To the Members,
The Directors have pleasure in presenting their 39th Annual Report of
the Company together with the Audited Statements of Accounts for the
year ended 31st March, 2015.
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. 18,610 lakhs compared to
Rs. 16,512 lakhs of previous year. The Company''s financial
performance for the year under review along with previous year''s
figures is given hereunder:
Financial highlights: (Rs in Lakhs)
Particulars 2014-15 2013-14
Total income 18,610 16,512
Total expenditure 17,677 15,591
Profit before interest, depreciation and tax 933 921
Finance cost 418 376
Depreciation 458 431
Profit before Exceptional items and tax 57 114
Exceptional Items - 201
Profit after Exceptional items & before tax 57 315
Provision for taxation (Net of deferred tax) (16) 61
Profit after tax 73 254
Balance in Statement of profit and loss 4,623 4,434
Amount available for appropriation 4,696 4,688
Depreciation on transition to Schedule
II of the Companies Act, 2013 15 -
General reserve 4 13
Proposed dividend 45 45
Tax on proposed dividend 9 7
Balance carried to Balance Sheet 4,623 4,623
Total 4,696 4,688
2. THE EXTRACT OF ANNUAL RETURN (FORM MGT-9)
The extract of Annual Return 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 had been held during the financial year, 2014-15
viz., on 29th May 2014, 26th July 2014, 9th September 2014, 29th
October 2014 and 7th February 2015.
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 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 accor- dance 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
(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
(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 mana- gerial remuneration,
Directors'' qualifications, positive attributes, independence of
Directors and other related matters as provided under section 178(3) of
the Companies Act, 2013 is attached to this report in Annexure-2.
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 has been carried out.
7. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE
REMARKS OR DISCLOSURES MADE BYTHEAUDITORSANDTHE 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
8. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION
186 OF THE COMPANIES ACT, 2013
Particulars of Loans, guarantees or investments made under section 186
are furnished as under:
Particulars Bank Amount (Rs.)
Corporate Guarantee for Yuflow Engineering Private Limited
(Subsidiary) HDFC Bank Ltd. 212 lakhs
Corporate Guarantee for Coretec Engineering India
Private Limited (Subsidiary) State Bank of India 249 lakhs
The above guarantees are within the limits prescribed under section 186
of the Companies Act, 2013.
No loans given and no investments made during the year.
9. 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
The details of related party transactions as required under Accounting
Standard-18 are set out in Note-31 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:
10. DETAILS OF AMOUNTS TRANSFERRED TO RESERVES
Your Company proposes to transfer Rs. 4 lakhs to General Reserves.
The Board of Directors is pleased to recommend a dividend of 15% on
equity shares of the Company for the year ended 31st March, 2015,
subject to the approval of the members at the ensuing Annual General
12. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION
In terms of section 125 of the Companies Act, 2013 any unclaimed or
unpaid dividend relating to the financial year 2007-08 is due for
remittance on 10th September, 2015 to the Investor Education and
Protection Fund established by the Central Government.
13. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL
POSITION OF THE COMPANY OC CURRED BETWEEN 31ST MARCH, 2015 AND 09TH
There were no material changes and commitments affecting the financial
position of the Company occurred between the end of the financial year
(31st March, 2015) and the date of the Report (09th May, 2015).
14. 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 responsi- bility perspective. The power factor is regularly
monitored and maintained between 0.99 and 1.00. Solar power is being
used at Malur Plant.
Remittance in Foreign Currency on Account of:
(Rs. in lakhs)
3. Research and Development (R&D)
The Company continues to invest in R&D activities towards development
of new products and applications, improve- ment in operating
efficiencies and reduction in manufacturing costs.
(a) Specific areas in which R&D carried out by the Company
Development of larger valves for process and steel industries, rugged
vane pumps for special applications and development of high efficiency
gear pumps are some of the areas where R&D was carried out by the
(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
- 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
- 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:
i. Technology imported: For manufacture of Chip compacting machine
ii. Year of import: 2011
iii. Has technology been fully absorbed- Yes
iv. If not fully absorbed, areas where this has not taken place,
reasons thereof and future plans of action: NA
15. DETAILS OF CHANGE IN NATURE OF BUSINESS, IF ANY
There was no change in the nature of business of the Company, during
the year 2014-15.
