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TTK Prestige

BSE: 517506|NSE: TTKPRESTIG|ISIN: INE690A01010|SECTOR: Domestic Appliances
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Directors Report Year End : Mar '17    Mar 16

The Directors have pleasure in presenting their Sixty First Annual Report, together with the Audited Accounts of the Company, for the year ended 31st March, 2017 as follows:

FINANCIAL RESULTS (STAND ALONE)

(Rs,in crores)

2016-17

2015-16

Sales (inclusive of excise duty)

1683.06

1558.82

Other income

6.74

10.37

Exceptional Income/(expense)

1.77

(3.74)

EBIDTA (before Exceptional Income)

201.65

193.27

EBIDTA (Including Exceptional Income)

203.42

189.53

Profit/(Loss) before tax

172.99

166.80

Tax Provision

29.99

51.17

Net Profit/(Loss) after Tax

143.00

115.63

Other Comprehensive Income (Net of Tax )

(0.43)

(0.79)

Total comprehensive Income

142.57

114.84

Transfer to General Reserve

15.00

12.00

Dividend paid /Proposed Dividend (including tax)*

0.00

37.83

Surplus carried to balance sheet

127.57

65.01

* Please see para (g) under Review of Performance

REVIEW OF PERFORMANCE:

a. Each quarter of FY 16-17 witnessed different sets of external factors having a bearing on the overall economy including your Company. The first quarter reeled under severe drought conditions across the domestic market due to deficient monsoon in the preceding couple of years. Owing to the arrival of bountiful monsoon during the second quarter, certain buoyancy was seen till October 2016, the beginning of the 3rd quarter. A few key geographies like Tamil Nadu, Kerala and parts of Karnataka continued to suffer under severe drought conditions. The demonetization initiative in November 2016 sucked the liquidity in the market leading to sharp decline in consumption both in November and December. This adverse impact continued in the fourth quarter also, except for players who adopted different strategies to attract consumers and to tap the release of pent up demand of the previous quarter. Your Company tailored its strategies in each of these situations and could deliver a domestic growth of around 8%. The YoY growth for the fourth quarter alone was 22% reflecting the resilience of Your Company and its Brands. The overall growth was around 8% including exports.

b. As compared to FY 15-16 the commodity prices hardened during FY 16-17; comparatively the capacity utilization was also moderate hampering full absorption of overheads. In addition some overheads arising out of absorption of the Kitchen Appliance Division under a Scheme of Demerger with Triveni Bialetti Industries P Limited (TBI) were accounted for. Notwithstanding all these factors the EBIDTA registered a moderate growth and EBIDTA margin was maintained at about 12%.

c. As stated in the past years, your company does not follow a stand-alone margin led policy but is focused on growth with a fair long-term return on capital employed. In spite of substantial additions to manufacturing asset base in recent years the operating ROCE was maintained at a healthy 27%.

d. The net profit after tax for the year was Rs.143.00 Crores. The net tax charge was lower as compared to previous year on account of reversal of excess provisions/MAT credit arising out of the retrospective appointed date of 1.4.2012 provided under the Scheme of Arrangement with TBI. Hence the stand alone EPS was Rs 122.81(PY Rs 99.33)

e. Your Company continued to be debt-free as at the end of 31st March, 2017 and was carrying significant net free cash after investing Rs. 97 Crores in the UK subsidiary.

f. As shareholders are aware, your Company acquired through its UK subsidiary the business of Horwood Homewares Limited effective from April 2016. On a consolidated basis taking into account the performance of UK Subsidiaries, the Sales was Rs.1837.01 crores EBIDTA was Rs.221.24 Crores and EPS Rs.133.23.

g. Your Board had already paid an interim dividend of Rs.15/-per share for the FY 16-17; a final dividend of Rs.12/- is now recommended by your Board.

To sum up, your Board of Directors is of the view that the current year performance is commendable against the background of various external factors described earlier as well as continuing dismal global economic conditions. The market share of the key product categories was maintained across geographies. The e-commerce channel contribution to total sales is on the increase and is less disruptive.

A detailed analysis is provided under the section ''Management''s Discussion and Analysis'' forming part of this Director''s Report.

