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Your Directors place before you the 54th Annual Report of the Company together with statement of Accounts for the Financial year ended 31st March, 2018.
|1. FINANCIAL HIGHLIGHTS||(Rs. in Lakhs)|
|Particulars||F.Y. 2017-18||F.Y. 2016-17|
|Revenue from Operations||2733.21||2937.02|
|Profit Before Depreciation & Taxation||164.26||256.75|
|Profit Before Tax (PBT)||6.09||92.73|
|Provision for Taxation|
|Profit after Tax (PAT)||9.64||69.21|
|Other Comprehensive Income||0.19||(9.50)|
|Total Comprehensive Income for the year||9.83||59.71|
The Company has adopted Indian Accounting Standards ("Ind-AS") notified by the ministry of corporate Affairs w.e.f 1st April, 2017 with a transition date being 1st April, 2016 and accordingly, the results for the year ended 31st March, 2018 have been prepared in accordance with Companies (Indian Accounting Standards) Rules, 2015 (as amended), as prescribed under Section 133 of the Companies Act, 2013 read with relevant rules issued thereunder and other accounting principles generally accepted in India. The figures for the corresponding previous period have been restated/ regrouped wherever necessary to confirm to the classification of the current period.
Revenue from operations for the year ended 31st March, 2018 was Rs. 2733.21 lakhs compared to Rs. 2937.02 lakhs for the year ended 31st March, 2017. During the year under review the revenue from operations has fallen by 203.81 lakhs mainly on account of lower sales. Further, despite of fall in turnover, gross profit percentage and absolute gross profit has improved due to increase in selling prices and better product mix composition.
3. DIVIDEND AND TRANSFER TO GENERAL RESERVE:
Your Directors recommend a Dividend of 25 percent (Rs.25/- per equity share) for the financial year ended 31st March, 2018 as compared to 35 percent (Rs.35/- per equity share) paid in the previous year.
The Company proposes to transfer Rs. 20 Lakhs to the General Reserve.
4. SHARE CAPITAL
The paid-up Equity Share Capital as at 31st March, 2018 stood at Rs 22, 50,000/- During the year under review, the Company has not issued any further shares.
5. LISTING OF SHARES
Your Companys equity shares are listed on BSE limited.
6. DEPOSITS FROM PUBLIC:
The Company has not accepted any deposits from public in the past or during the year under the provisions of the Act and the rules framed thereunder.
7. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Mrs. Yogita Gautam Pai Kakode (DIN: 01587954) retires by rotation at the forthcoming Annual General Meeting and being eligible has offered herself for re-appointment.
Mr. Anbunathan Murugaian (DIN 02533205) was appointed as Additional Director of the Company in the category of Independent Director w.e.f. 12th February, 2018 as per the provisions of Section 161 (1) of the Companies Act, 2013 and he shall hold office upto the date of ensuing Annual General Meeting. Upon the recommendation of the Nomination and Remuneration Committee, the Board recommends the appointment of Mr. Anbunathan Murugaian (DIN 02533205) as an Independent Director of the Company, not liable to retire by rotation, for a period of 5 years upto 11th February, 2023, for approval of the members at the ensuing Annual General Meeting.
Appropriate resolutions for the appointment of the Directors are being placed for the approval of the shareholders at the ensuing Annual General Meeting. Your Directors recommend the appointment of the aforesaid Directors by the Members at the ensuing Annual General Meeting. The requisite details in this connection are contained in the notice convening the 54th Annual General Meeting.
Mrs. Geeta S Prabhudesai has been appointed as Chief Financial Officer (KMP) w.e.f. 12th February, 2018 at the Board Meeting held on 12th February, 2018. Prior to this, Mr. Shashikanth R. Devaramani and Mr. Indrakumar N. who were designated as CFO resigned from the office on 8th August, 2017 and 17th August, 2017 respectively. Mr. Aniket Karmali, Company Secretary continues to function as Key Managerial Personnel of the Company during the year under review.
