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Salzer Electronics

BSE: 517059|NSE: SALZERELEC|ISIN: INE457F01013|SECTOR: Electric Equipment
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Directors Report Year End : Mar '18    Mar 16

Dear Shareholders,

We have pleasure in presenting the Thirty Third Annual Report, together with the audited financial statements of the Company for the Financial Year ended March 31, 2018

1. FINANCIAL SUMMARY OF THE COMPANY

(Rs .in Lakhs)

Particulars

For the year ended March 31, 2018

For the year ended March 31, 2017

I

Revenue from operations (Net off Excise Duty)

44,277.14

38,497.89

II

Other Income

310.24

544.35

III

Total Revenue (I II)

44,587.38

39,042.24

IV

Expenses

Cost of Materials Consumed

35,717.26

29,795.87

Purchase of Stock in Trade

140.77

290.74

Changes in inventories of finished goods and work in progress

(3,512.29)

(2,118.37)

Employee benefits expenses

1,985.69

1,874.80

Finance Cost

1,491.25

1,459.29

Depreciation and amortization expenses

1,053.61

889.74

Other expenses

4,617.23

4,240.14

Total Expenses

41,493.52

36,432.21

V

Profit before exceptional and extraordinary items and tax (III-IV)

3,093.86

2,610.03

VI

Exceptional Items

-

-

VII

Profit before tax (V-VI) & extraordinary items

3,093.86

2,610.03

VIII

Extraordinary items

-

-

IX

Profit before tax (VII-VIII)

3,093.86

2,610.03

X

Tax expense:

(1,092.21)

(875.81)

XI

Profit for the period - After Tax(IX-X)

2,001.65

1,734.22

XIII

Earnings per equity share:

(1) Basic (in '')

13.82

12.53

(2) Diluted (in '')

13.45

12.11

2. ANALYSIS OF PERFORMANCE

In the FY 2017-18, the Company has witnessed the growth of 15% in its net revenue from the operations to Rs.44277.14 Lakhs. The Earnings before Interest Tax, Depreciation and Amortization (EBITDA) stood at Rs.5329.78 Lakhs in the year as against Rs.4,410.11 Lakhs in FY17, YoY growth of 20.7%. Similarly, EBITDA margin improved considerably by over 56 bps to 12% as against 11.5% in the corresponding previous period in view of improvement in the operational efficiency in the productions. Further, the Profit after Tax was at Rs.2,001.65 Lakhs in FY18 as against Rs.1,734.22 Lakhs in FY17, recorded a year on year growth of 15.4%. In the fiscal 2017-18, Direct Exports contributed 17.2% to the total revenues.

Your Company has demonstrated good growth in its revenues. This growth was mainly driven by demand in switchgear business segment and also from products like wire harness and three phase dry type transformers. The increase in exports to USA and Europe has also been another factor contributing to the increased revenues.

Your Company continues to focus on adding new, niche and high margin products, enter new geographies and offer total and customized electrical solutions to its existing and new customers. To aid to this, your Company has constantly been on the lookout for any new opportunities for technical associations to strengthen the base for its product offerings.

Industrial switch gear segment

The industrial switch gear segment is one the largest contributors to overall revenues of your Company. This segment comprises Cam Operated Rotary Switches; Toraidal Transformers, Relays, Load Break Switches, Wire Harness, Three Phase Dry Type Transformers etc. This division posted a growth of 16% on year on year and made 45% contribution to the total revenue of the Company. Your Company has increased its supply for these new products to the Original Equipment Manufacturers (OEMs). Going forward, the demand for the Products will significantly improve because of its high standards of quality. Good traction has been seen in the newly added product Three-Phase Dry Type Transformers with various large OEMs.

Wire and cable segment

Wire and cable segment consisting of copper wires and cables, is the second major business of your Company. On a yearly basis, wire and cable business contributed 49% with a year on year robust growth of 27%. Within this segment, your Company''s focus has been to do brand labelling for major brands. Initially, it has been started with branding for L&T, and today branding is being done for Crompton Greaves, Texmo, E-Fab and a couple of other brands. In the last two years, this division has started to focus giving value added products to various customers like elevator travelling cables; wire harnesses, hoist cables and other similar cables in the segment including UL approved wires.