MANAGEMENTS'' DISCUSSION AND ANALYSIS

A. ECONOMY / INDUSTRY SCENARIO

The overall domestic economic scenario was somewhat chequred. Government''s initiatives to unearth black money, though beneficial for the economy in the long-run, impacted liquidity in the short-run dampening the Private Final Consumption Expenditure. Despite a good monsoon benefiting major parts of India the trickle down to consumption was moderate. As mentioned earlier, certain geographies in the southern states continue to suffer from severe drought conditions. The global picture was also not encouraging.

Specific initiatives of the Government such as providing gas connections to BPL families, direct cash benefit transfer etc., and the rural and infrastructure thrust envisaged under the Union Budget for 2017-18 coupled with a normal monsoon can drive up the GDP growth in FY 2017-18. The proposed implementation of GST from 1st July, 2017 is expected to augur well for the organized players in the long-run.

Your Company predominantly operates in the kitchen appliances segment with a wide range of product categories. The product categories broadly consist of Pressure Cookers, Cookware, Gas Stoves and Domestic Kitchen Electrical Appliances. The market for Pressure Cookers is shared amongst organized national branded players, regional players and unorganized players. Over the years, the share of the unorganized players has been gradually coming down as there has been a shift in the consumer preference to reliable branded products. The market for organized brands is estimated at about 60% of the total market. The share of unorganized players is greater for cookware as compared to pressure cookers. For the rest of the product categories, the market structure is fragmented and the share and the role of regional brands and unorganized players continue to be significant.

As mentioned in the last year''s Annual Report your company is entering categories adjacent to Kitchen thus expanding the business to cover select home appliances and requisites keeping in view the ''mind share'' of your Company''s core customer, the home maker and building around the trust and goodwill your Company and its brands enjoy with its core customer base. This extended segment would henceforth include Cleaning Solutions, Irons, Lanterns, Water filters etc., Each of the product-line within the Home portfolio has competition both from organized and unorganized players. Your company''s focus is to bring in upgraded differentiated products at several price points to get a sizable addition to the overall turnover of the Company to start with and establish a decent market share in the long run.

Continued sluggish economic scenario is hampering spend from core middle-class giving room for down-trading by some regional brands and cropping up of some unorganized players. As a result, value added products in general witnessed a better performance.

The kitchen appliance category is also witnessing entry of quite a few players - regional, national as well as global players who have brand strength mostly in non-kitchen appliance business.

Going forward, proactive innovation and product differentiation will be the key to stay ahead in the market place.

OPPORTUNITIES, THREATS AND COMPANY''S RESPONSE

Shareholders are aware that the Company operates out of its core strengths of brand, innovation, design, manufacturing, distribution, sourcing and service capabilities and more importantly ''Customer Engagement''.

a. Opportunities within the Kitchen Domain:

The core vision of the company has been ''A Prestige in every Indian Kitchen''; the core mission being ''Quality products at affordable prices''.

Driven by the above vision duly supported by the strengths outlined earlier your Company has been continuously broad basing its product offerings, customer segments and geographical coverage. Continuous interaction with the ultimate user of the product has been helping your Company in identifying the pain points and offering solutions in the form of innovative products, concepts and consumer offer of bundled products for a holistic use. This focus helps your Company to create opportunities even in the face of depressed consumer sentiment.

Given the fact that vast sections of Indian homes are to yet to equip their kitchens with various products- whether unbranded or branded- there is a significant opportunity in the long-run for every product category of your Company in the kitchen domain. Your Company''s growth over the last decade has largely come from tapping urban markets and offering innovative products at price points relevant to this consumer segment. Aided by the State policy of providing LPG connections to rural households and electrification of rural areas across India, rural markets are expected to drive growth in the coming years. Your company has geared its innovation efforts to offer a slew of products to the rural segment with appropriate price points.

Your Company is slated to launch around 100 new SKUs in the financial year 2017-18

Your Company continues to see a significant opportunity to increase its share of business in the non-south markets.

b. Opportunities adjacent to Kitchen Domain:

As outlined in the earlier sections of this report, your Company has been constantly in the lookout for offering products adjacent to the Kitchen Domain keeping the mind-share of the core customer. The response from the few markets where the products have been placed has been encouraging. These adjacencies can become a growth driver in the years to come.

c. Opportunities outside India: -Overseas Acquisition/Export Thrust

Shareholders are aware of the acquisition of the branded business of Horwood Home wares Limited through the overseas subsidiary TTK British Holdings Limited. Your Company is expected to leverage this acquisition for developing global business. Any further opportunity, appropriate to the size of your company will be examined. Your Company has kept all its India based manufacturing facilities ''export ready'', by meeting global standards in every respect - technology, manufacturing, processes, green initiatives and governance. These are expected to drive white-label exports as well as exports to overseas brands acquired by your Company. Your Company envisions to be a significant part of Make In India'''' policy of the Government of India.

