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Veto Switchgears and Cables Ltd.

BSE: 539331 | NSE: VETO |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE918N01018 | SECTOR: Electric Equipment

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Annual Report

For Year :
2018 2016 2015

Director’s Report

1. DIRECTOR’S REPORT

Dear Members,

The Directors are pleased to present the 11th Annual Report on the business and operations of the Company, together with the Audited Financial Statements for the financial year ended 31st March, 2018 and other accompanying reports, notes and certificates.

1. Company Performance

Your Company has grown exponentially during the current financial year. The Standalone and Consolidated Audited Financial Results of the Company for year ended 31st March 2018 are as follows.

Financial Results:

Consolidated

Standalone

Particulars

2017-18

2016-17

2017-18

2016-17

Revenue from Operations (including other Income)

25,562.77

24,072.16

12,963.76

12,570.09

Less Expenses :

(a) Cost of materials consumed

(b) Purchases of stock -in-trade

(c) Changes in inventories of finished goods, and stock- in-trade

(d) Employee benefits expense

(e) Finance costs

(f) Depreciation and amortisation expense

(g) Other expenses

5,125.90

14,571.56

(705.90)

901.08

275.64

158.17

1,344.10

4,444.44

14,790.96

(273.28)

1,222.53

412.38

166.44

1.177.38

4,728.51

4,201.08

(1,243.68)

755.32

273.98

148.05

1,124.35

4,444.44

3.691.31

119.17

1,100.57

410.31

166.44

1,110.89

Total expenses

21,670.55

21,940.85

9,987.61

11,043.12

Profit before tax and exceptional items

3,892.22

2,131.31

2,976.15

1,526.97

Less: Exceptional item s

-

-

-

-

Profit before tax

3,892.22

2,131.31

2,976.15

1,526.97

Less: Tax Expense

995.15

298.84

983.07

298.8

Less: Minority interest

-

-

-

-

Profit after tax

2,897.07

1,832.47

1,993.08

1,228.17

Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the official Gazette dated 16th February, 2015, notified the Indian Accounting Standards (IND AS) which has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014. Pursuant to the above said notification, the Indian Accounting Standards (IND AS) is applicable on the Company for the accounting periods beginning on or after 1st April, 2017.

Consolidated Financial Results:-

During the year under review on consolidated basis our Company earned profit before tax and exceptional items of Rs. 3,892.22 Lacs against Rs. 2,131.31 Lacs in the previous year. The Company earned profit after tax of Rs. 2,897.07 Lacs as compare to Rs. 1,832.47 Lacs in the previous year. The Company had Income from operation of Rs. 25,562.77 Lacs as compared to Rs. 24,072.16 Lacs in previous year. The Profit before Interest/Depreciation/Tax (PBDIT) was Rs. 4147.88 Lacs as compared to Rs. 2699.09 Lacs in previous year.

Standalone Financial Results:-

During the year under review on standalone basis our Company earned a profit before tax and exceptional items of Rs. 2976.15 Lacs against Rs. 1526.98 Lacs in the previous year. The Company earned profit after tax of Rs. 1993.08 Lacs as compare to Rs. 1228.19 Lacs in the previous year. The Company had Income from operation of Rs. 12380.07 Lacs as compared to Rs. 12033.93 Lacs in previous year. The Profit before Interest/Depreciation/Tax (PBDIT) was Rs. 3349.13 Lacs as compared to Rs. 2094.11 Lacs in previous year.

Keeping pace with growth trajectory and its efforts to improve efficiency, productivity and profitability the management seeks the trust of shareholders in future growth of the Company and enhancement of shareholders wealth.

Dividend

We are pleased to recommend a final dividend of Rs. 2/- per share having face value of Rs. 10/- each aggregating to 20% of FV. for the financial year ended on 31st March 2018. The final dividend, if approved by the members, will be paid to members within the period stipulated by the applicable Companies Act. The aggregate dividend for the year will amount to 20%, being Rs. 2 per share of 10/- each.

Reserves

Rs. 1993.08 lakhs has been transfer to reserves and surplus account during the current year.

Share Capital

The paid up Equity Share Capital as at 31st March 2018 stood at Rs.18,32,71,000.

However, the company subsequently has allotted 7,87,855 Equity Shares of Rs. 10 each on 23rd May 2018 to employees/directors of the company pursuant to exercise of Stock Options under Employee Stock Option Scheme 2015 (“ESOP SCHEME 2015”).

Consequent to the said allotment, the paid up Equity Share Capital has been increased to Rs. 1,91,14,955 Equity Shares of Rs. 10 each.

Also, through the Extra-ordinary General Meeting (“EGM”) of the Members of the Company held on May 31st, 2017 the company has been authorised to create, offer, issue and allot, by way of a preferential issue, from time to time and in one or more tranches, an aggregate of 45,00,000 (Forty Five Lacs) warrants convertible into equivalent number of equity shares of a face value of Rs. 10/- each of the Company (“Warrants”), at any time within a period of 18 months from the date of allotment of Warrants, at an exercise price of Rs. 170 (including a premium of Rs. 160) per equity share (“Exercise Price”) to the Promoter Group entities of the Company.