In order to strengthen the revenues of this Segment, your Company has acquired the whole of the business undertaking from Salzer Magnet Wires Limited on slump- sale basis as a going concern in pursuance of the Business Transfer Agreement effective March 08, 2018 for a total value of Rs.2,029.10 Lakhs for consideration other than cash. The acquired undertaking is engaged in the business of manufacturing of enameled Copper Wires which have its applications in Transformers, Motors, Alternators, Contactors, Relays and Auto electricals. It is being expected that the acquired undertaking would bring not less Rs.75 Crores business volumes in the top line of this segment in the current year

Building Product Segment

This is the only segment where your Company has been operating on a B2C basis. The Portfolio under this Segment involves Distribution Boards, Modular Switches & Specialty Switches, Movement Sensors, Remote Switches, Single Phase Motors Switches, House Wires etc., The building segment product division contributed around 5% of our revenues in 2017-18. In the real estate Sector, this Segment secured some annual rate contracts with certain major builders in the south.

Energy management segment

The fourth is the Energy Management Segment. This is a new technology oriented business which was developed by your Company''s in-house R&D team. This product segment has given a benefit of being the largest ESCO, with highest CRISIL rating -Grade A in the country for your Company Energy management division, during the full year FY 2018, generated revenues of nearly Rs.500 Lakhs, which is only about 1% of total revenues as this an order book driven business. Your Company has already participated in a new tender with Energy Efficiency Services India Limited (EESL) in the last year and are expecting the results of this tender during the second quarter of current year Going forward, your Company''s focus remains to achieve profitable growth by adding newer products which are customized and value added in nature, exploring newer geographies which can yield better margins. With a very competent team in place, your Company is quite confident of achieving the milestone which it has set for itself

3. DIVIDEND

The Board of Directors at their meeting held on May 24, 2018 recommended a Dividend at a rate of 16% ('' 1.60 per share) for the financial year ended March 31, 2018 as that of the last year. The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting.

Dividend (including dividend tax) as a percentage of net profit after tax is 15%, on the expanded capital. In order to strengthen the internal accruals of the Company, Your Board of Directors moderated the Dividend Payment out of available surplus for the financial year 2017-18 on the expanded capital.

4. share capital and other related

SECURITIES

a. Amendment in Capital Clause in the Memorandum of Association

During the year under review, with the consent of the shareholders by means of requisite resolutions passed at their Extra Ordinary General Meeting held on December 16, 2017, the Capital Clause (Clause V) in the Memorandum of Association of the Company has been amended by Re-classification of the share Capital of 20,00,00,000 comprising of 2,00,00,000 equity shares of Rs.10/- each in the following manner

i. 1,90,00,000 Equity Shares having face value of Rs.10/- each aggregating to Rs.19,00,00,000

ii. 10,00,000 Non-cumulative convertible preference shares having a face value of Rs.10/- each aggregating to Rs.1,00,00,000.

b. Insertion of New Article in the Articles of Association

The Shareholders at their Extra Ordinary General Meeting held on December 16, 2017 approved by means of Special resolutions the insertion of new Article 13(a) in the Articles of Association of the Company which provides for :-“The Company shall have the power to issue Non -Voting Convertible Preference Shares which are eligible to be converted fully into equity shares of the Company as a part of its authorized share capital in the manner permissible under the Act and relevant SEBI Regulations and the “Directors may, subject to the “Provisions of the Act, exercise such powers in any manner as they may think fit and provide for the conversion of Non-Voting Convertible Preference Shares into Equity on such terms and conditions including payment of the Dividend and the right to convert at premium or otherwise as the Board may think fit.

c. Exercise of Stock Options

During the reporting period, your Company issued 1,48,500 equity shares of '' 10/- each to the employees who exercised their vested stock Options under “Salzer Electronics Limited Employees Stock Options Scheme 2012-13, with a lock in period of two years from the date of the allotment. As at March 31, 2018, the Company has 4,56,050 outstanding stock options, left unexercised by the Employees. Disclosures under Rule 12(9) of Companies (Share Capital and Debentures) Rules 2014 read with Regulation 14 of SEBI (Share Based Employees Benefits) Regulations 2014 are given under Annexure 5.

