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Yuken India

BSE: 522108|NSE: YUKENINDIA|ISIN: INE384C01016|SECTOR: Pumps
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Directors Report Year End : Mar '17    Mar 16

To the Members,

The Directors have pleasure in presenting their 41st Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2017.

1. FINANCIAL RESULTS

The Company is carrying on the business of manufacturing of hydraulic valves, pumps, systems and cast iron castings. During the year, the Company has registered a total income of Rs. 19,675 lakhs compared to Rs. 19,869 lakhs of previous year. The foundry business of the Company has been transferred to Grotek Enterprises Pvt. Ltd., by way of slump sale during the year with effect from 01st October, 2016. Hence the financial performance pertaining to foundry business for the first half of the year 2016-17 was considered in arriving at the financial results. The Company''s financial performance for the year under review along with previous year''s figures is given hereunder:

Financial summary or highlights: (Rs jn j_akhs)

Particulars

2016-17

2015-16

Total Income

19,675

19,869

Total expenditure

18,712

18,874

Profit before interest, depreciation and tax

963

995

Finance cost

574

503

Depreciation

388

461

Profit before Exceptional items and tax

01

31

Exceptional items*

328

-

Profit after Exceptional items & before tax

(327)

31

Provision for taxation (Net of deferred tax)

356

28

Profit after tax

29

03

Balance in Statement of profit and loss

4,590

4,623

Amount available for appropriation

4,619

4,626

Appropriations:

General reserve

-

-

Proposed dividend

-

30

Tax on proposed dividend

-

06

Balance carried to Balance Sheet

4,619

4,590

Total

4,619

4,626

*The above exceptional item of Rs. 328 lakhs includes additional depreciation charged for the year ended March 31, 2017 due to change in the useful life of buildings at Whitefield factory -net of salvage value of Buildings and gain on sale of Foundry Business.

2. THE EXTRACT OF ANNUAL RETURN (FORM MGT-9)

The extract of Annual Return for the financial year 2016-17 pursuant to the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Annexure-1 and is attached to this report.

3. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR

Five Board Meetings were held during the financial year, 2016-17 viz., on 28th May 2016, 13th August 2016, 21st September 2016, 19th October 2016 and 04th February 2017.

4. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, the Board hereby submits its Responsibility Statement:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The directors had 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 the end of the financial year and of the profit and loss of the Company for that period;

(c) The Directors had 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;

(d) The Directors had prepared the annual accounts on a going concern basis;

(e) The Directors had laid down internal financial controls to be followed by the Company as applicable to listed companies and such internal financial controls are adequate and were operating effectively; and

(f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

5. COMPANY''S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The Nomination and Remuneration Policy of the Company pertaining to appointment of Directors, payment of managerial remuneration, Directors'' qualifications, positive attributes, independence of Directors and other relevant matters as provided under section 178(3) of the Companies Act, 2013 may be accessed on the Company''s website, web link of which is as under:

http://www.yukenindia.com/wp-content/uploads/2016/05/

Nomination-Remuneration-Policy.pdf

6. EVALUATION OF DIRECTORS

Nomination and Remuneration Committee of the Company has formulated a criteria for evaluation of the Board Members. Accordingly performance evaluation of the Board and its members was carried out.

7. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLOSURES MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR RESPECTIVE REPORTS

There were no qualifications, reservations or adverse remarks made by the Auditors or by the Practicing Company Secretary in their respective reports.

8. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Loans:

During the year, the Company has provided a corporate loan of Rs. 77,000,000/- (Rupees Seven Crore Seventy Lakh Only) to Grotek Enterpises Pvt. Ltd., a wholly owned subsidiary of the Company.

Corporate Guarantee:

| Particulars

Bank

Amount (Rs.) |

Corporate Guarantee to

State

120 lakhs

Coretec Engineering India

Bank of

Private Limited (Subsidiary)

India

Corporate Guarantee to

HDFC

220 lakhs

Yuflow Engineering Private

Bank Ltd.

Limited (Subsidiary)

Investments:

An investment of Rs. 50,100,000/- (Five Core and One Lakh Only) was made in Grotek Enterprises Pvt. Ltd., by subscribing to 5,010,000 equity shares of Rs. 10/- each during the year.

