Voltamp Transformers Ltd Directors Report.

To,

The Members

VOLTAMP TRANSFORMERS LIMITED

Makarpura, Vadodara – 390014, Gujarat.

Your Directors have pleasure in presenting the 50th Annual Report and Financial Statements for the Financial Year ended 31st March, 2017.

WORKING RESULTS:

(Rs. in Lacs)

PARTICULARS 2016-2017 2015-2016
Sales & Services Income 60937.70 56330.32
Profit before Financial Charges and Depreciation 9727.91 6570.77
Financial Charges (Bank Charges) 47.17 43.91
Depreciation 581.72 597.77
Profit before Taxation 9099.02 5929.09
Provisions for Taxation :
Current Tax 2300.00 1550.00
Deferred Tax 2.14 (18.92)
Net Profit for the year 6796.88 4398.01
Add: Previous years surplus 1441.92 1066.01
Profits available for appropriation: 8238.80 5464.02
Appropriation therefrom:
A. Proposed Dividend 1517.57 1264.64
B. Dividend Tax on above 257.46
C. General Reserve 2500.00
D. Surplus 1441.92
8238.80 5464.02

DIVIDEND:

The Directors recommend payment of dividend @ 150%, i.e. Rs. 15 per equity share of Rs. 10 each on 1,01,17,120 equity shares, for the year ended March 31, 2017.

PERFORMANCE REVIEW:

During the year under review, the Sales and Other Income in monetary terms increased by about 10% to Rs. 651.45 crores as compared to Rs. 591.58 crores in the previous year. The Company has recorded its best ever performance in MVA term, achieving sales volume of 10189 MVA, as compared to 9202 MVA in the previous year, a growth of 10% compare to previous year. The Profit Before Tax (PBT) increased to Rs. 90.99 crores, as compared to Rs. 59.29 crores in the previous year and Profit After Tax (PAT) increased to Rs. 67.97 crores, as compared to Rs. 43.98 crores in the previous year.

The Company has been able to maintain its growth momentum both in terms of volume and margins for the second year in a row. Volatility in the Domestic as well as International market of principal raw materials had been a constant challenge for the Management to execute fixed price orders at budgeted cost and maintain the margins. The Company could avail some benefits out of falling material prices and better discipline in selecting orders along with scaling up volume help greatly to improve margin. The Companys dependence on TRANSCOs (erstwhile SEBs) business during the year come down drastically.

The financial year 2017-2018 started with an order backlog of Rs. 293.48 crores (4622.38 MVA) with sign of slow revival in Corporate CAPEX in select industries.

During the year, the Companys dedicated efforts towards timely collection of receivables has resulted in better liquidity position. The Companys efforts continued to have timely realization of receivables, which remain a challenging task.

For detailed analysis of the performance, please refer to the Management Discussion and Analysis section of the Annual Report given in Annexure-IV.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND :

The unclaimed dividend amount aggregating to Rs. 2,12,700 for the financial year ended on 31st March, 2009 was transferred to the Investor Education and Protection Fund established by the Central Government, during the financial year ended March 31, 2017, pursuant to Section 124 of the Companies Act, 2013.

Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF authority. Accordingly, the company has transferred the unclaimed and unpaid dividends. Further, the corresponding shares will be transfered as per the requirements of the IEPF rules.

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

The disclosure of particulars relating to conservation of energy and technology absorption and foreign exchange earnings and outgo as required by Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is given in Annexure - I.

EMPLOYEES:

The industrial relations during the year under review have remained cordial and satisfactory barring contract labour of Savli factory staying away from works for about 4-6 weeks. The Board thanks all the Employees for their valuable contribution to the working of the Company.

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees and the Disclosure pertaining to remuneration and other details are set out in the Annexure - II to the Directors Report. However, as per the provisions of Section 136(1) of the Companies Act, 2013, the Directors Report is being sent to the shareholders without this Annexure. Shareholders interested in obtaining a copy of the Annexure may write to the Company Secretary at the Companys Registered Office.

CORPORATE GOVERNANCE:

In compliance with Regulation 34 of the Listing Regulations, a separate report on Corporate Governance is given in Annexure –III along with certificate from M/s. Chandulal M. Shah & Co., Chartered Accountants confirming compliance with the requirement of Corporate Governance.

MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis Report is given in Annexure - IV.

DIRECTORS RESPONSIBILITY STATEMENT UNDER SECTION 134 (5) OF THE COMPANIES ACT, 2013:

The Directors confirm that:

1) In the preparation of the annual accounts, the applicable accounting standards have been followed by the Company;

2) Such accounting policies have been selected and consistently applied and judgments and estimates made 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, 2017 and of the profit of the Company for the year ended on that date;

3) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the applicable provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4) Annual accounts have been prepared on a going-concern basis;

5) Internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively.

6) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

As per the applicable provisions of the Companies Act, 2013, Shri Vallabh N Madhani, retire by rotation, and being eligible offers himself for reappointment. Further, since the tenure of appointment of Shri Kunjalbhai L. Patel as a Vice Chairman and Managing Director of the Company, has expired on 14.03.2017, he has been re-appointed as a Vice Chairman and Managing Director, liable to retire by rotation, for a further period of five (5) years, w.e.f. 15.03.2017, by the Board of Directors at their meeting held on 13th February, 2017, subject to approval of the shareholders.

During the year, there is no change in Key Managerial Personnel of the Company.

AUDITORS:

M/s Chandulal M. Shah & Co. are the retiring Auditors and will hold office up to the forthcoming Annual General Meeting of the Company. Under Section 139, 142 and other applicable provisions, if any, of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force), it is mandatory for the Company to rotate the statutory auditors on completion of the maximum term permitted under the said Section. Maximum permitted tenure of M/s Chandulal M. Shah & Co. will end on the date of ensuing Annual General Meeting of the Company. Therefore, to comply with the said provisions, it is necessary to appoint other firm as a statutory Auditors in place of Chandulal M. Shah & Co.,retiring Auditors. The Company has received a letter from CNK & Associates LLP, Chartered Accountants (Firm Registration No. 101961W), C-201/202, Shree Siddhi Vinayak Complex, Opp. Railway station, Faramji Road, Alkapuri, Vadodara 390005, showing their willingness to be appointed as statutory Auditors of the Company and they also confirmed that their appointment will be within the limits specified under Section 139 of the Companies Act, 2013. The Board of Directors of the Company at their meeting held on 15th May, 2017, on the recommendations of Audit Committee and subject to approval of shareholders at the ensuing Annual General Meeting, recommend the appointment of CNK & Associates LLP, Chartered Accountants as statutory auditors of the Company. CNK & Associates LLP will hold office for a period of 5 (five) consecutive years from the conclusion of the 50th Annual General Meeting of the Company till the conclusion of the 55th Annual General Meeting to be held in the year 2022, subject to the approval of shareholders of the Company. The first year of audit will be of the financial statements for the year ending March 31, 2018 which will include audit of the quarterly financial statements for the year.

COST AUDITORS:

Pursuant to provisions of section 148 of the Companies Act, 2013 and the Companies (Audit & Auditors) Rules, 2014, The Board, on the recommendation of the Audit Committee, has approved the appointment of M/s. Y. S. Thakar & Co., Cost Accountants as the Cost Auditors and remuneration payable to them, to conduct the audit of the cost records of the Company for the financial year ending March 31, 2018. The Company has received a letter from M/s. Y. S. Thakar & Co., Cost Accountant, Vadodara showing their willingness to be appointed as a cost Auditors stating that they are not disqualified under section 148(5) read with section 141(3) of the Companies Act, 2013.

SECRETARIAL AUDIT REPORT

The Board of Directors of the Company has appointed M/s. J. J. Gandhi & Company, Practicing Company Secretaries, Vadodara, to conduct the Secretarial Audit, pursuant to section 204 of the Companies Act, 2013 and the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 and their report, viz. Secretarial Audit Report in Form MR-3 is appended to this Report as Annexure V.

NUMBER OF MEETINGS OF THE BOARD

The Company has complied with the provisions for holding Board Meetings and the gap between any two meetings did not exceed 120 days. During the financial year under review, four Board Meetings were held, viz. on 30th May, 2016, 12th August, 2016, 09th November, 2016, and 13th February, 2017.

INDEPENDENT DIRECTORS

The Independent Directors hold office for a fixed term and are not liable to retire by rotation.

In accordance with Section 149(7) of the Act, each Independent Director has given written declaration to the Company confirming that he/she meets the criteria of independence as mentioned under Section 149(6) of the Act and SEBI Regulations, 2015.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS

The Policy of the Company on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is appended as Annexure - VI to this Report. The Policy has been posted on the website of the Company (http:// www.voltamptransformers.com/pdf/nomination_remuneration_policy.pdf)

COMMENTS ON STATUTORY AUDITORS REPORT & SECRETARIAL AUDITORS REPORT

Neither the statutory auditors nor the Secretarial Auditors of the Company, in their respective reports, have made any qualifications, reservations or adverse remarks.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There are no loans, guarantees or investments falling under section 186 of the Companies Act, 2013. However, investments not falling under purview of this, made by the Company are given in the Notes to the financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

There are no contracts or arrangements entered into with related parties, except payment of managerial remuneration to Whole-time Directors (MDs). Further, the policy on Related Party Transactions duly approved by the Board of Directors of the Company has been posted on the website of the Company. (http://www.voltamptransformers.com/pdf/ related_party_transactions_policy.pdf)

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, 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 the report.

RISK MANAGEMENT POLICY AND INTERNAL FINANCE CONTROL ADEQUACY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks in achieving key objectives of the Company. The Company has developed and implemented Risk Management Policy of the Company to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage.

