Solitaire Machine Tools Ltd Directors Report.

To the Members,

The Directors have pleasure in presenting before you the Twenty Ninth Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2021.

FINANCIAL RESULTS:

The Standalone performance during the period ended 31st March, 2021 has been as under:

(Rs. in Lacs)
Particulars Year Ended 31st March, 2021 Year Ended 31st March, 2020 Year Ended 31st March, 2019 Year Ended 31st March, 2018 Year Ended 31st March, 2017
Sales (Net) 1715.93 1226.07 1559.64 1652.56 1834.07
Other Income 86.38 32.93 29.03 41.56 31.51
(Increase)/ Decrease in stocks 463.33 (351.59) (222.83) (28.85) (19.99)
Profit Before Taxation 166.88 103.09 207.95 248.45 305.95
Less: Taxation 30.00 50.00 73.00 82.00 100.00
Excess/Short provision of tax relating to earlier years - 2.18 7.32 - -
Deferred Tax (4.94) (15.16) (2.16) (24.51) 14.40
Net Profit after Tax 141.81 66.07 129.79 190.97 191.54
Add: Profit brought forward from Previous Year 968.17 968.66 900.83 776.54 652.25
Profit available for appropriation 1109.98 1034.73 1030.62 967.51 843.79
Less:
Proposed Dividend Including Corporate tax 45.42 61.52 61.52 68.33 54.50
Less:
Other Comprehensive Income 2.48 0.87 0.44 (1.64) 12.75
Less: Loss of Shruchi Manufacturing Limited* 4.16
Balance Carried to Balance Sheet 1073.43 968.18 968.66 900.83 776.54

DIVIDEND:

Your Directors recommend dividend of Rs. 45,42,176/- which would be 10% on 4542176 equity shares of Rs. 10/- each for the year ended March 31,2021 subject to members approval.

OPERATIONS:

We are pleased to offer the Financial Results for the year 2020-2021. The Year of Covid was surprisingly turned out to be a year of higher sales and Profits.

The operation for the year has shown increase in sales by 40 % from operations in spite of plant being closed for about first two months of the year due to total Lock-down by Government authorities. The total income of Rs. 1802.31 was 43 % higher than previous year. Our customers loyalty to us and capability to increase their export of components worldwide, helped us to meet their increased demands and also clear our inventory by almost 5 crores.

The Net Profit of Rs. 139.33 Lacs was higher by 114 % from previous year. This was higher than Profit in last two years.

The company had provided excess depreciation in previous year due to casting error and was written back as other operating income.

The domestic market had seen upsurge in orders from some of the large group of companies who kept on increasing their share of business worldwide and took delivery of grinders. Due to Covid and travel restrictions, many of the grinders were approved by customers by Video links and were also commissioned in similar manner. This is now new trend in industry.

The Export market remained sluggish and efforts are being made to improve for future. Covid had restricted all travels abroad by us as well as potential customers / dealers from abroad. As restrictions are reducing, we are hopeful of improvement. The approval for European standards is in process.

Your company has remained Profitable and Debt Free for Tenth year in a row. The finance cost of 0.65% of income has been mainly amount paid to GIDC for land loan installments. Your company was able to invest additional Rs. 2.00 crores during the year in Mutual Funds and Fixed Deposits from accrued funds available. The investment in capital goods was marginal at Rs. 8 Lacs.

The GIDC land has been allotted to us in Halol during last year. The building plans have been prepared and approved by GIDC. The water and electricity connection applications have been made and expected by July 2021. We hope to start building activities in coming months after monsoon. We expect to meet part of funds requirement from own resources and balance by Term Loan from bank.

The IMTEX 2021 was postponed due to Covid situation and is now planned for January 2022. We plan to participate.

During the year, we saw that due to scarcity of funds, many customers were demanding low cost solution. We were able to meet the same by offering Used grinders after rebuilding and retrofitting them as low cost solution. The used grinders procured in past years were sold and some more currently are on order. This was a slight diversion from our Rebuilding business and provided another avenue of sales.

The company continues with its own social responsibility program for our own employees and their families. During Covid times, all government norms were followed of sanitization, social distancing, mask distribution etc. to minimize the risk of Covid.

The company continues to train and educate the employees for better skill. During Lock-down and other period of times, management and employees attended several Webinars and had chance to learn new skills and other avenues for improvement. The company thanks its employees for their continued support in difficult times and putting in all their efforts to make these results possible.

The company thanks all its customers for continued support and loyalty in meeting their requirements. We expect to add new customers during coming months and hope to gain additional percentage of market share.