The above loans, guarantees and investments are within the limits prescribed under section 186 of the Companies Act,

2013.

9. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, the Statement of Profit & Loss and other documents of the Subsidiary Companies are not being attached to the Balance Sheet of the Company.

The Company will make available the Annual Accounts of the Subsidiary Companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Annual Accounts of the Subsidiary Companies will also be kept open for inspection by any investor at the Registered Office of the Company and that of the respective Subsidiary Companies. The consolidated financial statements presented by the Company include financial results of its Subsidiary Companies.

The details of financial performance of Subsidiaries and Associate Companies are furnished as under:

(Rs. in lakhs)

Particulars

Coretec Engineering India Pvt. Ltd. (Subsidiary)

Yuflow Engineering Pvt. Ltd. (Subsidiary)

Grotek Enterprises Pvt. Ltd. (Subsidiary) (from 01.10.2016)

Sai India Ltd (Associate) (Unaudited)

Kolben

Hydraulics

Ltd.

(Associate)

Bourton Consulting (India) Pvt. Ltd. (Associate)

Total Income FY 2016-17

1081.62

792.21

1904.65

2081.10

309.36

63.27

FY 2015-16

778.17

1011.65

-

1849.66

227.78

70.89

Total expenditure FY 2016-17

988.71

1023.32

2086.34

1807.23

289.89

56.69

FY 2015-16

697.17

1109.61

(0.075)

1689.57

219.65

60.37

Profit before interest, depreciation and tax FY 2016-17

92.91

(231.11)

(181.69)

273.87

19.47

6.57

FY 2015-16

81.00

(97.95)

(0.075)

160.09

8.13

10.42

Finance cost FY 2016-17

13.02

26.02

19.96

93.63

2.02

FY 2015-16

11.13

28.93

-

90.66

1.24

0.09

Depreciation FY 2016-17

29.10

24.60

97.22

106.60

6.21

2.69

FY 2015-16

22.41

27.36

-

110.45

6.48

3.25

Profit before Exceptional items, Prior year items and tax FY 2016-17

50.79

(281.73)

(298.87)

73.63

11.24

3.89

FY 2015-16

47.46

(154.25)

(0.075)

(41.02)

0.41

7.16

Exceptional items FY 2016-17

FY 2015-16

-

(53.00)

-

-

-

-

Profit after Exceptional items but before prior year items and tax FY 2016-17

50.79

(281.73)

(298.87)

73.63

11.24

3.89

FY 2015-16

47.46

(207.25)

(0.075)

(41.02)

0.41

7.16

Prior year items FY 2016-17

FY 2015-16

-

-

-

-

-

-

A statement containing salient features of financial statements of subsidiaries and associate companies in Form AOC-1 is enclosed herewith as Annexure-2 to this report.

Profit after Exceptional items and prior year items but before tax FY 2016-17 FY 2015-16

50.79

47.46

(281.73)

(207.25)

(298.87)

(0.075)

73.63

(41.02)

11.24

0.41

3.89

7.16

Provision for taxation (Net of deferred tax)

FY 2016-17

16.97

5.93

2.14

1.42

FY 2015-16

18.70

-

-

2.49

0.10

2.23

Profit/ (Loss) after tax FY 2016-17

33.81

(281.73)

(304.80)

73.63

9.10

2.47

FY 2015-16

28.76

(207.25)

(0.075)

(38.53)

0.51

4.93

Earnings per share (in Rs.) FY 2016-17

5.46

(14.09)

(24.19)

8.18

0.91

1.71

FY 2015-16

4.64

(19.85)

(0.75)

(4.28)

0.05

3.30

10. CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The details of related party transactions as required under Accounting Standard-18 are set out in Note-32 to the standalone financial statements of the Company.

The Form AOC-2 pursuant to section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure-3 to this report.

The Policy on Related Party Transactions as approved by the Board may be accessed on the Company''s website, web link of which is as under:

http://www.yukenindia.com/wp-content/uploads/2016/02/

Related-Party-Transactions-Policy.pdf

11. DETAILS OF AMOUNTS TRANSFERRED TO RESERVES

Your Company has not transferred any amount to General Reserves.

