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Shankara Building Products Ltd.

BSE: 540425 | NSE: SHANKARA |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE274V01019 | SECTOR: Miscellaneous

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Annual Report

For Year :
2019 2018 2017

Director’s Report

Dear Members,

The Directors have pleasure in presenting the Twenty Fourth Annual Report on the business and operations of your Company together with the Standalone and Consolidated Audited Financial Statements for the year ended March 31st, 201 9.

1. Results of our operations (Rs. Crores, except as stated)

Particulars

Consolidated

Standalone

Year Ended March 31, 2019

Year Ended March 31, 2018

Year Ended March 31, 2019

Year Ended March 31, 2018

Revenue from Operations

2,654.10

2,548.67

2,352.37

2,247.98

Other Income

4.43

0.64

3.93

0.64

Total Income

2,658.53

2,549.31

2,356.30

2,248.62

Other Expenditure

2,534.69

2,373.48

2,287.52

2,157.03

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

123.85

175.83

68.78

91.59

Depreciation and Amortization Expenses

18.62

13.59

9.02

4.98

Finance Cost

56.70

46.35

35.20

27.45

Profit before Tax (PBT)

48.53

115.90

24.56

59.17

Tax expense:

Current Year

12.84

38.15

7.47

21.54

Earlier Year

(0.73)

1.10

(0.60)

(0.27)

Deferred Tax

3.68

2.84

1.26

(0.36)

Profit After Tax (PAT)

32.74

73.80

16.43

38.25

Add: Other Comprehensive Income

(0.35)

0.10

(0.39)

0.04

Total Comprehensive Income

32.40

73.91

16.04

38.29

EARNING PER EQUITY SHARE (Face Value of Rs.10 each)

i) Basic

ii) Diluted

14.33

14.33

32.30

32.30

7.19

7.19

16.74

16.74

The Company recorded consolidated revenues of ^2,654.10 crores for the year ended 31st March, 2019 representing a growth of 4% over the previous year. The Company recorded a consolidated EBITDA of Rs.123.85 crores and the EBITDA margins stood at 4.7%. We reported a PAT of Rs.32.74 crores.

Our standalone revenues increased by 4.6% and stood at ^2,352.37 crores for the year ended 31st March, 2019. The standalone PAT stood at Rs.1 6.43 crores.

The first half of the previous financial year was very robust. However, the Company faced several headwinds in the second half including weak operating environment, natural calamities in South India and commodity price volatility. These impacted the performance of the Company for the year ended 31st March, 2019.

2. Dividend

The Board subject to the approval of the members of the Company at the ensuing Annual General Meeting, recommends a dividend of Rs.1.50 per fully paid up equity share of Rs.10 each of the Company for the year ended 31st March, 2019 as against Rs.3.25 per share for the previous year.

3. Key consolidated balance sheet information

In compliance with the applicable provisions of the Companies Act, 2013 (Act) and regulations of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) the Company has prepared consolidated financial statements and as per the applicable Accounting Standards issued by the Institute of Chartered Accountant of India.

The Audited Consolidated Financial Statements along with the Auditors'' Report have been annexed to the Annual Report.

4. Capital Expenditure on tangible assets

This year, on a standalone basis, we undertook a capital expenditure of Rs.32.55 Crores (Net) as against Rs.15.14 Crores (Net) in the previous year. On a consolidated basis, our capital expenditure stood at Rs.40.31 Crores (Net) for FY 2019 as against Rs.40.33 Crores (Net) for the previous year.

5. Particulars of loans, guarantees or investments

Loans, guarantees and investments covered under Section 1 86 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.

6. Transfers to reserves

The Company transferred Rs. Nil from the Profit of the year towards reserve.

7. Nature of Business

There has been no change in the nature of business of the Company.

8. Particulars of contracts or arrangements made with related parties

During the financial year ended 31st March, 2019, all the contracts or arrangements or transactions entered into by the Company with the related parties were in the ordinary course of business and on arm''s length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR), 2015.

Further, the Company has not entered into any contract or arrangement or transaction with the related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. In view of the above, disclosure in FORM AOC-2 is not applicable.