8. MEETINGS OF THE BOARD OF DIRECTORS:
During the year under review, the Board of Directors of the Company met 4 (Four) times on 26th May, 2017, 10th August, 2017, 27th November, 2017, and 12th February, 2018.
The intervening gap between the Meetings was within the period prescribed under the Act and Listing Regulations, 2015.
9. INDEPENDENT DIRECTORS DECLARATION:
The Company has received declarations pursuant to Section 149(7) of the Companies Act, 2013, from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015"), in respect of their position as an "Independent Director" of The Southern Gas Limited.
10. INDEPENDENT DIRECTORS MEETING:
During the year under review, an Independent Directors meeting was held in accordance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.
11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has an effective internal control and risk-mitigation system, which are constantly assessed and strengthened with new / revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted to the senior management officials. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry.
The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strength the same. The Company has a robust Management Information System which is an integral part of the control mechanism.
The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective action taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective action taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.
Pursuant to provisions of Section 139 of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules, 2014 in the Annual General Meeting held on 26th September, 2017, M/s Lorence & Shankar, Chartered Accountants (Firm Registration No. 112761W), were appointed as statutory auditors of the Company to hold office for a period of 5 years commencing from the conclusion of the 53rd AGM till the conclusion of the 58th AGM, subject to ratification by the Shareholders at every agm.
In view of the statutory modification brought into force in Section 139 of the Companies Act, 2013 as amended vide Companies Amendment Act, 2017 effective from 7th May, 2018; there is no requirement of ratification of appointment of Auditors at every AGM. Accordingly, appropriate resolution considering this statutory amendment has been proposed in the Notice of AGM.
13. STATUTORY AUDITORS REPORT AND OBSERVATIONS:
The reports of the Statutory Auditors, M/s Lorence & Shankar, Chartered Accountants on the financial statements of the Company for the year ended on 31st March, 2018 form part of this Annual Report. The statutory auditors have submitted an unmodified opinion on the audit of financial statements for the FY 2017-18.
The Notes on Financial Statements referred to in the Auditors Reports are self-explanatory and do not call for any comments and explanation
There is no qualification, reservation, adverse remark or disclaimer made by the Auditors in their Report.
During the year under review, the Auditors have not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
14. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules thereunder, the Board of Directors of the Company appointed Mrs. Kritika Satardekar, Practicing Company Secretary to conduct the Secretarial Audit of the Company for the FY 2017-18. The Secretarial Audit Report for the financial year ended 31st March, 2018 forms a part of this Annual Report. The same is selfexplanatory and requires no comments.
The Board of Directors have constituted Board Committees to deal with specific areas and activities which concern the Company and need a closer review. The Board Committees are formed with approval of the Board and function under their respective Charters. These Board Committees play an important role in overall management of day-to-day affairs and governance of the Company. The Board Committees meet at regular interval, takes necessary steps to perform its duties entrusted by the Board. To ensure good governance, the Minutes of the Committee Meetings are placed before the Board for their noting.
The Board has currently the following Committees:
(A) AUDIT COMMITTEE:
The Company complies with section 177 of the Companies Act, 2013 as well as requirement under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015") pertaining to the Audit Committee.
Terms of Reference
The Audit Committee inter alia performs the functions of approving Annual Internal Audit Plan, review of financial reporting system, internal control systems, reviewing the quarterly, half-yearly, and annual financial results, interaction with Statutory and Internal Auditors, one-on-one meeting with Statutory and Internal Auditors, recommendation for the appointment of Statutory and cost Auditors and their remuneration, recommendation for the
appointment and remuneration of Internal Auditors, review of Business Risk Management Plan, review of Forex Policy, Management Discussion & Analysis of financial condition and results of operations, review of Internal Audit Reports, significant related party transactions. The Board has framed the Audit Committee Charter for the purpose of effective compliance of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (LODR) Regulations, 2015. In fulfilling the above role, the Audit Committee has powers to investigate any activity within its terms of reference, to seek information from employees and to obtain outside legal and professional advice.