12. DIVIDEND

The Board of Directors is pleased to recommend a dividend of 10% on equity shares of the Company for the year ended

31st March, 2017, subject to the approval of the members at the ensuing Annual General Meeting

13. TRANSFER OF UNCLAIMED DIVIDEND b EQUITY SHARES IN RESPECT OF WHICH DIVIDENDS FOR 7 CONSECUTIVE YEARS REMAIN UNPAID TO INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY

Since the Company has not declared / distributed any dividend for the financial year 2008-09, there is no unclaimed and unpaid dividend pertaining to that financial year and hence it was not required to remit any amount to the Investors Education and Protection Fund in accordance with section 125 of the Companies Act, 2013, during the year 2016-17. The Company is required to transfer unpaid dividend pertaining to the year 2009-10 to IEPF.

Also, in pursuance of the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules”) notified by the Ministry of Corporate Affairs effective September 7,

2016 and subsequent amendments effective February 28, 2017, we are required to transfer all the equity shares in respect of which dividends for 7 (seven) consecutive years have remained unpaid / unclaimed to Demat account of IEPF Authority.

14. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN 31ST MARCH,

2017 AND 29TH MAY, 2017

There were no material changes and commitments affecting the financial position of the Company occurred between the end of the financial year (31st March, 2017) and the date of the Report (29th May, 2017).

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO UNDER SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8(3) OF THE COMPANIES (ACCOUNTS) RULES, 2014

1. Conservation of Energy:

The Company has taken various steps for conservation of energy in the process of implementing several projects. Energy conservation is a consistent focus area for the Company both from cost control as well as social responsibility perspective. The power factor is regularly monitored and maintained between 0.99 and 1.00. LED lights are being used in the Company''s premises so that the power consumption comes down.

2. Foreign Exchange Earnings and Outgo:

Foreign Exchange Earnings: (Rs. in lakhs)

Export Sales

670.06

Other Income

4.31

Expenditure in Foreign Currency: (Rs. in lakhs)

Brand fee

80.32

Royalty

5.66

Interest

0.00

Others

19.95

Remittance in Foreign Currency on Account of: (Rs. in lakhs)

Dividend

12

3. Research and Development (R&D)

The Company continues to invest in R&D activities towards development of new products and applications, improvement in operating efficiencies and reduction in manufacturing costs.

The Company has developed certain pumps, valves etc., which are energy efficient and as per the customer requirement. The core idea of the Company''s investments in R&D is to initiate product up gradations and to develop new products that would give an edge over competitors.

(a) Specific areas in which R&D is carried out by the

Company

i. Up gradation and modification of chip compacting machine which was originally designed by Yuken Kogyo Co. Ltd., Japan.

ii. Several concepts of energy saving hydraulic power units have been designed to suit customer requirements.

iii. Development of high pressure application valves and pumps for process and steel industries.

(b) Benefits derived as a result of above R&D efforts

Special products developed to meet specific requirements of customers which enable your Company to develop niche markets for growth.

(c) Future plan of action

- Development of additional range of products

- Focus on process improvements to enable the Company to penetrate the export market

- Strong focus on employee involvement to eliminate waste in operations through focused initiatives.

(d) Expenditure on R&D

There is a continuous increase in R&D expenditure as the scope of activities carried out keeps on increasing.

4. Technology Absorption, Adaptation and Innovation

(a) Efforts in brief, made towards technology absorption, adaptation and innovation:

- Special models of energy saving pumps and valves have been designed to meet specific needs of customers and these have enabled us to extend our customer base to include a wider range of industries.

- Indigenization is a continuous ongoing effort.

(b) Benefits derived as a result of the above efforts:

- Reduction of material cost

- Quality improvement and improvement in product performance characteristics

- Ability to innovate and produce new products

(c) Information regarding technology imported during the last five years reckoned from the beginning of the financial year: Nil

16. DETAILS OF CHANGE IN NATURE OF BUSINESS,

IF ANY

There was no change in the nature of business of the Company, during the year 2016-17.