Mr. Shiro Hattori, nominated by Yuken Kogyo Company Limited, Japan has
been appointed as a Director in the 38th Annual General Meeting held on
09th September, 2014.
The status of Mr. Osamu Tanaka has been changed from Director not
liable to retire by rotation to Director liable to retire by
rotation in the 38th Annual General Meeting held on 09th September,
Mr. Srinivasan Rangarajan, Capt. N S Mohanram and Dr. Premchander had
been appointed as Independent Directors of the Company in compliance
with the provisions of section 149 of the Companies Act, 2013 and
Clause 49(H) of the Listing Agreement.
Mr. Y Mukaide has resigned from the office of Director, on 01st April,
Mrs. Vidya Rangachar has been appointed as an Additional Director on
30th March, 2015.
The Independent Directors have submitted their declarations to the
Board stating that they meet the criteria of indepen- dence as
stipulated in Section 149(6) of the Companies Act, 2013.
17. KEY MANAGERIAL PERSONNEL
In compliance with the provisions of section 203 of the Companies Act,
2013, Mr. H M Narasinga Rao, Chief Financial Officer and Mr. Subramanya
Ullal, Chief Executive Officer have been designated as Key Managerial
Personnel and Ms. Sridevi Ch has been appointed as the Company
Secretary during the year.
18. 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 informa- tion 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
The details of financial performance of Subsidiaries and Associate
Companies are furnished as under:
(Rs. in lakhs)
Coretec Yuflow Sai India Ltd Kolben Bourton
Particulars Engineer Engineer- Hydrau Consulting
ing ing lics
India Pvt ing Pvt. Ltd. (India)
Ltd. Ltd. Ltd.
(Subsidi (Subsidi (Associate) (Associ (Associ
ary) ary) ate) ate)
Total Income 718.23 1121.24 1583.15 221.77 64.76
Total expenditure 631.10 1098.44 1438.85 210.64 54.13
and tax 87.13 22.80 144.31 11.12 10.63
Finance cost 11.69 28.57 96.80 1.28 0.60
Depreciation 27.92 37.34 126.24 8.17 6.19
Prior year items
and tax 47.52 (43.11) (78.73) 1.68 3.84
Exceptional items - - - - -
but before prior
year items and tax 47.52 (43.11) (78.73) 1.68 3.84
Prior year items - - - 3 -
and prior year
items but before tax 47.52 (43.11) (78.73) (1.33) 3.84
Provision for taxation
(Net of deferred
tax) 6.97 - (2.86) (7.56) 1.33
after tax 40.55 (43.11) (75.87) 6.23 2.51
share (in Rs.) 6.54 (4.31) (8.43) 0.64 1.99
The Company has neither accepted nor renewed any deposits during the
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
Details of the same are provided in the Management Discussion and
Analysis Report attached as Annexure-6 to this report.
22. RISK MANAGEMENT POLICY
In compliance with the provisions of Clause 49(VI) of the Listing
Agreement, a Risk Management Committee has been constituted by the
Board, which has formulated a Policy on Risk Management for the purpose
of identification, assess- ment, 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 Man- agement Policy during the
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
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 compli- ance 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
* 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
1. Appointed a Teacher in a school run by State Government at Malur, on
its own expenses,
2. Donations made to ISKCON''s Akshaya Patra and
3. Rain water harvesting at Malur foundry and Whitefield Factory.
However, the Company could not allocate and spend enough funds as
required under the provisions of section 135 of the Companies Act,
2013, on CSR activities due to insufficiency of funds.
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, the Company has constituted an Audit Committee
with the following members:
1. Capt. N. S. Mohanram - Chairman
2. Mr. R. Srinivasan - Member
3. Mr. C.P Rangachar - Member
The above composition of the Audit Committee consists of two
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:
25. DETAILS OF REVISION OF FINANCIAL STATEMENTS
There was no revision of the financial statements of the Company,
during the year 2014-15.
26. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
As part of the Familiarisation Programme, Independent Directors of the
Company have been made aware of the following information:
a. Rules and regulations pertaining to their appointment as Independent
b. Duties and responsibilities of the Independent Directors towards the
Company and 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) OFTHE 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
Ratio of remunera-
Remuneration % increase in tion of each Direc
for Fi- remu- tor-
Name of the Director/KMP nancial year neration in Kmp to that of
2014-15 the financial Median remunerat
in rs year 2014-15 ion of employees
Mr. C P Rangachar,
Managing Director 4,984,401 (1%) 9.44:1
Mr. O Tanaka, Chairman &
Non-Executive Director 10,000 Nil 0.02:1
Capt. N S Mohanram,
Director 90,000 Nil 0.17:1
Mr. R Srinivasan, Non-
Director 90,000 Nil 0.17:1
Dr. Premchander, Non-
Director 30,000 Nil 0.06:1
Mr. S Hattori,
Nominee Director 10,000 Nil 0.02:1
*Mrs. Vidya Rangachar,
Additional Director - Nil -
Mr. H M Narasinga Rao,
CFO 4,214,787 20% 7.98:1
**Mr. Subramanya Ullal,
CEO 3,255,000 Nil 6.17:1
**Ms. Sridevi Ch,
Company Secretary 362,006 Nil 0.69:1
1. The sales for the year has increased by 12% and the remuneration of
the Managing Director has been decreased by 1%. *2. Mrs. Vidya
Rangachar has been appointed as an Additional Director on 30/03/2015.
**3. The CEO has been appointed on 01/01/2014 and the Company Secretary
has been appointed on 01/08/2014.
b. The median remuneration of employees of the Company during the year:
Rs. 527,856/- and percentage increase in the median remuneration of
employees compared to the previous financial year: 6.17%.
c. The number of permanent employees on the rolls of the Company as on
31st March, 2015 was 392.
d. Relationship between average increase in remuneration and company
performance: The sales for the year has Increased by 12% and the
average increase in median employee remuneration was 6.17%.
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 2014-15
has been increased by 49% whereas the revenue from the operations has
increased by 12% when compared to the previous year. The variation in
increase in the remuneration of KMP is due to new appointments of the
CEO and Company Secretary. Remunerations of the KMP are as per the
f. (i) Variations in the market capitalization of the Company: The
market capitalization as on 31st March, 2015 was Rs. 68.22 crores
whereas as on 31st March, 2014 was Rs. 48.66 crores.
(ii) Price earnings ratio of the Company as on 31st March, 2015:
100.18:1 (Previous year - 19.17:1).
(iii) 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. 227.40 as on
31st March, 2015 indicating a Compounded Annual Growth Rate of 13.90%.
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: 9.96%
- Percentage increase/decrease in the managerial remuneration: 7.30%*
* CEO and CS have been newly appointed and hence there is no increase
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 Remunera- tion Policy of the Company.
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
It is hereby affirmed that the remuneration paid to the Directors is as
per the Nomination and Remuneration Policy of the Company.
(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. 18,412 lakhs compared to Rs. 16,449 lakhs in the previous year.
Operations of the Company for the year under review have resulted in a
net profit of Rs. 72.80 lakhs.
The economy is slowly improving during the year. Once the interest rate
comes down, the demand for our products is likely to increase and the
Company hopes to improve its performance in the near future.
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. Kamalakara & Co., Cost Accountants,
Bangalore as Cost Auditors for conducting Cost Audit for the financial
year, 2014-15. However, in accordance with a clarification provided by
the Ministry of Corporate Affairs, the cost audit for the financial
year 2014-15 was not applicable to the Company and hence it was not
31. STATUTORY AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore had
been appointed as the Statutory Auditors for a period of 3 years in the
38th Annual General Meeting held on 09th September, 2014, whose
appointment is subject to ratification in each Annual General Meeting
till their last year.
32. SECRETARIAL AUDITORS
The Company has appointed M/s. BG & Associates, Practicing Company
Secretaries, Bangalore for conducting Secre- tarial Audit for the
financial year 2014-15 in compliance with the provisions of section
2014 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 in Form MR-3 is attached herewith in
33. CORPORATE GOVERNANCE
Your Company is committed to maintaining high standards of Corporate
Governance. A report on Corporate Gover- nance 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 this report
as Annexure-6 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
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 Direc- tors 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 C.P. Rangachar R. Srinivasan Dr. Premchander
Date: 09th May, 2015 Managing Director Director Director