d. Issue of securities on preferential basis

During the reporting period, your Company has acquired the whole of the business undertaking of Salzer Magnet Wires Limited (“SMW”) as a going concern on a Slump Sale basis in terms of Business Transfer Agreement executed on March 08, 2018. In pursuance of the Business Transfer Agreement, SMW transferred all its Assets and Liabilities at the cost of Rs.2029.10 Lakhs as valued by an Independent Chartered Accountant, to the Books of your Company without any further obligations and in turn as a purchase consideration, SMW has been allotted 10,30,000 securities at an issue Price of Rs.197/- per share in the following form for an aggregate amount of Rs.2,029.10 Lakhs on March 16, 2018 on preferential basis based on the strength of the shareholders'' approval dated December 16, 2017 as required under Chapter VII of SEBI (Issue of Capital and Disclosures Requirement) Regulations, 2009:-

i. 5,00,000 Equity shares of Rs.10/- each at an issue Price of Rs.197 per share for total value of Rs.985 Lakhs and

ii. 5,30,000 Non-Cumulative 5% Convertible Preference Shares (“NCCPS”) Rs.10/- each at an issue Price of Rs.197 per share for total value of Rs.1,044.10 Lakhs with lock in period of three years and convertible into equity at any time over the period of two years from the date of allotment.

e. On the sum up of the above allotment of shares, the Company alloted 6,48,500 equity of Rs.10/each and 5,30,000 NCCPS during the reporting Period.

f. On date of this report,

a) Aforementioned 5,30,000 NCCPS have also been converted into similar number of equity shares on May 24, 2018 and there was no pending conversion of NCCPS and

b) Of 4,56,050 Outstanding Stock Options as at March 31, 2018, the employees have exercised 97,050 Stock Options under the Stock Options Scheme and got allotment of similar Number of equity shares on May 17, 2018 which resulting in only 3,59,000 left Un-exercised vested options by the Employees

5. CORPORATE GOVERNANCE

As required under Schedule V(C) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, a separate section on corporate governance practices followed by the Company, together with a certificate from the Managing Director and the Company''s Auditors confirming compliance attached with this report Annexure: 1

6. RESERVES,

Your Board of Directors, as a prudent policy in the absence specific provisions in the Companies Act 2013 and Rules made there-under, has transferred Rs.45 Lakhs to the General Reserve Account.

7. LIQUIDITY

As at March 31, 2018, your Company had adequate cash and cash equivalents in its Books, taking care of all such current liabilities comfortably.

8. CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year, the nature of the business of your Company - Manufacturing of Electrical Installation Products- has not been changed.

9. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no significant material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2017-18 and the date of this report.

10. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

No orders passed by any Court in India or by any Regulator or by Tribunals affecting the going concern status and Company''s operations in future.

11. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS.

The Company has put in place adequate internal financial controls over financial reporting. These are reviewed periodically and made part of work instructions or processes in the Company. The Company continuously tries to automate these controls to increase its reliability.

The Company has adopted accounting policies which are in line with the Indian Accounting Standards (“IND-AS”) notified under Section 133 of the Companies Act, 2013 read together with the Companies (Indian Accounting Standards) Rules, 2015. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

The Company has identified inherent reporting risks for each major element in the financial statements and put in place controls to mitigate the same. These risks and the mitigation controls are revisited periodically in the light of changes in business, IT systems, regulations and internal policies. Corporate accounts function is involved in designing large process changes as well as validating changes to IT systems that have a bearing on the books of account.

The Company periodically conducts physical verification of inventory, fixed assets and cash on hand and matches them with the books of account and dealt with appropriately. No Discrepancies were found during the year under review.

The Company, in preparing its financial statements makes Judgments, Recognitions, Measurements and Estimates based on requirements under Notified IND AS and uses external agencies to verify/ validate them as and when appropriate. The basis of such Judgments, Recognitions, Measurements and Estimates are also approved by the Audit Committee of the Board of Directors of the Company in consultation with the Statutory Auditors of the Company

The Company has a Code of Conduct applicable to all its employees along with a Whistle Blower Policy which requires employees to update accounting information accurately and in a timely manner The policy is also available at www. salzergroup. net

12. DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES

Your Company does not have any Associate or subsidiary as defined under Sec.2(6) & 2(87) of the Companies Act, 2013, during the year under review.

13. DEPOSITS

During the Financial year under the review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules, 2014. As such there was no deposits as at March 31, 2018.