17. DIRECTORS

There is no change in the composition of Board of Directors, during the year.

The Independent Directors have submitted their declarations to the Board stating that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act, 2013.

18. KEY MANAGERIAL PERSONNEL

Mr. C P Rangachar, Managing Director, Mr. H M Narasinga Rao, Chief Financial Officer, Mr. Subramanya Uiiai, Chief Executive Officer and Ms. Sridevi Ch, Company Secretary are the Key Managerial Personnel in accordance with the provisions of section 203 of the Companies Act, 2013, during the period under report.

19. DEPOSITS

The Company has neither accepted nor renewed any deposits during the year.

20. MATERIAL ORDERS PASSED BY REGULATORY AUTHORITIES

There are no significant and material orders passed by the regulators or courts or tribunals during the year, impacting the going concern status and Company''s operations in future.

21. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company''s management is responsible for establishing and maintaining an adequate system of internal controls over financial reporting. The Company has in place adequate systems of internal controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies. The observations arising out of audit are periodically reviewed and compliance ensured. The Internal Audit Reports, observations and status of the implementation is submitted to the Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.

22. RISK MANAGEMENT POLICY

In compliance with the provisions of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Risk Management Committee has been constituted by the Board. The Company has in place, a Policy on Risk Management for the purpose of identification, assessment, handling, monitoring and dealing with various risks across the organization.

Risks are identified by the respective departmental heads. Each SBU & Corporate will carry out the Risk Assessment for each identified risk, as applicable to them and will document the results for each risk in the Risk Register. Action will be taken based on the possible impact of the identified risk.

The Company has adopted the following measures concerning the development and implementation of a Risk Management Policy during the year:

a. Measures taken by IT department of the Company to mitigate risk relating to security of data and systems of the Company;

b. Security measures in the manufacturing units of the Company to prevent accidents; and

c. Installation of CC TV cameras and siren at factory for safety of the employees.

d. Measures taken by the Company to mitigate foreign exchange transaction risks.

23. DETAILS OF POLICY DEVELOPED, IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has constituted a Corporate Social Responsibility Committee and developed a CSR Policy, in compliance with the provisions of section 135 of the Companies Act, 2013, with the following objectives:

- To ensure an increased commitment at all levels in the Organization to operate its business in an economically, socially and environmentally sustainable manner, while recognizing the interests of the stakeholders.

- To directly or indirectly take up programs that benefit the communities over a period of time, in enhancing the quality of life and economic well being of the people around.

In accordance with the Company''s CSR Policy, following are the areas on which the Company would like to focus for the purpose of CSR:

1. Education and

2. Environmental sustainability

In compliance with the CSR Policy, your Company has undertaken the following activities:

1. Rain water harvesting in all the plants of the Company, and

2. The Company has appointed a Teacher to teach English and Computers in the Government Elementary School in Hedagenabele village of Kolar District.

However, since the CSR provisions are not applicable to the Company for the year 2016-17, it was not required to allocate / spend any funds towards CSR activities under the provisions of section 135 of the Companies Act, 2013.

24. COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM

In compliance with the provisions of Section 177 of the Companies Act, 2013 read with Rules 6 and 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company''s Board has constituted an Audit Committee with the following Directors:

1. Capt. N S Mohanram - Chairman

2. Mr. R Srinivasan - Member

3. Mr. C P Rangachar - Member

4. Dr. Premchander - Member

The above composition of the Audit Committee consists of three Independent Directors, who form the majority.

The Company has established a Vigil Mechanism to deal with the genuine concerns of the employees and Directors pertaining to the Company''s interests and also provided direct access to the Chairman of the Audit Committee and the Vigilance Officer of the Company on reporting issues concerning the interests of the Company. The Company also has provided adequate safeguards against victimization of employees and Directors who are the whistle blowers.

The Company has published the Whistle Blower Policy in its website, a web link of which is as under:

http://www.yukenindia.com/wp-content/uploads/2016/02/

Whistle-Blower-Policy.pdf

25. DETAILS OF REVISION OF FINANCIAL STATEMENTS

There was no revision of the financial statements of the Company, during the year 2016-17.

26. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

As part of the Familiarization Programme, Independent Directors of the Company have been made aware of the following information:

a. Rules and regulations pertaining to their appointment as Independent Directors,

b. Duties and responsibilities of the Independent Directors towards the Company and its stakeholders,

c. Code of conduct to be followed by them and

d. Company''s policies and procedures.

27. DETAILS OF REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

a. Ratio of remuneration of each Director/KMP to the median employee''s remuneration and the Percentage increase in the median remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year 2016-17.

Name of the Director / KMP

Remuneration for financial year 2016-17 (in Rs.)

Remuneration for financial year 2015-16 (in Rs.)

% increase in remuneration in the financial year 2016-17

Ratio of remuneration of each Director/KMP to that of Median remuneration of employees

Mr. C P Rangachar, Managing Director

5,292,489

5,543,841

-4.53%

7.54:1

Mr. O Tanaka,

Chairman & Non-Executive Director

10,000

10,000

Nil

0.01:1

Capt. N S Mohanram, Non-Executive Independent Director

90,000

100,000

Nil

0.13:1

Name of the Director / KMP

Remuneration for financial year 2016-17 (in Rs.)

Remuneration for financial year 2015-16 (in Rs.)

% increase in remuneration in the financial year 2016-17

Ratio of remuneration of each Director/KMP to that of Median remuneration of employees

Mr. R Srinivasan, Non-Executive Independent Director

70,000

70,000

Nil

0.10:1

Dr. Premchander, Non-Executive Independent Director

70,000

60,000

Nil

0.10:1

Mr. S Hattori, Nominee Director

10,000

10,000

Nil

0.01:1

Mrs. Vidya Rangachar, Non-Executive Director

50,000

50,000

Nil

0.07:1

Mr. H M Narasinga Rao, CFO

4,868,252

4,618,845

5.40%

6.94:1

Mr. Subramanya Ullal, CEO

4,499,053

4,260,268

5.60%

6.41:1

Ms. Sridevi Ch, Company Secretary

601,237

530,657

13.30%

0.86:1

Notes:

The Net Profit after tax has increased by Rs. 26 iakhs compared to the previous year and the remuneration of the Managing Director has decreased by 4.53%.

b. The median remuneration of employees of the Company during the year and percentage increase (decrease) in the median remuneration of employees compared to the previous financial year:

Particulars

2016-17 (Rs.)

2015-16 (Rs.)

Increase in %

Median Remuneration of all employees

701,572/-

607,405/-

15.50%

c. The number of permanent employees on the rolls of the Company as on 31st March, 2017 was 304.

d. Relationship between average increase in remuneration and company performance:

The Profit After Tax for the financial year 2016-17 stood at Rs. 29 lakhs and the average increase in median employee remuneration was 15.50%. Remunerations of the employees are as per the industry standards.

e. Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company

Overall remuneration of Key Managerial Personnel for the year 2016-17 has increased by 2.06% whereas the total revenue from the operations has decreased by 1.22% when compared to the previous year. The decline in revenue is due to transfer of Foundry Business to Grotek Enterprises Pvt. Ltd. during the year and hence the revenue generated for the first half of the year only has been considered. Remunerations of the KMP are as per the industry benchmarks.

f. Details of share price and market capitalization:

(i) The details of variation in the market capitalization and price earnings ratio as at the closing date of the current and previous financial years are as follows:

S.No.

Particulars

2016-17

2015-16 |

i.

Variations in the market capitalization of the Company

Rs. 314.82 crores

Rs. 92.10 crores

ii.

Price Earnings Ratio of the Company

1072:1

2791:1

(ii) Percentage increase over/decrease in the market quotations of the shares of the Company as compared to the rate at which the company came out with the last public offer in the year:

The Company had come out with initial public offer in 1991. An amount of Rs. 10 invested in the said IPO would be worth Rs. 1049.40 as on 31st March, 2017 indicating a Compounded Annual Growth Rate of 19.60%. This is excluding the dividend accrued thereon.

g. Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

-Average percentage increase of salaries of employees other than the managerial personnel in the financial year: 10.31%

-Percentage increase/decrease in the managerial remuneration: 2.06%

h. The key parameters for any variable component of remuneration availed by the directors

Directors are paid commission calculated on the basis of net profits of the Company under the provisions of section 197 of the Companies Act, 2013 and as approved by the shareholders and based on the Nomination and Remuneration Policy of the Company. The Directors were not paid any commission during the financial year 2016-17.

i. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year

Not Applicable.