Composition, names of members and Chairperson, its meetings and attendance:
The Audit Committee met four times during the financial year 2017-18 on 26th May, 2017, 10th August, 2017, 27th November, 2017 and 12th February, 2018.
The composition and attendance of each member at the meeting of the Audit Committee is given below:
|Name of the Director||Position||Category||Meetings
|Mr. Ranganath N, Prabhu||Chairman||Independent
|Mr. Sripad P. Patnekar||Member||Independent
|Mr. Gautam V. Pai Kakode||Member||Managing Director||4||4|
|Mr. Jayendra V. Gaitonde*||Member||Independent
* Mr. J. V. Gaitonde was inducted into the Audit Committee w.e.f. 27th November, 2017.
(B) NOMINATION AND REMUNERATION COMMITTEE:
The Nomination and Remuneration Committee of the Company is constituted in line with the provisions of Regulation 19(1) & (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015") as also the requirement laid down in Section 178 ofthe Companies Act, 2013.
Terms of Reference :
The Board has framed the Nomination and Remuneration Committee Charter which ensures effective compliance of Section 178 of the Companies Act, 2013 and Regulation 19(1) & (2) of the Listing Regulations. The Board has clearly defined terms of reference for the Nomination and Remuneration Committee, which are as follows:
Reviewing the overall compensation policy, service agreements and other employment conditions of Managing/Whole-time Director (s) and Senior Management (one level below the Board);
To help in determining the appropriate size, diversity and composition of the Board;
To recommend to the Board appointment/reappointment and removal of Directors;
To frame criteria for determining qualifications, positive attributes and independence of Directors;
To recommend to the Board remuneration payable to the Directors (while fixing the remuneration to Executive Director (s) the restrictions contained in the Companies Act, 2013 is to be considered.)
To create an evaluation framework for Independent Directors and the Board;
To provide necessary reports to the Chairman after the evaluation process is completed by the Directors;
To assist in developing a succession plan for the Board;
To assist the Board in fulfilling responsibilities entrusted from time-to-time;
Delegation of any of its powers to any Member of the Committee or the Compliance Officer.
Composition, names of members and Chairperson, its meetings and attendance:
The Nomination and Remuneration Committee met two times during the financial year 201718 on 10th August, 2017 and 12th February, 2018.
The composition and attendance of each member at the meeting of the Nomination and
Remuneration Committee is given below:
|Name of the Director||Position||Category||Meetings
|Mr. Ranganath N. Prabhu||Chairman||Independent Director||2||1|
|Mr. Sripad P. Patnekar||Member||Independent Director||2||2|
|Mr. Jayendra V. Gaitonde||Member||Independent Director||2||2|
(C) STAKEHOLDERS RELATIONSHIP COMMITTEE:
The constitution of the Stakeholders Relationship Committee meets with the requirements of Section 178 of the Companies Act, 2013 and also of Regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015").
Terms of reference:
The Committee is empowered to consider and approve the physical transfer/transmission/ transposition of shares, issue of new/duplicate share certificates and oversees and reviews all matters connected with securities transfer. The Committee also specifically looks into the redressal of shareholders and investors complaints/ grievances pertaining to transfer/transmission of shares, non-receipt of share certificates, non-receipt of annual report and non-receipt of dividend warrants etc.
Composition of the Committee and the attendance details of the members are given below:
The Stakeholders Relationship Committee met only once during the financial year 2017-18 on 27th November, 2017.
|Name of the Director||Position||Category||Meetings
|Mr. Jayendra V. Gaitonde||Chairman||Independent
|Mr. Sripad P. Patnekar||Member||Independent
|Mr. Motilal S. Keny||Member||Non-Executive
During the year under review the Company did not receive any complaints from the Shareholders and investors.
16. CODE OF CONDUCT:
In terms of Regulation 17(5) of the Listing Regulations, the Company has adopted the Code of Conduct for the Board Members and Senior Management of the Company which has been posted on the Companys Requisite annual affirmations of compliance with the code have been made by the Directors and Senior Management of the Company.