d. Channel Management and Service Network:

Over the last few years the method of reaching the ultimate consumer is undergoing a churn. Every channel - traditional dealers, modern format stores, exclusive retail network or online stores - is rediscovering and re-orienting itself to maximize footfalls. This process has thrown in opportunities as well as conflicts besides disruptions. Your Company is fully seized of the situation and has put in place strategies to leverage every channel to reach the ultimate consumer.

Prestige Smart Kitchen network continues to provide a significant contribution to the total domestic sales. Current focus is on consolidation and rationalization based on quality of the network rather than quantity. Due to this process, the same store growth has been satisfactory. The current strength of the network is 531.

Your Company is continuing the process of strengthening the service network and call centre operations so as to ensure timely service and build customer loyalty. It also provides the platform to increase sale of original spares. Current strength of the service network is 254.

e. Threats:

While there are vast opportunities in the Domestic Market, threats can continue in the form of unorganized sector and irrational discounting by regional brands. As the entry barriers are low, any lag in innovation can impact growth. In the short-term, GST implementation can cause some disruptions though transient.

C. ANALYSIS OF PERFORMANCE:

1. Kitchen & Home Appliances:

The products include Pressure Cookers, Cookware, Kitchen Electrical Appliances, Gas Stoves, and home appliances. The turnover of these product categories is given in the following table:

('' in crores)

2016-17

2015-16

Domestic

Export

Total

Domestic

Export

Total

Pressure

Cookers(including Microwave Pressure Cookers)

561.10

34.35

595.45

522.45

34.15

556.60

Cookware

274.43

5.91

280.34

272.69

2.53

275.22

Kitchen Electrical Appliances

491.69

0.89

492.58

446.73

1.09

447.82

Gas Stoves

229.88

0.89

230.77

209.53

1.40

210.93

Home Appliances

24.71

0.00

24.71

6.32

0

6.32

Others

58.15

1.06

59.21

61.11

0.82

61.93

Total

1639.96

43.10

1683.06

1518.83

39.99

1558.82

a. Domestic Sales grew by about 8% and the Export Sales by 7.8%.

b. The Pressure Cooker and cookware category registered a growth of 6.98% and 1.86% respectively. The lower growth was due to depressed market conditions in parts of South India as well as subdued demand for non-premium products.

c. Gas stoves recorded a growth of around 9.5% while kitchen electrical appliances grew by around 10%.

d. ''Cleaning Solutions'' introduced in select markets for part of the year was received well and contributed around Rs.13 crores to the Sales.

e. The EBIDTA before exceptional items margin for the year was about 12% as compared to 12.40% in the previous year. This marginal drop was caused by the factors already mentioned earlier in this report.

f. The overall pay-roll cost ratio to Sales was around 7.16% as compared to 7.07 % in the previous year.

g. The interest cost during the year was Rs.5.13 crores (PY Rs.1.84 crores). The higher interest outflow was on account of transitional borrowings. The Company continued to be debt free and carried a sizeable cash balance at the year end.

h. Your Company has over the last three years substantially reduced its dependence on imports which has a positive impact on margins and cash-flows. Working capital efficiency improved as compared to the previous year.

i. During the year under report your Company introduced around 109 new SKUs covering Pressure Cookers, Induction Cook Tops, Mixer Grinders, Rice Cookers, Gas Stoves and other small electric/nonelectric appliances and cleaning solutions. All these introductions received good response.

j. PSK network was consolidated and rationalized where necessary. The number of outlets as at 31.3.2017 was 531. The network now covers 26 States and 302 towns. The spread of the network is also evenly distributed between Metros, MiniMetros, Tier 1, Tier 2 and Tier 3 cities. About 65% of the Stores are located in South and the balance in Non-South.

2. Properties & Investment :

The shareholders are aware that your Company has handed over the development of the Dooravani Nagar, Bangalore property to Rajmata Realtors (Salarpuria) for developing an office cum residential complex. Your Company has completed arrangements for monetizing its share of rights and the proceeds have started to flow in and expects completion of realization of proceeds during the FY 17-18. Accrual of income from this source will be reflected in the quarterly results from the first quarter of FY 17-18.

