer to the IEPF on the said date.

The Company Secretary is nominated as the Nodal Officer for issues relating to the Investor Education and Protection Fund. The Nodal Officer may be contacted at investors@rotopumps.com.

Details of un-claimed dividend are available on the Companys website at https://www.rotopumps.com/unclaimed-dividend- shares/ under Investors section.

Your Company has achieved income from operations of Rs.19,065.60 lakhs, against previous years Rs.15,159.91 lakhs, registering a growth of 25.76%. Domestic sales were Rs.6,502.52 lakhs as compared to Rs.5,115.65 lakhs, showing an increase of 27%. Export sales were Rs.12,563.08 lakhs, as compared to Rs.10,044.27 lakhs, exhibiting an increase of 25% over the prior year. Export sales includes Rs.6,671.75 lakhs, sales from marketing outlets in the United Kingdom and Australia. Revenue from exports constitutes 65.89% of the total revenue from operations. Your company earned other income of Rs.426.93 lakhs as compared to Rs.418.12 lakhs during the previous financial year. Your Company has registered a profit after tax of Rs.3,027.69 lakhs, against Rs.2,624.67 lakhs during the previous financial year, which is higher by 15.35%.

Your Company would continue to focus on increasing its market share to achieve significant growth in topline, which would also result in better profitability. Your Company has strong manufacturing and marketing infrastructure with presence in five continents besides a robust R&D setup and experienced and motivated manpower. Your Company has been focusing on the MENA region and has made steady progress in this regard. Your Company has setup a wholly owned subsidiary in the UAE. This would enhance your Companys capabilities to service the MENA region market more effectively.

The time ahead looks challenging as geo-political issues in Eurasia, higher inflation especially in the UK and European countries, and recessionary trends in the US and Europe are threats to the global economy. However, the domestic economy appears to be positive. Your Companys majority of revenue is generated from exports, hence exchange rate fluctuation is a matter of concern.

Your Companys project of downhole pumps for artificial lift and mud motors for drilling of wells in the oil & gas industry are scheduled to become operational by the end of the third quarter of the current financial year. The other project of solar pumping systems undertaken in a wholly owned subsidiary would also become operational during the current financial year. These ventures would lead towards your Companys vision of being among the first five global Positive Displacement Pump manufacturers in the world.

With a highly diversified market presence, both in terms of geographical reach and customer base, along with enhanced focus to increase market share coupled with introduction of new products, viz. downhole pumps and mud motors, your Company is well placed to withstand turbulent times and improve its performance in terms of both topline and bottom-line.

The Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with Indian Accounting Standard 110 notified by the Ministry of Corporate Affairs, Government of India and form part of the Annual Report.

The annual accounts of subsidiaries and related information are kept at the Registered Office of the Company, as also at the registered offices of respective subsidiary companies and will be available to investors seeking information at any time.

PERFORMANCE OF THE SUBSIDIARY COMPANIES a. Roto Pumps GmbH - A wholly owned subsidiary in Germany engaged in the business of sales and marketing of the Companys products in the German region to service customers more effectively. During the year, the subsidiary achieved a sales turnover of Euro 3,537,576.78 and earned a profit after tax of Euro 44,183.21.

Amount Rs. in Lakhs

b. Roto Pumps Americas, Inc. - A wholly owned subsidiary in USA which has an operating wholly owned subsidiary in the name and style of Roto Pumps North America, Inc. Germany engaged in the business of sales and marketing of Companys products in the American region. During the year, the operating subsidiary achieved a sales turnover of USD 3,287,913 and earned a profit after tax of USD 316,475.

c. Roto Overseas Pte. Ltd. - A wholly owned subsidiary in Singapore which has operating subsidiaries as per below:

i. Roto Pumps (Africa) Pty Ltd, South Africa, a company engaged in the business of sales and marketing of pumps and parts of pumps in the African region. Roto Overseas Pte Ltd holds almost 100% shares in the subsidiary. During the year, the subsidiary achieved sales turnover of Rand 24,042,718 and profit after tax of Rand 708,385.

ii. Roto Pumps (Malaysia) Sdn. Bhd., Malaysia Germany is engaged in the business of sales and marketing of the Companys products in Malaysia, Indonesia and Singapore. During the period under review, the subsidiary achieved sales turnover of MYR 7,019,282 and profit after tax of MYR 793,042.

d. Roto Energy Systems Ltd. - A wholly owned subsidiary was incorporated to carry on the business of solar pumping systems. The subsidiary is taking steps towards commencement of its business operations. During the year under review, the subsidiary incurred revenue expenses amounting to Rs.82.99 lakhs.

A statement containing the salient features of financial statements of the subsidiary companies in the prescribed Form AOC-1 is annexed as per Annexure-A.

During the year under review, your Company acquired 29,00,000 equity shares of face value Rs.10/- each in Roto Energy Systems Limited (Indian subsidiary), a wholly owned subsidiary company incorporated in India. Your Company has also granted a loan amounting to Rs.90.00 lakhs to its Indian subsidiary.

Your company has not given any other loan or provided any guarantees during the year under review.

Your Company has neither accepted nor renewed any deposits during the financial year under review.