Transactions with related parties, as per requirements of Indian Accounting Standard 24 are disclosed in the notes to accounts annexed to the financial statements. Your Company''s Policy on Related Party Transactions, as adopted by your Board, can be accessed on the Company''s website i.e www.shankarabuildpro.com.

9. Subsidiary Companies:

Shankara Building Products Limited has the following subsidiary companies

(i) Taurus Value Steel & Pipes Pvt. Ltd. - Having a tube & galvanized strip processing facility at Hyderabad.

(ii) Vishal Precision Steel Tubes & Strips Pvt. Ltd. Having a tube & cold rolled strip processing facility at Bengaluru.

(iii) Steel Network Holdings Pte. Ltd. - Wholly owned subsidiary, registered at Singapore, having an Indian colour coated roofing profiling subsidiary Centurywells Roofing India Pvt. Ltd.

(iv) Centurywells Roofing India Pvt. Ltd -Step-down, wholly owned subsidiary held through Steel Network Holdings Pte Limited primarily engaged in providing colour coated roofing products. It has processing facilities in Chennai, Bangalore, Coimbatore, Pune, Vijayawada and Hubli.

No new subsidiary was added and no company has ceased to be a Shankara Building Products Limited subsidiary during FY 201 8-19

The details in Form AOC-1 for each subsidiary is as per Annexure- I

10. Information Technology

We have implemented a company-wide ERP system. This system is used to manage and co-ordinate all resources, information and functions of the business on a real-time basis. The ERP system helps in integration of different functional areas to ensure proper communication, productivity, quality and efficiency in decision making. It further helps in tracking customer demands and assisting in maintaining optimum inventory levels. We have a dedicated IT team which is involved in maintaining the ERP system.

11. Human Resource

As of March 31, 2019 we have 1,61 7 employees on the payroll of our Company and Subsidiaries. The following table sets forth the break-up as of March 31, 2019:

Sr. No

Departments

No. of Employees

1.

Sales and marketing

533

2.

Finance, Accounts and Administration

434

3.

Operations

441

4.

Supply Chain

229

Total

1,617

In addition to the employees listed above, we also engage contract labour to facilitate our processing operations. As of March 31, 2019, we engaged 462 contract workers. Our Company is in compliance with the Contract Labour (Regulation and Abolition) Act, 1970, and the rules prescribed thereunder in this regard.

12. Directors'' Responsibility Statement

To the best of knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) and 1 34(5) of the Act, that:

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

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

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

iv. they have prepared the annual accounts on a going concern basis;

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

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

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company''s internal financial controls were adequate and effective during FY.201 8-19.

13. Directors & key managerial personnel

A. Composition and size of the Board:

The Board has an optimum combination of executive, non-executive and independent directors. The total strength of the Board as on the date of reporting is seven Directors, of which four are Independent Directors.

B. Director retiring by rotation:

Mr. C. Ravikumar (DIN : 01247347), is liable to retire by rotation in terms of provisions of the Act at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

As stipulated under Regulation 36(3) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 brief resume of the director proposed to be re-appointed is given in the Notice of the Annual General Meeting.

The Board of Directors at its meeting held on 14th August, 2018 has approved the appointment of Mr. B. Jayaraman as Independent Director of the Company for a period of five years subject to the approval of the shareholders at the ensuing Annual General Meeting.

On the recommendation of Nomination and Remuneration Committee, the Board of Directors at its meeting held on 9th May, 2019 has approved the re-appointment of Mr. V. Ravichandar as Independent Director of the Company for a period of five years subject to the approval of the shareholders at the ensuing Annual General Meeting.

Pursuant to the provisions of section 149 of the Act, Mr. V. Ravichandar, Mr. Chandu Nair, Ms. Jayashri Murali and Mr. B. Jayaraman were appointed as Independent Directors of the Company.

