Solitaire Machine Tools Ltd Directors Report.

To the Members,

The Directors have pleasure in presenting before you the Thirtieth Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2022.

FINANCIAL RESULTS:

The Standalone performance during the period ended 31st March, 2022 has been as under:

(Rs. in Lacs)

Particulars Year Ended 31st March, 2022 Year Ended 31st March, 2021 Year Ended 31st March, 2020 Year Ended 31st March, 2019 Year Ended 31st March, 2018
Sales (Net) 1357.91 1715.93 1226.07 1559.64 1652.56
Other Income 29.81 86.38 32.93 29.03 41.56
(Increase)/ Decrease in stocks (139.51) 463.33 (351.59) (222.83) (28.85)
Profit Before T axation 122.25 166.88 103.09 207.95 248.45
Less:
Taxation 35.00 30.00 50.00 73.00 82.00
Excess/Short provision of tax relating to earlier years 4.32 - 2.18 7.32 -
Deferred Tax (3.72) (4.94) (15.16) (2.16) (24.51)
Net Profit after Tax 105.56 141.81 66.07 129.79 190.97
Add: Profit brought forward from Previous Year 1073.44 968.17 968.66 900.83 776.54
Profit available for appropriation 1179.00 1109.98 1034.73 1030.62 967.51
Proposed Dividend Including Corporate tax 54.51 45.42 61.52 61.52 68.33
Add/Less: Other Comprehensive Income 3.26 2.48 0.87 0.44 (1.64)
Less: Loss of Shruchi 4.16
Manufacturing Limited*
Balance Carried to Balance Sheet 1136.83 1073.43 968.18 968.66 900.83

DIVIDEND:

Your Directors recommend dividend of Rs. 54,50,610/- which would be 12% on 4542176 equity shares of Rs. 10/- each for the year ended March 31, 2022 subject to members approval.

OPERATIONS:

The operation of the year has shown decline in sales and net profit. The year began with good promise for higher sales and profits. however, due to low production in automobile field, customers did not pick up the machines as well as delayed payments to affect final sales for the company. The principal reasons were low availability of semiconductors for automotive as well as slow pick up of electric vehicle manufacturing. The expected production of electric two wheelers was very low from projections and all part suppliers delayed ordering as well as taking delivery of machines. This affected entire machine tool industry.

This resulted in increase in inventory as well as several machines were slowed down in manufacturing, as customers were delaying taking delivery from us as well as delaying their own projects.

The export market was very sluggish for most of the year. US market was hit hard by slow offtake in aircraft industry. During last quarter, we were fortunate to receive order for over 4 crores for export and we could execute this order partially during the year. Year 2022-23 would see good export order execution. New order from USA has also been received.

Inspite all negative circumstances, your company has remained profitable. The company continued to work with very little requirement for working capital loan from bank. Our finance cost was just 0.6 % of our sales.

As per Government of India directives for MSME, banks were advised to loan certain amount at lower interest rates. we were offered term loan of Rs. 47.40 lacs with moratorium of 2 years and repayment in 5 years. This is the only debt company has as of end of financial year.

The company had taken loan from GIDC for land of new Halol plant being set up. This loan of Rs. 98 lacs was paid up fully during the year from internal accruals.

The old outstanding liability for gratuity has been fully paid up.

The work of construction at Halol plant has begun and is expected to be completed by Mid 2023.

The company has initiated process of transferring registered office from Mumbai to Vadodara and has received the order from Regional Director, Mumbai as on 02nd June, 2022. In Vadodara, all office functions have been shifted to Gorwa plant and same shall also be registered office of the company from 02nd June, 2022 onwards.

The company invested about 31 lacs during the year for installation of CNC systems on existing machines for better productivity and also for new offices etc.

During the year, we saw upsurge in orders for rebuilding and CNC retrofitting due to paucity of funds by our customers. We have started to procure old grinders from various sources within the country as well as from outside India. This helps us to meet customers requirement for rebuilt grinders at lower cost and at the same time, it gives additional source of income.

The ease of availability of semiconductors for auto industry and upsurge of export of steel bars could increase demand in current year in 3rd quarter onwards. The volatile increase in input material for castings, steel parts, electrical components has put pressure on us to monitor the same continuously and maintain our prices in accordance with the input costs.

The governments initiative to stop import of machines of lower value will help to meet requirement of mainly government PSU, who habitually imported precision machines for their requirement. This initiative is making India self-dependent for our internal requirements. We have started to receive inquiries for PSU as well as Defense related industries.