It is hereby affirmed that the remuneration paid to the Directors is as per the Nomination and Remuneration Policy of the Company.

Information as per rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Name

Designation

Remuneration

Received

Contractual / otherwise

Qualification & Experience

Date of

commencement of employment

Age

Last

employment

% of equity shares held in company

Whether relative of any director or manager of Company

Nil

(i) Employed throughout the financial year and were in receipt of remuneration for the year, in the aggregate of not less than Rs. 6,000,000/- - Nil

(ii) Employed for a part of the financial year and were in receipt of remuneration for any part of the year, at a rate which, in the aggregate, was not less than Rs. 500,000/per month - Nil

(iii) Employed throughout the financial year or part thereof, was in receipt of remuneration in the year in excess of that drawn by the Managing Director and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company - Nil

28. REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

During the year under review, the Company has registered a turnover of Rs. 19,675 lakhs compared to Rs. 19,869 lakhs in the previous year. Operations of the Company for the year under review have resulted in a net profit of Rs. 29 lakhs.

As per the Meteorological Department, monsoon will be average during the year 2017-18. Hence we expect that the economy may grow from 7.2% to 7.5%. The order position is encouraging during the year and we expect that the demand for our products will continue to be good during the year.

29. SHARES

a. BUY-BACK OF SHARES

The Company has not bought back any of its securities during the year.

b. SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year.

c. BONUS SHARES

No Bonus Shares were issued during the year.

d. EMPLOYEES STOCK OPTION PLAN

The Company has not provided any Stock Option Scheme to its employees, during the year.

30. COST AUDITORS

Pursuant to the provisions of section 134 of the Companies Act, 2013, the Board had appointed M/s. Adarsh Sharma & Co, Cost Accountants, Bangalore, as Cost Auditors for conducting Cost Audit for the financial year 2017-18.

31. STATUTORY AUDITORS

Tenure of M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore who were acting as the Statutory Auditors is going to expire at the conclusion of the ensuing Annual General Meeting. M/s. Walker Chandiok & Co. LLP, Chartered Accountants, are proposed to be appointed as the Statutory Auditors for a period of 5 consecutive years, subject to approval of the members of the Company.

32. SECRETARIAL AUDITORS

The Board has appointed M/s. Joseph & Chacko LLP, Practicing Company Secretaries, Bangalore for conducting Secretarial Audit for the financial year 2017-18 in compliance with the provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

A report on Secretarial Audit for the financial year 2016-17 in Form MR-3 is attached herewith as Annexure-4.

33. CORPORATE GOVERNANCE

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance along with a Certificate from the Statutory Auditors on compliance of Corporate Governance is attached to this Report as Annexure -5.

34. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis (MDA) forms part of the Annual Report setting out an analysis of business including the industry scenario, performance, financial analysis and risk mitigation.

35. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, the audited Consolidated Financial Statements are provided in the Annual Report.

36. FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words anticipate, believe, estimate, expect, intend, will and other similar expressions as they relate to your Company and / or its business are intended to identify such forward-looking statements. Your Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performance or achievements could differ materially from those expressed or implied in such forward looking statements. This report should be read in conjunction with the financial statements included herein and notes thereto.

37. ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks to the bankers, business associates, consultants and various Government Authorities for their continued support extended to your Company''s activities during the year. Your Directors also acknowledge their gratitude to the Shareholders of the Company, for their continuous support and confidence reposed on the Company.

For and on behalf of the Board of Directors

Place: Bangalore CP Rangachar Capt. N S Mohanram R Srinivasn

Date: 29th May, 2017 Managing Director Director Director

Source : Dion Global Solutions Limited
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