All Independent Directors of the Company have given declarations to the Company under Section 149(7) of the Act that, they meet the criteria of independence as provided in Sub-Section 6 of Section 149 of the Act and also under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations)

Pursuant to the provisions of section 203 of the Act, the key managerial personnel of the Company are Mr. Sukumar Srinivas, Managing Director, Mr. Siddhartha Mundra, Chief Executive Officer, Mr. Alex Varghese, Chief Financial Officer and Ms. Ereena Vikram, Company Secretary.

14.Number of meetings of the Board

During the year, 4 meetings of the Board of Directors were held and one meeting of Independent Directors was also held. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report.

15. Policy on directors'' appointment and remuneration and other details

The Nomination and Remuneration Policy of the Company for appointment and remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company along with other related matters have been provided in Corporate Governance Report.

The Company has formulated and adopted a Nomination and Remuneration policy which is disclosed on our website at i.e., www.shankarabuildpro.com

A Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in Annexure-ll forming part of this report.

16. Internal financial control systems and their adequacy

The Company has in place adequate internal financial controls with reference to financial statements and no material reportable weakness was observed in the system during the year. The details in respect of internal financial control and their adequacy are included in the management discussion & analysis, which forms part of this report.

The Board has reappointed M/s GRSM & Associates, Chartered Accountants as Internal Auditor in the Board Meeting held on May 9, 2019.

17. Audit committee

The details pertaining to composition of the Audit Committee and terms of reference are included in the Corporate Governance Report, which forms part of this report.

18. Auditors

(i) Statutory Auditor: M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai (Firm Registration No.004207S), were appointed as statutory auditors of the Company to hold office from the conclusion of this Annual General Meeting til I the conclusion of 29th Annual General Meeting to be held during calendar year 2024. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Statutory Auditors of the Company.

Accordingly consent of the members is being sought for their appointment as the statutory auditors of the Company.

(ii) Secretarial Auditor: Mr. K. Jayachandran, Practicing Company Secretary (ACS No. 11309 and Certificate of Practice No. 4031) was appointed as the Secretarial Auditor of the Company to conduct Secretarial Audit of the Company for the Financial Year 2018-19 as required under Section 204 of the Companies Act, 2013 and the Rules made there under. The Secretarial Audit Report for FY 2018-19 is appended as Annexure - III to the Directors'' Report.

Pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report. The Annual Secretarial Compliance Report for FY 201 8-19 signed by Mr. K. Jayachandran, Practicing Company Secretary is appended as Annexure- IV to the Directors'' Report

19. Reporting of frauds

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and/ or Board under Section 143 (12) of the Act and Rules framed thereunder.

20. Unclaimed Dividend of the previous years

Section 124 of the Companies Act 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules 2016 (''the Rules'') mandates the Companies to transfer dividend that has remained unpaid/unclaimed for a period of seven years in the unpaid dividend account to the Investor Education and Protection Fund (I EPF).

The details of the unpaid/ unclaimed dividend lying with the Company are available on the website of the Company i.e., www.shankarabuildpro.com.

21. Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made

(i) Statutory Auditor''s report

The Auditors Report to the Shareholders for the year under review does not contain any reservation, qualification, or adverse remark. The comments in the Auditors'' Report to the shareholders for the year under review to the shareholders for the year under review are self-explanatory and does not need further explanation.

(ii) Secretarial Auditor''s Report

There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor in his report.

22. Risk Management

In terms of regulation 179(b) of the Listing Regulations, the Board of Directors adopted a Risk Management Policy. The main objective of Risk Management Policy is to enable long term sustainable growth by creating a robust risk management framework involving identification, evaluation & management of risks by partnering with businesses and its associate functions.

The details of Risk Management are provided as a part of Management''s Discussion and Analysis which forms part of this report.

23. Corporate social responsibility

The Company has implemented various CSR projects directly and/or through implementing partners and the projects undertaken by the Company are in accordance with Schedule VII of the Act.

The brief outline of the corporate social responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure - V of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Reasons for not spending the amount earmarked for CSR Activities:

A sum of Rs.8.81 lakhs has remained unspent since some of the projects undertaken by the Company are multiyear in nature and therefore, further expenditure would be done in stages / ensuing years.