3. Overseas Subsidiary & Consolidated Results:

As the shareholders are aware, your Company through its wholly owned subsidiary TTK British Holdings Limited, acquired the ultimate operating subsidiary Horwood Home wares Limited, UK. This acquisition was made in April 2016, prior to the impact of Brexit. It is heartening to note that this business withstood the shock of Brexit and delivered a sale of GBP 16.2 million with operating EBIDTA of GBP 2.3 million. The UK operations are managed by the whole-time directors and senior management based in UK. The consolidated statement of results is separately attached to this annual report.

D. OUTLOOK

The Central Government Budget for 2017-18 has a major thrust on rural economy including investments in infrastructure and direct transfer of subsidies. The overall consumer sentiment is expected to pick up. The demonetization and the digital payment policies coupled with the expected implementation of GST is expected to drive the formal economy and render the market more organized. Depending on the progress of a normal monsoon and the impact of the Central Government''s budget on rural economy and infrastructure, a GDP growth of 7.5% is expected. All these augur well for the overall economy. Your Company''s specific plans such as category expansion, market expansion to enlarge its customer base in select rural areas, global and export initiatives, etc., can help your Company to grow at a better pace than the economy.

E. RISKS AND CONCERNS

The various general economic risks and concerns which can impact your Company have already been outlined in the preceding sections. The concerns largely center on external factors. Your Company is continuously improving its efficiencies and is hopeful of dealing with the various challenges described in the preceding sections. Your Company will not compromise on the objective of growth and improving market share for the sake of short-term profits.

F. RISK MANAGEMENT

Your Company has developed and implemented a Risk Management Policy which includes identification of elements of risk, if any, which in the opinion of the Board, may threaten the existence of the Company.

Your Company has a risk identification and management frame work appropriate to the size of your Company and the environment under which it operates.

Risks are being continuously identified in relation to business strategy, operations and transactions, statutory/legal compliance, financial reporting, information technology system and overall internal control framework.

Your Company is utilizing the services of independent professional management auditors for advising the Company on a continuous basis on contemporary risk management framework appropriate to the size and operations of the Company. They are also carrying out risk audit on a periodical basis.

Your Board is periodically reviewing the broad risk frame work to ensure that there is a dynamic process to capture and measure key elements of risks.

G. SHARE CAPITAL

The paid up equity share capital as on 31st March 2017 was Rs.11.66 Crores (PY Rs.11.65 crores). During the year 9979 equity shares were allotted to the shareholders of Triveni Bialetti Industries (P) Limited pursuant to the Scheme of Arrangement sanctioned by the Hon''ble High Courts of Madras and Bombay. The Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

H. FINANCES

Your Company continues to generate substantial post-tax operating free cash flows and the same have been applied to meet capital expenditure besides other uses including retirement of debt and payment of dividend. Your Company on a standalone basis continued to be debt-free and at the end of the year carried cash and cash equivalents of around Rs.14 crores and short term investments of around Rs. 75 crores after investing Rs.97 crores in the UK Subsidiary.

I. INVESTMENTS

During the year your Company invested an amount Rs.97 crores in the wholly owned UK subsidiary, TTK British Holdings Limited in order to acquire through them Hor-wood Homewares Limited, being the ultimate operating subsidiary in UK. Other than this your Company carries short-term investments in mutual funds as a part of treasury operations.

J. INTERNAL CONTROL SYSTEMS

Your Company has necessary Internal Control Systems in place which is commensurate with the size, scale and complexity of its operations. Your Company is continuously making improvements in internal control systems keeping in view the increasing level of activities. Independent team of Internal Auditors/Management Auditors are carrying out internal audits and advising the management on strengthening of internal control systems. The reports are periodically discussed internally. Significant audit observations and corrective actions thereon are presented to the Audit Committee.

K. DEVELOPMENTS IN HUMAN RESOURCES

In pursuit of the Long-Range Plan, your Company has forayed into overseas markets by establishing a subsidiary in UK. Your company is also expanding its operations beyond kitchen. Having due regard to entering new frontiers your Company has implemented strategic HR initiatives covering talent management, leadership development, succession management etc. The in-house Human Resource Department is constantly being strengthened. A host of people development programmes are put in place on a continuous basis.

The industrial relations across all the manufacturing units has been cordial.

The direct employment strength stood at 1295 as compared to 1217 in the previous year.