All Related Party Transactions that were entered into by the Company during the year under review were on an arms length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act,

2013 (the Act) and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. There were no materially significant Related Party Transactions made by your Company during the year that would have required Shareholder approval under Regulation 23 of securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Prior omnibus approval of the Audit Committee has been obtained for transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions and other relevant details as are required in terms of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Details of the transactions with Related Parties are provided at Note no. 40 of the accompanying standalone financial statements.

Your Company has formulated a risk management policy to put in place a procedure to inform the Board about the risk assessment and minimization procedure. The Policy is available on the Companys website https://www.rotopumps.com/investors/ policies/.

Your Company has adequate internal control systems commensurate with the size of the Company and the nature of its business.

Further, in terms of provisions of Section 138 of the Companies Act, 2013 and the rules made thereunder, your Company has appointed M/s. Kapoor Tandon & Co., Chartered Accountants as its Internal Auditor to conduct the internal audit of the functions and activities and review of internal controls system in the Company. Based on the report of internal audit function, the Board undertakes corrective action in their respective areas and thereby strengthens the controls.

There was no change in Directorship and key managerial personnel during the year.

Pursuant to the provisions of the Companies Act, 2013 read with the Articles of Association of the Company, Mr. Anurag Gupta, Director (DIN: 00334160) retires from the Board by rotation, and is eligible for re-appointment.

Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, performance

of the Directors as well as the evaluation of the working of its Committees. The Nomination and Remuneration Committee has laid down the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Directors.

Independent Directors were provided an insight about their roles, duties, rights and responsibilities. They were given a fair idea and knowledge about the working, strategy and the organizational structure of the Company so that they could adapt to the company culture and contribute through active participation and interaction in a better manner.

The Nomination and Remuneration Policy adopted by your Company deals with the criteria for selection and determining the Independence of Directors and also the Remuneration policy for directors, Key Managerial Personnel (KMP) and other employees. The Remuneration policy is available at the website of the Company at http://www./investors/policies.html.

Your Companys Independent Directors meet at least once in a financial year without the presence of Executive Directors or Management Personnel. Such meetings are conducted to enable the Independent Directors to discuss matters pertaining to the Companys Affairs and put forth their views. During the year under review, one meeting of the Independent Directors was held on 30^th March, 2023 where all the independent directors were present.

Details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013, the Rules made thereunder and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, the Board hereby submits its responsibility Statement:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) The directors had 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 your Company at the end of the financial year and of the profit of your Company for the financial year;

(c) The directors had 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 your Company and for preventing, detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis

(e) The directors had laid down internal financial controls to be followed by your Company and that such internal financial controls were adequate and were operating effectively; and

(f) 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.

Your Company has formulated its Corporate Social Responsibility (CSR) Policy to undertake CSR activities as specified in the Schedule VII to the Companies Act, 2013. CSR Policy is available at http://www.rotopumps.com/investors/policies.html. The Annual Report of CSR activity for the financial year 2022-23 is annexed at Annexure -B.

Your Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress any complaint(s) of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. Your Company has complied with the provisions of the Act relating to the constitution of Internal Complaints Committee. Your Company has not received any complaint of sexual harassment during the year under review.

Your Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their genuine concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees or director who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee.

It is affirmed that no personnel of your Company has been denied access to the Audit Committee. The policy has been adopted in compliance with the requirements of SEBI and Section 177(9) of the Companies Act, 2013 and the Rules thereunder including any amendment(s) thereto.

MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT Pursuant to approval of the Members of the Company vide Postal Ballot resolution dated 29.06.2023, your Company has allotted fully paid-up 1,57,03,805 equity shares of Rs.2/- each on 11.07.2023 in proportion of 1:1 to its existing shareholders holding shares as on the record date fixed for the purpose, i.e. 08.07.2023 by way of capitalization of equivalent amount from the securities premium account.

Apart from the above, there were no material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year to which these financial statements relate and on the date of this report.

Your Company has complied with the requirements of the mandatory secretarial standards issued by the Institute of Company Secretaries of India.

No significant and material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of your Company and its future operations.

M/s. R. N. Marwah & Co. LLP, Chartered Accountants, New Delhi (Firm Registration no. 001211N/N500019) were appointed as the Statutory Auditors of the Company for a period of five years to hold office from the conclusion of the 47^th AGM till the conclusion of the 52^nd AGM of the Company to be held in the year 2027 by the members of the Company at their Annual General Meeting held on 29^th September, 2022.

The term of the Branch Auditors of the Warehouse and Marketing Offices of the Company in Australia and U.K., M/s Eric Townsend & Co., Chartered Accountants, Australia and M/s Laytons, Chartered Accountants, U.K., respectively, will expire at the conclusion of the ensuing Annual General Meeting. Board of Directors of your Company is seeking authority to appoint Branch Auditors for the financial year 2023-24.

In terms of the provisions of Section 148(1) of the Companies Act, 2013, the Company has maintained cost accounts and records in respect of the applicable products for the year ended 31^st March 2023.