17. RELATED PARTY TRANSACTIONS:
All Related Party Transactions (RPT) are done on an arms length basis and in the ordinary course ofbusiness and therefore the provisions of Section 188 ofthe Companies Act, 2013 are not attracted. All RPTs are placed before the Audit Committee as well as the Board.
All RPTs entered during the year under review by the Company were in ordinary course of business and on arms length basis. No material RPTs were entered during the financial year. Accordingly, the disclosure required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable.
By virtue of Regulation 15(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the provisions of Regulation 23 pertaining to RPTs are not applicable to the Company.
18. VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has established a vigil mechanism and accordingly framed a Whistle Blower Policy. The policy enables the employees to report to the management instances of unethical behaviour, actual or suspected fraud or violation of Companys Code of Conduct. Further, the mechanism adopted by the Company encourages the Whistle Blower to report genuine
concerns or grievances and provide for adequate safeguards against victimization of Whistle Blower who avails of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of vigil mechanism is reviewed by the Audit Committee from time to time. None of the Whistle blowers has been denied access to the Audit Committee of the Board.
19. NOMINATION AND REMUNERATION POLICY:
The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel of the Company. This policy also lays down criteria for selection and appointment of Board Members.
A) Remuneration to Non-Executive Directors:
The Non-Executive Directors are paid remuneration by way of Sitting Fees. The NonExecutive Directors are paid sitting fees for each meeting of the Board or Committee of Directors attended by them. The Non-Executive Independent Directors do not have any material pecuniary relationship or transactions with the Company.
B) Remuneration to Executive Directors:
The appointment and remuneration of Executive Directors including Managing Director and Whole-time Director is governed by the recommendation of the Nomination and Remuneration Committee, resolutions passed by the Board of Directors and shareholders of the Company. Payment of Remuneration to Executive Directors is governed by the respective Agreements executed between them and the Company. The remuneration package of the Managing Director and Whole-time Directors comprises of salary, perquisites, allowances and contributions to Provident and other Retirement Benefit Funds as approved by the Shareholders at the General Meetings.
Annual increments are linked to performance and are decided by the Nomination and Remuneration Committee and recommended to the Board for approval there of.The remuneration policy is directed towards rewarding performance, based on review of achievements. It is aimed at attracting and retaining high calibre talent.
Presently, the Company does not have a scheme for grant of stock options or performance linked incentives for its Directors.
20. EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013 and Rule 12 (1) of The Companies (Management and Administration) Rules, 2014, is included in this Report as Annexure A and forms an integral part of this Report.
21. BOARD EVALUATION:
The annual evaluation of all the directors including the independent directors and Chairperson, various Committees, and the Board as whole was carried out in the manner prescribed in the provisions of the Companies Act, 2013, and Guidance Note on Board Evaluation issued by Securities and Exchange Board of India on 5th January 2017.
The performance evaluation of the Independent directors was carried out by the entire Board of Directors excluding the Director being evaluated based on the criteria covering aspects such as independence, Independent views and judgment, contribution to the meetings, commitment, integrity, availability and attendance etc. The performance of the Committees was evaluated by the Board on the basis of criteria such as mandate and composition, effectiveness of the committee, structure of the committee and meetings, independence of the committee from the Board and contribution to decisions of the Board. Independent Directors in their separate meeting held, reviewed the performance of the Non- Independent Directors, the performance of Board as a whole and the performance of the Managing Director of the Company, taking into account the views of the executive and non-executive directors.
The criteria for performance evaluation of the non-independent Directors included aspects like contribution to the Board or committee meetings, attendance, preparedness on the issues to be discussed, participation in the discussions, integrity etc. The evaluation of the Managing Director included aspects such as Effectiveness of leadership and ability, impartiality, commitment, ability to manage shareholders interest etc. the performance of the Board as a whole was carried out based on the criteria which included aspects such as Board structure and composition, Board diversity, frequency and regularity of meetings, effectiveness of Board processes, information and functioning, etc.
The Nomination and Remuneration Committee reviewed the performance of the individual Directors.
The Board in their meeting discussed the performance of the Board, its Committees and individual Directors including the Independent Directors.