SCHEME OF ARRANGEMENT:

During FY 2012-13, the Board of Directors of your Company approved a Scheme of Arrangement (Demerger) whereby the Kitchen Appliances Division of Triveni Bialetti Industries Private Limited (TBI), (a subsidiary of Bialetti Industries SpA., Italy) with all its assets, rights, liabilities, obligations, etc., would be vested in TTK Prestige Limited (Company) at book values, the Appointed Date being 1st April, 2012. All profits, losses etc. on and from 1.4.2012 and the benefit of accumulated losses relating to the said Division as on that date would accrue to the Company.

The Scheme was approved by the Stock Exchanges and further approved by the Honourable High Court, Madras on 13.12.2013 subject to sanction of the Scheme by the Hon''ble High Court, Bombay being the jurisdictional court of the Transferor. The Hon''ble High Court, Bombay by its order of 28.1.2016 sanctioned the Scheme. With the sanction of the Scheme by the Hon''ble High Court, Bombay (the jurisdictional Court of the Transferor) the Scheme acquired the necessary legal sanction. However, the Scheme could not be given effect due to the ''status quo'' orders on account of some disputes raised by a 6% minority shareholder of TBI before various forums. Pending admission of the appeal of the said minority by the Division Bench of High Court, Bombay, the status quo orders ceased during the FY 2016-17 and the said Division stands fully absorbed in to the Company with effect from the appointed date of 1.4.2012. Consequently, necessary effect has been given in the books of accounts during FY 2016-17 and necessary disclosures have been made in the financial statements and the notes thereto.

Dr. T.T. Mukund, who was coopted in the casual vacancy created by the resignation of Dr. Mrs. Latha Jagannathan retires by rotation and is eligible for re-appointment. The information on the retiring Director is provided in the Notice calling the Annual General Meeting.

FIXED DEPOSIT

The Company is neither inviting or accepting deposits from public or shareholders and hence there are no deposits outstanding or remaining unpaid as at the end of 31st March, 2017.

DIVIDEND

Your directors had already approved payment of interim dividend of Rs.15/- per share for the year and the same was paid to shareholders in May 2017. Your Directors recommend a final dividend of Rs.12/- per share taking in to account the current profits and the cash requirements of the Company for expanding the business operations.

FUTURISTIC STATEMENTS

This Directors'' Report and the Management Discussion and Analysis included therein may contain certain statements, which are futuristic in nature. Such statements represent the intentions of the Management and the efforts being put in by them to realize certain goals. The success in realizing these goals depends on various factors both internal and external. Therefore, the investors are requested to make their own independent judgments by taking into account all relevant factors before taking any investment decision.

CORPORATE GOVERNANCE

Report on Corporate Governance is separately presented as part of the Annual Report. Management Discussion and Analysis is included in this Board''s Report in the preceding sections.

BUSINESS RESPONSBILITY REPORT

Your Company now forms part of the Top 500 listed companies of India and is mandatorily required to provide a Business Responsibly Report as part of the Annual Report in accordance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. This report is separately presented as part of this Annual Report.

LISTING

Your Company''s shares are listed in the BSE Limited (BSE) Mumbai and National Stock Exchange of India Limited (NSE), Mumbai and the applicable listing fees have been paid.

FURTHER DISCLOSURES UNDER THE COMPANIES ACT, 2013 AND THE RULES MADE THEREUNDER:

(a) Extract of Annual Return:

Extract of Annual Return (Form MGT-9) is enclosed as Annexure A

(b) Number of Meetings of the Board:

The Board of Directors met 6 (Six) times during the year 2016-17. The details of the Board Meetings and the attendance of the Directors are provided in the Report on Corporate Governance.

(c) Corporate Social Responsibility (CSR) Committee:

As per the provisions of Section 135 of the Companies Act, 2013 and the Rules made there under, your Company constituted the Corporate Social Responsibility Committee which comprises of Mr. T.T. Jagannathan as Chairman and Mr. R Srinivasan, Mr. K Shankaran as Members.

The Corporate Social Responsibility (CSR) Policy enumerating the CSR activities to be undertaken by the Company, in accordance with Schedule VII to the Companies Act, 2013 was recommended to the Board and the Board adopted the same. The said policy was also made available on the website of the Company http://www.ttkprestige.com. The Annual Report under CSR Activities is annexed to this report as Annexure B.