For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of this report. The policy is available on the website of the Company www.shankarabuildpro.com.

24. Board Evaluation

The Companies Act and Listing Regulations relating to Corporate Governance contain provisions on evaluation of the performance of the Board and its Committees as a whole and Directors including Independent Directors, Non-Independent Directors and Chairperson individually. In pursuant thereof, Annual Evaluation of performance of the Board, working of its Committees, contribution and impact of individual directors has been carried out through a questionnaire for peer evaluation on various parameters.

25. Dividend Distribution Policy

As required under the Regulation 43A of the Listing Regulations, the Company has a Policy on Dividend Distribution. This Policy can be accessed on the Company''s website at www.shankarabuildpro.com

26. Extract of annual return

As per the provisions of Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended from time to time, the extract of the Annual Return in the Form MGT-9 is given in Annexure - VI forming part of this report.

27. Corporate Governance

As required under Regulation 34(3) of the Listing Regulations read with Schedule V (c) of the Listing Regulations, a report on Corporate Governance and the certificate as required under schedule V (e) of the Listing Regulations from Mr. K. Jayachandran, Practicing Company Secretary, regarding compliance of conditions of Corporate Governance are given in Annexure - VII & Annexure - VIII forming part of this report.

28. Management Discussion and Analysis Report

In terms of regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report on your Company''s performance, industry trends and other material changes with respect to your Company and its subsidiaries, wherever applicable, are forming part of this report.

29. Particulars of employees

The details of remuneration to Employees, as required under Rule 5(2) read with Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended are given in Annexure-IX and form part of this Report.

30. Disclosure requirements

As per SEBI Listing Regulations, Corporate Governance Report with Auditors'' Certificate thereon and Management Discussion and Analysis are attached, which form part of this report.

31. Deposits from public

The Company has not accepted any deposits covered under Chapter V of Companies Act, 2013 and also any other deposit which is not in compliance with the requirements of Chapter V of the Companies Act, 2013.

32. Conservation of energy, technology absorption, foreign exchange earnings and outgo

Conservation of energy:

The particulars as prescribed under Section 134 of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are enclosed in the Annexure X to the Directors'' report.

Technology absorption, adaptation and innovation:

The Company continues to use the latest technologies for improving the productivity and quality of its services and products. The Company''s operations do not require significant import of technology.

Foreign Exchange earnings and outgo

There was no Foreign Exchange inflow and outflow during the year.

33. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, your Company has framed a Policy on prevention, prohibition and redressal of sexual harassment at workplace and constituted Internal Complaints Committee having designated members to redress complaints regarding sexual harassment. During the year under review, no complaint of sexual harassment has been reported.

34. The 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 significant or material orders have been passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

35. Other disclosures

(i) Details of equity shares with differential rights

The Company has not issued any equity shares with differential rights during the year.

(ii) Details of sweat equity shares issued

The Company has not issued any sweat equity shares during the year.

(iii) Buy Back of Securities

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

(iv) Bonus Shares

No Bonus Shares were issued during the year under review.

36. Whistle Blower Policy

The Company in compliance with Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations has established a Whistle Blower policy / Vigil Mechanism for the Directors and Employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the company''s Code of Conduct or Ethics Policy. The Company has a vigil mechanism process wherein the employees are free to report violations of laws, rules, regulations or unethical conduct.

The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice. The whistle blower policy of the Company is disclosed on our website i.e., www.shankarabuildpro.com

Acknowledgement

Your Directors place on record their sincere appreciation for the significant contribution made and services rendered by employees of the Company with dedication and commitment at all levels which has been critical for the Company''s success.

Your Directors take this opportunity to thank Clients, Bankers, Vendors, Shareholders and Investors at large for their valuable co-operation and continued support.

The directors appreciate and value the contributions made by every member of the Shankara family.

For and on behalf of the Board of Directors

Sd/- Sd/-

Sukumar Srinivas C. Ravikumar

Date: Bengaluru Managing Director Whole-time Director

Place: May 9th, 2019 DIN: 01668064 DIN: 01247347

Director’s Report