The evaluation of the annual performance of individual directors including the Chairman of the Board and Independent Directors, Board as a whole and Committees of the Board was carried out by questionnaires.
Based on above criteria, the performance of the Board, various Board Committees, Managing Director and Individual Directors (including Independent Directors) was found to be satisfactory.
22. RISK MANAGEMENT:
With reference to the provisions of Section 134 (3)(n) of the Companies Act, 2013 the Board of Directors has developed a risk management plan of the Company and had identified the key risk areas where the Companys business is vulnerable.
Some of the risks that the Company is exposed to are:
a) Financial Risks
b) Commodity Price Risks
c) Regulatory Risks
d) Human Resources Risks
Risk management, by and large involves reviewing the operations of the organization followed by identifying potential threats to the organization and the likelihood of their occurrence, and then taking appropriate actions to address the most likely threats.
The risk management process involves identifying the risks an organization is subject to, deciding how to manage it, implementing the management technique, measuring the ongoing effectiveness of management and taking appropriate correction action.
23. DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 (5) of the Companies Act, 2013:
That in the preparation of the Annual Accounts for the year ended 31st March, 2018; the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any.
That 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 as at 31st March, 2018 and of the profits of the Company for the year ended on that date.
That 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.
That the Directors have prepared the Annual Accounts on a going concern basis.
That the Directors have laid down internal financial controls to be followed and that such internal controls are adequate and are operating effectively.
That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
24. CORPORATE GOVERNANCE:
By virtue of Regulation 15(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the corporate governance provisions are not applicable to the Company.
25. ENVIRONMENT AND SAFETY:
The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires conduct of operations in such a manner so as to ensure safety of all concerned compliances, environmental regulations and preservation of natural resources.
26. DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. Its redressal is placed on the internet for the benefit of employees. During the year under review, neither any complaints of sexual harassment were received by the Board nor were there any complaints relating thereto which required any disposal thereof.
27. HUMAN RESOURCES AND INDUSTRIAL RELATIONS:
The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business.
The Human Resource agenda continues to support the business in achieving sustainable and responsible growth by building the right capabilities in the organisation.
The Company is committed to nurturing, enhancing and retaining top talent through superior Learning & Organisational Development. This is a part of Corporate HR function and is a critical pillar to support the organisations growth and sustainability in the long run.
28. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
Disclosures as required under Section 197 (12) of the Companies Act, 2013 read with Companies (appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors Report for the year ended 31st March, 2018 is given in Annexure B to this Report.
29. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
During the year under review there were no transactions attracting provisions of Section 186 of the Companies Act, 2013.
30. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134 (3) (m) of the Companies Act, 2013 read with rule 8(3) of the Companies (accounts) Rules, 2014 is annexed herewith as Annexure - C to this Report.
The provisions of CSR are not applicable to the Company.
There are no significant and material orders passed against the Company by any regulating authority or court or tribunal affecting the going concern status and Companys operation in future.
The company does not have any subsidiary 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 Statements relate and the date of this Report.
The Company has complied with the provisions of the applicable Secretarial Standards.
32. CAUTIONARY STATEMENT
This report contains forward looking statements that involve risks and uncertainties. Actual results, performing or achievement could differ materially from those expressed or implied in such forward looking statements. Important factors that could make the difference to the Companys operations include raw material availability and its prices, cyclical, demand and pricing in the Companys principle markets, changes in Government regulations, Tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.
33. APPRECIATION / ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation for the excellent performance of the employees at all levels as without their hard work and support your Companys achievements would not have been possible. The Board also wish to express its sincere appreciation for the valuable support and co-operation received from Central and State Government Authorities, Stock Exchanges, Financial Institutions and Banks during the year. They also wish to thank company clients, vendors, investors, agents and suppliers for their continued support and faith reposed in the Company.
For and on Behalf of The Board of Directors
|Gautam V. Pai Kakode||Motilal S. Keny|
|Margao - Goa||DIN:02395512||DIN: 06813111|
|28th May, 2018|