The company thanks its bankers, vendors and various government bodies for their continued support.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

As required under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is enclosed as a part of this report.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

Report on Corporate Governance and Management Discussion and Analysis Reports has been included in the report. Your company has been practicing the principle of good Corporate Governance over the year. The Board of Directors supports the broad principles of Corporate Governance. In addition to the basic governance issues, the Board lays strong emphasis on transparency, accountability and integrity.

LISTING WITH STOCK EXCHANGES:

The Company confirms that it has paid the Annual Listing Fees for the year 2021-22 to BSE where the Companys Shares are listed.

DEMATERIALISATION OF SHARES:

92.86% of the companys paid up Equity Share Capital is in dematerialized form as on 31st March, 2021 and balance 7.14% is in physical form.

NUMBER OF BOARD MEETINGS HELD:

The Board of Directors duly met 4 times from 1st April, 2020 to 31stMarch, 2021. The dates on which meetings were held are as follows:

S. No. Date
01 29-07-2020
02 07-09-2020
03 07-11-2020
04 11-02-2021

DIRECTORS:

The Board of Directors are duly constituted. As per provisions of Companies Act, 2013 for retirement by rotation, all executive directors are now liable to retire by rotation.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Mr. Nilam Madhubhai Patel (DIN 00852577) has retired from the position of Independent director with effect from 11.02.2021 due to personal reasons. Company and Board of Directors are thankful for his contribution and hope for his continued guidance in future.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that:

a) In the preparation of the annual accounts for the year ended 31st March, 2021, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) They 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 the same period;

c) The directors 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;

d) They have prepared the annual accounts on a going concern basis;

e) They have laid down internal financial controls in the company that are adequate and were operating effectively.

f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

COMMENTS ON AUDIT OBSERVATIONS:

The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer.

DISCLOSURE ON NON-APPLICABILITY OF MAINTENANCE OF COST RECORDS

The maintenance of Cost records as specified by the Central government under sub section (1) of Section 148 of the Companies Act, 2013 is not applicable on the Company.

COMMENTS ON SECRETARIAL AUDITORS OBSERVATIONS:

There is no malafide intention on the part of company and delay if any, in the matter is inadvertent and caused due to oversight. The Company is in process of complying all the requirements of the Companies Act, 2013 and amended listing agreement.

AUDITORS:

Statutory Auditors:

M/s. Ajay Shobha & Co. (Firm Registration No.: 317031E), Chartered Accountants, Mumbai were appointed as Statutory Auditors for financial year 2017-18 to 2021-22 at the Annual General Meeting held on 29th July, 2017.

The requirement to place the matter relating to appointment of Auditors for ratification by members at every Annual General Meeting is done away with vide notification dated 7th May, 2018 issued by the Ministry of Corporate Affairs. Accordingly, no resolution is proposed for ratification of appointment of Auditors.

Secretarial Audit:

M/s Kiri & Associates has been appointed as the Secretarial Auditor for the Company with effect from 29thJuly, 2020 for the FY 2020-21.

According to the provision of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Company Secretary in Practice is enclosed as a part of this report Annexure-A.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

a. CONSERVATION OF ENERGY:

The companys operations do not involve substantial consumption of power in comparison to costs of production. However, regulatory measures are there to ensure that the consumption of power is within the norms.

b. TECHNOLOGY ABSORPTION:

The company has fully absorbed the technical know-how received from USA and Italy.

c. FOREIGN EXCHANGE EARNING AND OUTGO:

Foreign exchange earnings of the company during the year 2020-2021 were Rs. 168.87 Lacs (Previous Year Rs. 97.06 Lacs) while outgoings were 34.65 Lacs (Previous Year Rs. Rs. 82.17 Lacs).

VIGIL MECHANISM/ WHISTLE BLOWER:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.smtgrinders.com under link http://www.smtgrinders.com/policies/.

RELATED PARTY TRANSACTIONS:

Related party transactions that were entered during the financial year were on an arms length basis and were in the ordinary course of business. There were no materially significant related partytransactions with the Companys Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexure-B.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules there under and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company at www.smtgrinders.com under link http://www.smtgrinders.com/policies/

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-C.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

There are no Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 during the current Financial Year.

REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:

i. The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees) Rules, 1975, in respect of employees of the Company and Directors is furnished hereunder:

S. No. Name Designation Remuneration paid FY 20-21 Remuneration paid FY 19-20 Percentage Increase in remuneration from previous year Ratio/Times per Median of employee remuneration
1 Mr. Ashok Sheth Chairman & Managing Director Rs. 12,85,968 Rs. 12,74,509 NIL 4.58
2 Mr. Hemandra Badani Managing Director Rs. 12,97,749 Rs. 12,91,790 NIL 4.62
3 Mr. Harsh Badani Whole Time Director Rs. 10,77,345 Rs. 11,45,944 NIL 3.83

ii. Percentage Increase in Median Remuneration of Employees in the Previous Year:

Total Employees in FY 2019-20 Median Remuneration of Employees in FY 2019-20 Total Employees in FY 202021 Median Remuneration of Employees in FY 2020-21 Percentage Increase
80 282395 77 280914 -0.005

iii. Average percentage increase in Employee remuneration- 0.66%

iv. Average percentage increase in Managerial Remuneration- 0.00%

PARTICULARS OF EMPLOYEES

The total number of on roll employees in Company as on 31st March, 2021- 77

Details of employees which are covered under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is as follows:

A. Top ten employees in terms of remuneration:

Name of Employee Date of Commencement Total remuneration paid Qualification & Experience Designation Ag e Last employment Relation with Director
Ashok Sheth 10/09/1987 Rs. 12,74,509 B.S- Mechanical Engineering USA with 51 Years of experience Chairman & MD 73 N.A Himself
Hemandra Badani 10/09/1987 Rs. 12,91,790 B Com Graduate with 46 years of experience Vice Chairman and MD 68 N.A Himself
Harsh Badani 31/01/2006 Rs. 11,45,944 B.E- Mechanical and MBA with 13 years of experience WTD 36 N.A Himself
N M B Khan 15/06/1992 Rs. 6,99,840 Commerce Graduate with 37 years of experience Dy. General Manager- Finance & Corporate affairs 58 KR Kanakiy a& Co. N.A.
M I Gohil 01/04/2001 Rs.5,92,515 ITI with 31 years of experience Assembly Manager 57 N.A. N.A.
M.A Bidiwala 09/11/1991 Rs. 5,24,340 DME with 29 years of experience QC and Developm ent Manager 48 N.A. N.A.
Atul Modi 01/11/1996 Rs.4,98,395 M.Com with 24 years of experience Purchase Officer 52 Geeta Valves N.A.
Girish D Goswami 01/10/1995 Rs.4,44,734 ITI with 27 years of experience Supervisor 47 N.A. N.A.
Indravada n A Patel 01/02/1996 Rs 4,34,390 ITI with 26 years of experience Sr. Marking & Scheduler 53 N.A N.A.
Vasant S Uttekar 01/06/1991 Rs. 4,27,813 ITI with 31 years of experience Sr. Machinist 51 N.A N.A.

B. Employed throughout the year under review & were in receipt of remuneration in aggregate of not less than Rs. 1,02,00,000/- p. a. or Rs. 8,50,000/- per month if employed for part of the year: N. A.

C. Person who are getting more remuneration than MD, WTD or manager and hold 2% or more equity shares together with spouse and dependent children: N. A.

DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY:

The Company has been addressing various risks impacting the Company and the policy of the Company on risk management is provided elsewhere in this Annual Report in Management Discussion and Analysis.

INTERNAL FINANCIAL CONTROLS

Your Company has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business including adherence to the 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.

DISCLOSURE REGARDING MSME SUPPLIERS

The Company has as on 31st March, 2021, nothing pending for more than 45 days towards the payment of Micro and Small enterprise registered under Micro, Small and Medium Enterprise Act, 2006.

POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

The Company has zero tolerance for sexual harassment at workplace, and has constituted an Internal Complaints Committee against 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 Committee aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has not received any complaint of sexual harassment during the financial year 2020-21.

PERFORMANCE EVALUATION

The Company has devised a Policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which include criteria for performance evaluation of Non-executive Directors and Executive Directors. The evaluation process inter aliaconsiders attendance of Directors at Board and committee meetings, acquaintance with business, communicating inter se board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy.

The Board carried out an annual performance evaluation of the Board, Committees, Individual Directors and the Chairperson. The Chairman of the respective Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Committees.

The report on performance evaluation of the Individual Directors was reviewed by the Chairman of the Board and feedback was given to Directors.

DETAILS OF FRAUDS REPORTED BY THE AUDITORS

No frauds have been reported by the auditors under sub-section 12 of section 143 of the companies Act, 2013.

ACKNOWLEDGEMENT:

Directors take this opportunity to express thanks to various departments of the Central and State Government, Bankers, Material Suppliers, Customers and Shareholders for their continued support and guidance. The Directors wish to place on record their appreciation for the dedicated efforts put in by Employees of the Company at all levels.