The internal control systems are commensurate with the nature, size and complexity of the business of the Company. These are routinely tested and certified by Statutory as well as Internal Auditors.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) Committee was constituted by the Board of Directors, pursuant to Section 135 of the Companies Act, 2013 and CSR policy has also been framed by the Board as per the said Section and the Rules made thereunder. The Policy on CSR has been posted on the website of the Company (http:// www.voltamptransformers.com/pdf/corporate_social_responsibility_policy.pdf).

The details about initiatives taken by the Company on Corporate Social Responsibility during the year is appended at Annexure - VII of the report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return in Form MGT-9 as on 31.03.2017 is appended to this Report as Annexure VIII.

ANNUAL EVALUATION BY THE BOARD

The evaluation framework for assessing the performance of Board including the individual Directors are based on certain key measures, viz. Attendance of Board Meetings and the Committee Meetings, qualitative contribution in deliberations on agenda items, long term view in the inputs regarding development and sustainability of the Company and consideration of shareholders and other stakeholders interests.

The evaluation involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board does not participate in the discussion of his / her evaluation. The Board of Directors has expressed their satisfaction to the evaluation process.

WHISTLE BLOWER POLICY

The Whistle Blower Policy (Vigil Mechanism) was constituted by the Board of Directors, pursuant to Section 177 of the Companies Act, 2013 and the Rules made thereunder to report genuine concerns of Directors and Employees. The Policy has been posted on the website of the Company (http://www.voltamptransformers.com/pdf/ whistle_blower_policy.pdf).

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, no complaints were reported to the Board.

APPRECIATION AND ACKNOWLEDGEMENT:

Your Directors wish to convey their thanks to all the Companys valued Customers, Bankers, Vendors, Business Associates, Government Authorities, and Shareholders for their continued support and patronage to the Company.

The Board also expresses its appreciation towards the contribution made by all the Employees of the Company.

FOR AND ON BEHALF OF THE BOARD
Place : Vadodara KANUBHAI S. PATEL
Date : May 15, 2017 CHAIRMAN & MANAGING DIRECTOR

ANNEXURE - I TO THE DIRECTORS REPORT

A] CONSERVATION OF ENERGY:

[a] Energy conservation measures taken :

1. Use of energy efficient LED lighting and modernization in distribution system.

2. Systematic studies of power consumption to avoid unwanted energy losses.

3. Creating awareness among all employees to conserve energy.

4. Develop vacuum pumping system in VPD plant.

[b] Additional investments and proposal if any, being implemented for reduction of consumption of energy: Installation of Vacuum Ovening for distribution transformers manufacturing facility.

[c] Impact of the measures at [a] and [b] above for reduction of energy consumption and consequent impact on the cost of production of goods: The various measures taken by the Company have resulted in reduction in consumption of energy and efforts are going on to further reduce the consumption of energy, quality improvement, time saving and the consequent impact on the cost of production.

[d] Total energy consumption and energy consumption per unit of production as per Form-A: Not Applicable.

B] TECHNOLOGY ABSORPTION:

Research and Development (R&D):

[a] Specific areas in which R&D carried out by the Company:

1. Use of Special Bunch & CTC Conductors to minimize losses.

2. Use of special CTC Conductor bending tools.

3. Developed in house Tinning Plant for copper bus-bar.

4. Extensive use of partial discharge & impulse test facility.

5. Introduction of layer winding in Distribution Transformers.

6. Installation of HVAC system for winding area.

7. Installation of vertical winding machine.

[b] Benefits derived as a result of the above R&D :

1. Transformer is able to withstand severe short circuit conditions without deformation, hence reliability is ensured.

2. Price Competitiveness.

3. Improvement in quality with cost saving.

4. Know the quality of Insulation and process for better reliability.

5. Better space factor and better balancing of windings.

6. Dust is being controlled which is essential for electrical equipments.

7. Higher rating transformers winding become easier and with better quality.

[c] Further plan of action:

1. Continued emphasis on development of cost effective components and work on import substitution.

2. Identification and narrowing down the gaps in the areas of product, process, manufacturing and information technologies.

3. Wastage reduction / control by implementation of 5-S.

4. Solar panel installation for office building power supply. Technology Absorption, Adaptation an Innovation:

[a] Efforts, in brief, made towards technology absorption, adaptation and innovation : Extensive training in technical and management fields with a special emphasis on Total Quality Management.

[b] Benefits derived as a result of the above efforts:Improvement in product quality.

[c] Technology imported during the last five years: The Company has executed technical license agreement with PROCOM, Germany for getting Aluminum Foil Winding Technology.

C] FOREIGN EXCHANGE EARNINGS AND OUTGO:

[a] Foreign Exchange used : Rs. 2,05,21,058
[b] Foreign Exchange earned : Rs. 1,95,25,673