The details relating to the meetings convened, etc. are furnished in the Report on Corporate Governance.

(d) Composition of Audit Committee:

The Audit Committee comprises of Mr. Dileep Krishnas-wamy as Chairman, and Mr. R Srinivasan and Mr. Arun K. Thiagarajan as Members. All the members are Independent Directors.

Mr. K Shankaran - Director and Whole-time Secretary is the Secretary of the Committee. More details on the Committee are given in the Report on Corporate Governance.

(e) Related Party Transactions:

During the year under review, no transaction of material nature has been entered into by the Company with its promoters, the directors or the management, their subsidiaries or relatives, etc., that may have a potential conflict with the interests of the Company.

All related party transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of unforeseen or repetitive nature. A Statement giving details of the transactions entered into with the related parties, pursuant to the omnibus approval so granted, is placed before the Audit Committee and the Board of Directors for their approval / ratification on a quarterly basis.

The Register of Contracts containing transactions, in which directors are interested, is placed before the Audit Committee / Board regularly.

The Board of Directors of the Company, on the recommendation of the Audit Committee, adopted a policy on Related Party Transactions, to regulate the transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. The Policy as approved by the Board is uploaded on the Company''s website at http://www.ttkprestige.com.

The details of the Related Party Transactions in Form AOC-2 are annexed as Annexure C to this Report.

(f) Directors and Key Managerial Personnel:

None of the Directors is disqualified from being appointed or holding office as Directors, as stipulated under Section 164 of the Companies Act, 2013.

(i) Appointment / Re-appointment of Directors:

Dr. T.T. Mukund, liable to retire by rotation at the ensuing Annual General Meeting, being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

(ii) Statement on Declaration by the Independent Directors of the Company:

All the Independent Directors of the Company have given declarations under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The terms and conditions of appointment of the Independent Directors are posted on the website of the Company http://www.ttkprestige.com.

(iii) Key Managerial Personnel (KMP):

The following managerial personnel are Key Managerial Personnel (KMP):

- Mr. Chandru Kalro, Managing Director as Chief Executive Officer (CEO) w.e.f. 1st April 2015.

- Mr. K. Shankaran, Director & Whole time Secretary as Company Secretary; and

- Mr. V. Sundaresan, Senior Vice President - Finance as Chief Financial Officer (CFO).

(iv) Performance Evaluation of the Board, its Committees and Separate meeting of Independent Directors:

In compliance with the provisions of the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the performance evaluation of the Board was carried out during the year under review. During the year 3 separate meetings of Independent Directors were held to consider various aspects of Management of the Company as well as to review the performance of the Board and Non-Independent Directors''. More details on the same are given in the Report on Corporate Governance.

(v) Remuneration Policy:

Your Company follows a policy on remuneration of Directors and Senior Management. The policy is framed by the Nomination and Remuneration Committee and approved by the Board. More details on the same are given in the Report on Corporate Governance.

(g) Auditors:

(i) Statutory Auditors and their Report:

In accordance with the provisions Section 139 and other applicable provisions, if any, of the Companies Act, 2013 and the Rules made thereunder, M/s S. Viswanathan, LLP, Chartered Accountants, Chennai (Firm Registration No. 004770S/S200025) who were appointed as Statutory Auditors, for a term of three years to hold office from the conclusion of 58th Annual General Meeting till the conclusion of 61st Annual General Meeting can hold office only till conclusion of ensuing Annual General Meeting.

The Audit Committee has recommended that M/s. PKF Sridhar & Santhanam (Firm Registration No.003990S/ S200018) be appointed as Statutory Auditors of the Company from the financial year 2017-18. Subject to the approval of the Shareholders and in accordance with the applicable provisions of the Companies Act, 2013, they can hold office for a period of 5 years from the commencement of 61st Annual General Meeting till the conclusion of the 66th Annual General Meeting. Necessary resolution seeking the approval of the Shareholders is included in the Notice for the Annual General Meeting.

The Auditors'' Report to the Shareholders for the year under review does not contain any qualifications.

(ii) Cost Auditor and Cost Audit Report:

- Appointment for the year 2017-18:

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Records of the Company relating to Stainless Steel Pressure Cookers and Cookware are required to be audited.

The Board of Directors, on the recommendation of the Audit Committee, appointed Mr. V. Kalyanara-man as Cost Auditor of the Company, for the financial year 2017-18 and fixed their remuneration.