14. STATUTORY AUDITORS

In terms of Proviso to Section 139 (1) of the Companies Act 2013, M/s. Swamy& Ravi, Chartered Accountants (FRN:004317S) Coimbatore has been appointed as a statutory auditor of the Company for a term five years from 2014-15, subject to ratification by the shareholders at the every general meeting in terms of ordinary resolution passed by the Members at their 29th Annual General Meeting held on August 9, 2014.

In pursuance of above term, necessary resolution ratifying appointment of M/s. Swamy & Ravi, Chartered Accountants, Coimbatore as the statutory auditor for the financial year 2018

19 is being placed before members for their consideration in this Annual General Meeting.

M/s. Swamy& Ravi, declares and confirms in pursuance of Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014 in their letter dated May 02, 2018 that

- The firm does not suffer any disqualification under the Companies Act 2013 and the Chartered Accountants Act, 1949 and the rules or regulations made thereunder;

- There is no such proceedings/litigations against the audit firm or any partner of the audit firm, pending with respect to professional matters of conduct.

- The Firm is holding the appointment within the limits laid down by or under the authority of the Act and

15. AUDITORS’ REPORT

The Independent Audit Report along with the Annexure as prescribed under Companies (Auditors'' Report) Order 2015 as issued by the Auditors'' are appended in this Annual Report, wherein the Auditors have not made any qualification / adverse remarks based on the auditing.

16. EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form No. MGT - 9 forms part of the Board''s report given as Annexure: 2 herewith in compliance with Rule 12(1) of the Companies (Management and Administration) Rules, 2014

17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo given as Annexure: 3 herewith separately.

18. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of the provisions of section 135 of the Companies Act, 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility (“CSR) Committee. The composition and terms of reference of the CSR Committee is provided in the Corporate Governance report, which forms part of this report. Your Company has also in place a CSR Policy and the same is available on your Company''s website www.salzergroup.net / investor

The Company, for the past many years, has been fulfilling the objectives of social nature in the area of education, health and other social causes in and around Periyanaickenpalayam Region, Coimbatore District. The Company primarily through its Trust, has been promoting education, healthcare etc. The Company is at the service of the Society in general for up-liftment of literacy and health care.

Accordingly, the Company was required to spend Rs.43 Lakhs towards CSR activities and against which, spent only Rs.24.60 Lakhs in respect of the activities enshrined in Schedule VII of the Companies Act, 2013 and also in Salzer''s Corporate Social Responsibility Policy. The Annual Report on the CSR Activities has been attached with this report as Annexure:4

19. DIRECTORS:

A) Changes in Directors and Key Managerial Personnel

i) During the year under the review, the following changes took place on the composition of the Board of Directors of your Company.

Mr Otto Eggiman who was appointed as an additional director by the Board of Directors at their Board Meeting held on May 25, 2017 in the capacity of the Independent Director for a term of three years effective May 25, 2017 and whose appointment was approved by the shareholders at their 32nd Annual General Meeting held on September 09, 2017 in terms of Section 160 of the Companies Act 2013

B) Declaration by an Independent Director(s) and re- appointment, if any

All Independent Directors have given declarations 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) Regulation 2015. The Board has optimum composition of the Independent and Non-Independent Directors.

C) Formal Annual Evaluation

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that the Board shall monitor and review the Board evaluation framework. The framework includes the evaluation of directors on various parameters such as: -

- Board dynamics and relationships

- Information flows

- Decision-making.

- Relationship with stakeholders

- Company performance and strategy

- Tracking Board and committees'' effectiveness

Peer evaluation

The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the Corporate governance report.

D) Committees of the Board.

Currently, the Board has six committees: the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, Stakeholders Relationship Committee, the Risk Management Committee, the Employees Compensation Committee. A detailed note on the composition of the Board and its committees is provided in the Corporate governance report section of this Annual Report.

Considering the objectiveness and functions, the Shareholders / Investors Grievances Committee and the Share Transfer Committee have been amalgamated and named as Stakeholders Relationship Committee effective May 26, 2016.

20. LISTING REGULATIONS

Your Company has duly complied with various Regulations as prescribed under SEBI (Listing obligations and Disclosures) Regulations 2015.

21. MEETINGS

The details in respect of the Meeting of the Board of Directors, Audit Committee and all other sub Committee are given in the Corporate Governance Report.