The Indian Machine Tool Exhibition, IMTEX 2023 has been scheduled for January 2023. The last exhibition was cancelled due to covid. We will participate in the next IMTEX.

The company continues with its own social responsibility program for our own employees and their families. We had arranged rangoli competition and distribution of education related items during the year.

The company continues to train the employees for better skill. the equipment, tooling and process in plant are being upgraded to reduce cost of manufacturing as well as improve quality norms. The company thanks all its employees for their support.

The company thanks all its customers for continued support and faith in meeting their requirements.

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 2022-23 to BSE where the Companys Shares are listed.

DEMATERIALISATION OF SHARES:

93.68% of the companys paid up Equity Share Capital is in dematerialized form as on 31st March, 2022 and balance 6.32% is in physical form.

NUMBER OF BOARD MEETINGS HELD:

The Board of Directors duly met 6 times from 1st April, 2021 to 31st March, 2022. The dates on which meetings were held are as follows:

S. No. Date
01 01-06-2021
02 12-08-2021
03 11-11-2021
04 27-11-2021
05 21-01-2021
06 10-02-2022

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.

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, 2022, 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 01st June, 2021 for the FY 2021-22.

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 2021-2022 were Rs. 114.02 Lacs (Previous Year Rs. 168.87 Lacs) while outgoings were Rs. 76.33 Lacs (Previous Year Rs. 34.65 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 party transactions 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 21-22 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 14,29,709/- 11.17% 4.92
2 Mr. Hemandra Badani Managing Director Rs. 12,97,749 Rs 14,60,353/- 12.5% 5.03
3 Mr. Harsh Badani Whole Time Director Rs. 10,77,345 Rs 14,14,887/- 31.33% 4.87

 

Remuneration includes Incentives and perquisites received by Directors. There has been no Salary increase for Mr. Ashok J Sheth and Mr. Hemandra J Badani, the increase shown is due to increase in incentive and perquisite. There has been a salary increase for Mr. Harsh Badani by 13.33% in the Board Meeting held on 12th August, 2022.

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

Total Employees in FY 202021 Median Remuneration of Employees in FY 202021 Total Employees in FY 202122 Median Remuneration of Employees in FY 2021-22 Percentage Increase
77 280914 82 290256 3.32%

iii. Average percentage increase in Employee remuneration- 3.35%

iv. Average percentage increase in Managerial Remuneration- 18.33%

PARTICULARS OF EMPLOYEES

The total number of on roll employees in Company as on 31st March, 2022- 82

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 Date of Resignation Total remuneration paid Qualification & Experience Designation Ag e Last employment Relation with Director
Ashok Sheth 10/09/1987 Rs. 14,29,709 B.S- Mechanical Engineering USA with 52 Years of experience Chairman & MD 74 N.A Himself
Hemandra Badani 10/09/1987 Rs. 14,60,353 B Com Graduate with 47 years of experience Vice Chairman and MD 69 N.A Himself
Harsh Badani 31/01/2006 Rs. 14,14,887 B.E- Mechanical and MBA with 15 years of experience WTD 37 N.A Himself
N M B Khan 15/06/1992 Rs. 7,82,754 Commerce Graduate with 30 years of experience Dy. General Manager- Finance & Corporate affairs 59 KR Kanakiy a& Co. N.A.
M I Gohil 01/04/2001 Rs. 6,30,996 ITI with 32 years of experience Assembly Manager 58 N.A. N.A.
M.A Bidiwala 09/11/1991 Rs. 6,00,661 DME with 31 years of experience QC and Developm ent Manager 49 N.A. N.A.
Atul Modi 01/11/1996 Rs.5,32,614 M.Com with 30 years of experience Purchase Officer 53 Geeta Valves N.A.
Girish D Goswami 01/10/1995 Rs.4,81,125 ITI with 27 years of experience Supervisor 48 N.A. N.A.
Indravada n A Patel 01/02/1996 Rs 4,80,875 ITI with 26 years of experience Sr. Marking & Scheduler 54 N.A N.A.
Vasant S Uttekar 01/06/1991 Rs. 4,75,938 ITI with 32 years of experience Sr. Machinist 52 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, 2022, an amount of Rs. 5,36,279/- pending for more than 45 days towards the payment of Micro and Small enterprise registered under Micro, Small and Medium Enterprise Act, 2006. This delay was due to delay in Bill entry. All these payments were cleared by 18/04/2022.

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 2021-22.

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 alia considers 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.