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Board, on the recommendation of the Audit Committee, at its meeting held on 23^rd May, 2023, has approved the appointment of M/s. Chandra Wadhwa & Co., Cost Accountant, New Delhi (Firm Registration No 00239) as the Cost Auditors for the Company for the financial year ending 31^st March, 2024. They are the Cost Auditor of the Company for the financial year 2022-23. Ratification of remuneration of the Cost Auditor for the financial year 202324 by the shareholders of the Company is being sought at the ensuing Annual General Meeting.

The Report of the Cost Auditor for the financial year ended 31^st March, 2023 shall be filed with the Ministry of Corporate Affairs within the prescribed period.

M/s Dayal & Maur, Company Secretaries, New Delhi have been appointed as the Secretarial Auditors to carry out the secretarial audit for the year under review. The Secretarial Audit Report for the financial year ended 31^st March, 2023 is annexed at Annexure- C.

There is no qualification or observation in the report of the Secretarial Auditors.

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 at Annexure -D.

The Independent Directors have submitted their disclosures to the Board that they fulfill 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 made thereunder.

Your Companys definition of Independence of Directors is derived from Regulation 16(1) (b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013.

Dr. Ramesh Chandra Vaish, aged about 82 years, holds a degree in M.A., M.Com, LLB, Ph.D. in Economics from University of Florida USA and is a Fellow Member of the Institute of Chartered Accountants of India. Dr. Vaish is an eminent practicing Chartered Accountant having over 49 years of rich and varied experience with specialization in International taxation and finance, tax planning and off-shore investment. Dr. Vaish has an outstanding academic record and after teaching at University of Florida, USA, has worked with Coopers and Lybrand in New York, Singapore, London and New Delhi. Dr. Vaish has been a Senior Counsel, Tax and Business Advisory Services at Price Waterhouse Coopers, New Delhi, besides being a member of the Company Law Advisory Committee, Regional Tax Advisory Committee and various fiscal committees of FICCI and ASSOCHAM.

Mr. Anand Bordia, aged 79 years is a retired IRS Officer, holds degree in M.A. Mr. Bordia has over 40 years of professional experience, most of which have been at a senior level in the Government of India and International Organizations. Mr. Bordia has worked in Ministry of Finance and Ministry of Social Justice & Empowerment in the Government of India. Mr. Bordia has been Member Finance in National Highway Authority of India. Mr. Bordia has also worked in Indian Customs and Central Excise Department and held various field positions such as Commissioner of Customs and Director Audit. Mr. Bordia has also worked in the Secretariat of Custom Cooperation Council, Brussels.

Mr. Seth aged 71 years is a Science graduate from Banaras Hindu University, a qualified Chartered Accountant and also has Post Graduate Diploma in Bank Management from National Institute of Bank Management, Pune. Mr. Seth has retired as Central Information Commissioner after successfully completing his tenure of five years. Before joining the Central Information Commission, he was a banker. He has served Bank of India for a very long period and later SIDBI. He has also served the Syndicate Bank as its Chairman and Managing Director.

Mr. Seth has extensive Board level experience having served as Bank of Indias nominee on the Board of Indo-Zambian Bank, Zambia and Commonwealth Finance Corporation Ltd Hong Kong besides holding the post of Whole Time Director in SIDBI and CMD of Syndicate Bank. He has long experience and expertise in Bank Management, Corporate Governance, Financial & Administrative matters.

Mr. Akhil Joshi aged 64 years, superannuated as Director (Power) from Bharat Heavy Electrical Limited (BHEL). He is a Mechanical Engineer and earned his degree of Mechanical Engineering from Delhi College of Engineering in 1979. Mr. Akhil Joshi has almost four decades of rich experience

in Power Sector, International Operations Division and Corporate Technology Management. During his tenure at the International Operations Division, he played a key role in the strategic growth of the companys overseas business in highly competitive markets such as the Middle East, South East Asia, the CIS region, the Mediterranean and Europe. He successfully pioneered BHELs maiden entry into a range of overseas markets including, among others, Iraq, Vietnam, Belarus, Bangladesh, Cyprus and Egypt. He played a pivotal role in negotiating and securing key EPC contracts for power projects in Iraq under the Oil-for-Food program and securing approvals from the Sanctions Committee of the United Nations.

The disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished at Annexure- E.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is furnished at Annexure-F.

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013, as amended by the Companies (Amendment) Act, 2017 a copy of the Annual Return has been placed on the website of the Company and can be accessed through the web-link: https:// www.rotopumps.com/investors/annual-returns/ under the head Annual Returns.

The Management Discussion and Analysis and the Report on Corporate Governance, as required under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V thereof, forms part of the Annual Report.

The Business Responsibility and Sustainability Report on the environmental, social and governance disclosures, as required under Regulation 34 (2) (f) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual Report.

During the year under review, no such application made or proceeding pending against your Company.

During the year under review your Company havent entered into any one-time settlement.

Your Directors place on record their sincere thanks to the Bankers, Business Associates, Consultants, and various Government Authorities for their continued support extended to your Companys activities during the year under review. Your Directors also acknowledge gratefully the shareholders for their valuable support and confidence reposed in the Company.

For and on behalf of the Board of Directors