22. VIGIL MECHANISM

A vigil Mechanism has been in place providing opportunity to Directors/Employees

- To access in good faith, to the Audit Committee in case they observe unethical and improper practices or any other wrongful conduct in the Company,

- To prohibit managerial personnel from taking any adverse personnel action against those employees and

- To provide necessary safeguards for protection of employees from reprisals or victimization

This policy applies to all directors and employees of the Company to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy

To report such incidents, practices etc., the concerned Employees / Directors can contact / report to

Office of the Audit Committee (Compliance Officer)

E-Mail : baskarasubramanian@salzergroup.com Contact No. 0422 4233614

Office of the Managing Director

E-Mail : rd@salzergroup.com Contact No.0422-4233612

Office of Joint Managing Director & Chief Financial Officer

E-Mail : rajesh@salzergroup.com Contact No.0422-4233610

23. PREVENTION OF SEXUAL HARASSMENT AT THE WORK PLACE

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, the Committee has not received any such complaint.

24. NOMINATION AND REMUNERATION COMMITTEE

The purpose of the committee is to screen and to review individuals qualified to serve as executive directors, non-executive directors and independent directors, consistent with policies approved by the Board, and to recommend, for approval by the Board, nominees for election at the AGM.

The committee also makes recommendations to the Board on candidates for

(i) nomination for election or re-election by the shareholders; and

(ii) any Board vacancies that are to be filled.

It also reviews and discusses all matters pertaining to candidates and evaluates the candidates. The nomination and remuneration committee coordinates and oversees the annual self-evaluation of the Board and of individual directors.

The nomination and remuneration committee charter and policy are available on our website www.salzergroup.net

25. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year under review,

- During the year, the Company has not granted/taken loans, unsecured, from or to Companies, firms or other parties, listed in the Register maintained under section 189 of the Companies Act, 2013 (‘the Act''), the terms and conditions are not prima facie prejudicial to the interest of the Company during the course of its business and

- The investments in other bodies corporate are well within the limit as prescribed under Section 186 of the Companies 2013

26. SALZER EMPLOYEES STOCK OPTIONS SCHEME 2012-13

The shareholders at their 27th Annual General Meeting held on August 11, 2012 passed necessary resolutions approving “Salzer Employees Stock Option Scheme 2012 -13 for grant of stock options to the eligible employees up to 10% of the paid capital of the Company, as a reward to the employees who are behind the growth of the Company.

Accordingly, the Employees Compensation Committee, constituted by the Board for administration of Stock option Plan, granted 10,28,000 Stock Options, constituting 10% of the paid up capital, to such eligible employees with one year vesting period and five years exercise period on November 19, 2013. The Bombay Stock Exchange in its letter dated May 08, 2014 granted In-principle approval for allotment of 10,28,000 shares which are likely to arise on exercise of stock options . Further, the Company also, on getting listed in NSE Limited, has got the requisite In-Principle approval for the Outstanding Options granted under the Scheme.

The aforesaid Committee, during the year under review, have allotted 148,500 Shares against equivalent amount of vested options exercised by the employees.

The relevant disclosures as required SEBI Guidelines are appended herewith as Annexure :5 The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the Resolution passed by the shareholders dated August 11, 2012. The Certificate would be placed at the Annual General Meeting for inspection by members.

27. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year under review were on an arm''s length basis and were in the ordinary course of business. During the year, the Company had material related party transaction with the related parties with due compliance of the approval accorded by the shareholders under Relevant Regulation.

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 an annual basis for the transactions which are of a foreseen and repetitive nature in compliance with Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

In response to Rule 8(2) of Companies (Accounts) Rules, 2014, particulars of contracts or arrangements with related parties during the year under review given in the Form AOC-2, annexed herewith as Annexure: 6.

28. INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company securities. The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading, is available on our website www.salzergroup.net

29. MANAGERIAL REMUNERATION

A) The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 i.e.

- No employee of the Company throughout the Financial year was in receipt of remuneration for that year which, in the aggregate , for Rupees one Crore and two Lakhs rupees and

- No employee of the Company for a part of the Financial year was in receipt of remuneration for any part of year which, in the aggregate, for Rupees Eight Lakhs and Fifty Thousand per month

B) The Company does not have such director who is in receipt of any commission from the Company and who is a Managing Director or Whole-time Director of the Company receiving any remuneration or commission from any Holding Company or Subsidiary Company of such Company

Details pursuant to section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as Annexure - 7.

30. SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Companies Act, 2013, the Board of Directors of the Company at their meeting held on 11th May, 2017 has appointed Mr G Vasudevan, B.Com, LLB & FCS, a Practicing Company Secretary (Certificate of Practice No. 6522), as the Secretarial Auditor to conduct an audit of the secretarial records, for the financial year 2018-19.

The Company has received consent from aforesaid Secretarial Auditor to act as the auditor for conducting audit of the Secretarial records for the financial year ending 31st March, 2019 in terms of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Audit Report for the financial year ended 31st March, 2018 is set out in the Annexure- 8 to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

31. RISK MANAGEMENT POLICY

Risk management is attempting to identify and then manage threats that could severely impact or bring down the organization. Generally, this involves reviewing operations of the organization, identifying potential threats to the firm and the likelihood of their occurrence, and then taking appropriate actions to address the most likely threats. In order to tackle such risks emanating during the course of business operation, the Board of Directors, constituted Risk Management Committee with an objective of identifying the potential threats that are likely to impact the growth of the organization and evolve suitable measure strategically to mitigate such identified Risks.

32. MANAGEMENT’S DISCUSSION AND ANALYSIS REPORT

In terms of the provisions of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management''s discussion and analysis is set out in this Annual Report as Annexure :9.

33. COST AUDITOR

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Directors, on the recommendation of the Audit Committee, have appointed CMA A.R. Ramasubramania Raja, Practicing Cost and Management Accountant, as the Cost Auditor of the Company for the Financial Year 2018-19, on a remuneration of '' 90,000/-. The remuneration payable to the Cost Auditor is subject to ratification of shareholders at the ensuing Annual General Meeting.

34. POLICIES OF THE COMPANY

The Company is committed to good corporate governance and has consistently maintained its organizational culture as a remarkable confluence of high standards of professionalism and building shareholder equity with principles of fairness, integrity and ethics.

The Board of Directors of the Company have from time to time framed and approved various Policies as required by the Companies Act, 2013 read with the Rules issued thereunder and the Listing Regulations. These Policies and Codes are reviewed by the Board and are updated, if required.

Some of the key policies adopted by the Company are as follows:

i) Policy on Determination of materiality of events/ information

ii) Policy on prevention of sexual harassment at workplace

iii) Code of Conduct for Directors and Employees

iv) Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information

v) Code of Conduct to Regulate, Monitor and Report trading by Insiders

vi) Policy on Related Party Transactions

vii) Whistle Blower Policy

viii) Corporate Social Responsibility Policy

ix) Nomination and Remuneration Policy

x) Risk Management Policy

35. DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act, 2013, your Directors make the following statements:

- that in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- that such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit and loss of the Company for that period;

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

- that the annual financial statements have been prepared on a going concern basis;

- that internal financial controls are being followed by the Company and that such internal financial controls are adequate and were operating effectively.

- that systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively

36. CREDIT RATINGS

Your Company''s Loan facilities from the Banks are being rated by CRISIL and assigned the following rating scales as under:

Total Bank Loan : Facilities Rated

Rs.193.58 Crores (Enhanced from Rs. 156.58 Crores)

Long Term Rating :

CRISIL A-/Positive (Reaffirmed)

Short Term Rating :

CRISIL A1 (Reaffirmed)

37. INDUSTRIAL RELATIONS

During the year under review, industrial relations at the Company''s unit continued to remain cordial and peaceful.

38. CAUTIONARY STATEMENT

Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis, describing the Company''s objectives, projections, estimates and expectations, may constitute ‘forward looking statements'' within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ

39. ACKNOWLEDGEMENTS

Your Directors place on record their deep sense of appreciation and gratitude to the Shareholders, various Government Agencies, Canara Bank, Union Bank of India, ICICI Bank, Citi Bank NA, Axis Bank, HDFC Bank, M/s. Larsen & Toubro Limited - Marketing Associates, CRISIL, M/s. GNSA Infotech Ltd, Share Transfer Agent for their continued support and co-operation. Your Directors also wish to record their appreciation for the dedicated services being rendered by the employees at all levels.

For and on behalf of the Board

Place : Coimbatore N. RANGACHARY

Date : May 24, 2018 CHAIRMAN

Source : Dion Global Solutions Limited
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