Mr. V. Kalyanaraman has confirmed that his appointment is within the limits of the Section 141 of the Companies Act, 2013 and has also certified that he is free from any disqualifications specified under the provisions of Section 141 of the Companies Act, 2013.

The Audit Committee also received a Certificate from the Cost Auditor certifying the independence and arm''s length relationship with the Company.

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under, the approval of the Members is sought by means of an Ordinary Resolution for the remuneration payable to Mr. V. Kalyanaraman, Cost Auditor, under Item No.5 of the Notice convening the Annual General Meeting.

The Cost Audit Report for the year ended 31st March, 2017 would be filed on or before the due date (i.e.) 27th September, 2017.

(iii) Secretarial Auditor and Secretarial Audit Report:

The Board had appointed Mr. Parameshwar G. Hegde, Company Secretary in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2017-18. The Report of the Secretarial Auditor in Form MR-3 is annexed to this report as Annexure G. The report does not contain any qualification.

(h) Transfer to Investor Education and Protection Fund:

Your Company has transferred a sum of Rs.5,41,850 during the financial year 2016-17 to the Investor Education and Protection Fund established by the Central

Government, in compliance with Section 205C(2) of the Companies Act, 1956. The said amount represents the unclaimed dividends for the year ended 31st March, 2010, which were lying unclaimed with the Company for a period of seven years from their respective due dates of payment.

(i) Disclosure with respect to demat suspense account / unclaimed suspense account:

Your Company does not have any Unclaimed Shares.

(j) Conservation of Energy:

The prescribed particulars under Rule 8(3) of The Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, are furnished in the Annexure D to this Report.

(k) Particulars of Employees:

The information required under Section 197 of the Companies Act, 2013 and the Rules made thereunder are annexed to this Report as Annexure E & Annexure F.

(l) Subsidiary Company:

Your Company has an overseas subsidiary by name TTK British Holdings Limited which was incorporated in the United Kingdom on 24th March 2016 and capitalized during the FY 16-17. TTK British Holdings Limited (TTK Brit). TTK Brit holds entire share capital of Horwood Homeware Holdings Limited which in turn holds 100% of Horwood Home wares Limited being the ultimate operating subsidiary.

(m) Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013:

During the year, your Company had not given any loan, provided any guarantee OR made any investment under Section 186 of the Companies Act, 2013. Your Company holds 1440 equity shares of Rs.10/- each in TTK Healthcare Limited and 103,00,000 shares of GBP 1 each in TTK British Holdings Limited. Your Company had in the past provided secured inter-corporate loan/deposit of Rs.18.75 crores to Triveni Bialetti Industries P. Ltd., (TBI), which now stands adjusted post sanction of the Scheme with TBI by the Courts.

(n) Significant and Material Orders passed by the Regulators or Courts:

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

(o) Whistle Blower Policy:

In accordance with the provisions of Section 177(9) of the Companies Act, 2013 and the Rules made there under and also SEBI (LODR) Regulations, 2015, your Company established a vigil mechanism termed as Whistle Blower Policy, for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy, which also provides for adequate safeguards against victimization of director(s) / employee(s) who avail of the mechanism and also provide for direct access to the Corporate Governance Officer / Chairman of the Audit Committee / Executive Chairman in exceptional cases.

The Whistle Blower Policy is made available on the website of the Company http://www.ttkprestige.com.

(p) Obligation of your Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

In order to prevent sexual harassment of women at work place a new Act, The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on 9th December, 2013. Under the said Act, every Company has to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee.

Your Company has adopted a policy for prevention of Sexual Harassment of Women at Workplace and has constituted a Committee with a NGO as one of its Members, for implementation of the said policy. During the year 2016-17, there were no complaints.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required by Sec.134 (5) read with Sec.134 (3) (c) of the Companies Act, 2013 your Directors confirm

a. that in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that 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 or loss of the Company for that period;

c. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d. that they have prepared the annual accounts on a going concern basis; and

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

ACKNOWLEDGEMENTS

Your Directors deeply appreciate and acknowledge the significant and continued co-operation given to your Company by the Bankers, Financial Institutions and the employees of the Company.

For and on behalf of the Board

(T.T. JAGANNATHAN)

Executive Chairman

Registered Office:

Plot No.38, SIPCOT Industrial Complex,

Hosur - 635 126 Tamil Nadu

Place : Bangalore

Dated : 30th May, 2017

Source :
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