Financial Statements

In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ‘Listing Regulations’) and Section 136 of the Companies Act, 2013 read with Rule 10 of the Companies (Accounts) Rules, 2014, the Annual Report containing salient features of the financial statements, including consolidated financial statements, for the financial year 2017-18, along with statement containing salient features of the Directors’ Report (including Integrated Reporting and Management Discussion & Analysis and Corporate Governance Report) is being sent to all shareholders who have not registered their email address(es) for the purpose of receiving documents/ communication from the Company in electronic mode. Please note that you will be entitled to be furnished, free of cost, the full Annual Report 2017-18, upon receipt of written request from you, as a member of the Company.

Full version of the Annual Report 2017-18 containing complete Balance Sheet, Statement of Profit & Loss, other statements and notes thereto, including consolidated financial statements, prepared as per the requirements of Schedule III to the Companies Act, 2013, Directors’ Report (including Integrated Reporting and Management Discussion & Analysis and Corporate Governance Report) is being sent via email to all shareholders who have provided their email address(es).

Full version of Annual Report 2017-18 is also available for inspection at the registered office of the Company during working hours up to the date of ensuing Annual general meeting (AGM). It is also available at the Company’s website at www.vetoswitchgears.com.

Change in the nature of business, if any

There is no change in the nature of business during current financial year.

Material changes if any affecting the financial position of the Company which have occurred between the ends of the financial year of the company to which the financial year relates and the date of the report.

- The company has launched its new Product range ‘VYOMA’ for Modular Switches on Sunday, 6th May 2018 at Jaipur, Rajasthan.

- The company has shut - down the additional factory unit (depot) at Delhi and Ghaziabad and inaugurated new plants at Indore, Allahabad and Bhatinda.

Management Discussion and Analysis

The Management Discussion and Analysis Report of the financial condition and results of operations of the Company for the year under review as required under regulation 34(2) (e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is being given separately and forms part of this Board Report .

Particulars of Loan, Guarantee and Investments

The details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the respective notes to the Standalone Financial Statements of the Company.

Deposits

During the year under review, the Company has neither accepted nor renewed any deposits in terms of Chapter V of the Companies Act, 2013 and Rules framed thereunder.

2. Business Operations/ State of Company’s Affairs

At Veto, we work with the single minded objective of not only improving, but empowering people’s lives with our unique repertoire of products and services, backed by time tested technology and path-breaking R & D methods. With persistent focus on innovation, prompt capitalization of opportunities, building up credibility through strategic thinking, operational expertise, well planned investments and business integrity, we aim to continue our journey unabated. Reaching out with world-wide tie-ups, collaborations and import-export relations, we envision an organization that is truly global in every way - technology, policies and possibilities. Your company has been developing as a distinctive brand of leadership well equipped to address critical challenges faced by industry and society. We look forward to being recognized as one of the major competitors in the global electrical accessory industry.

Veto switchgears and Cables Limited is one of the most respected cable manufacturers in India. Brand Veto is committed to quality, safety and service with no compromise. The Company is an ISO 9001:2008 certified company, engaged in the manufacture and sale of wires & cables and electrical accessories in India.

The brand name VETO is since 1967. VETO holds a major part of electrical accessories in India. The company also has a strong and hardworking team of marketing professionals and dealers and distributors sales of the unit increasing day by day and its production is manifold many times since its inception. We are looking forward to grow further by way of providing “Best Quality at Competitive Prices.”

The product portfolio ranges from industrial cables, stand cables to telephone & co-axial wires, from general switches to modular switches, from ceiling fans to rechargeable fans, compact fluorescent lamps, LED bulbs and other electrical accessories. We are dealing in electrical accessories like switch socket, MCB, bell and all electrical accessories which are used for household purposes and manufacturing wires and cables. Cable starts from 0.75 mm to 10 mm.

Our Company supplies these products under the brands “VETO” and “VIMAL POWER” through large network of dealers to the customers in India as well as selected customers abroad.

VIMAL POWER is a part of the Veto group and continues to reinforce a successful international presence and enhance its enviable reputation for innovation. A continuous programme of research and development ensures a world beating range of cables to satisfy or surpass requirements of Indian Standards.

Recently, the company has launched its new range of Modular Switches by the Brand Name “VYOMA”.

In the year the company has largely benefited from the sale of LED panel Lights, LED Flood Light, Slim Panel Light, LED strip Light.

Its major distribution in India covers more than 10 states including major sale in Rajasthan and Gujarat.

The Group is strongly positioned in high-tech markets and offers the widest range of products, services, technologies and know-how. In the Energy sector, the Group operates in the business of underground and submarine power transmission cables and systems, special cables for applications in a range of industries and building services and also medium and low voltage cables for the construction and infrastructure. In the Telecom sector, the Group manufactures cables and accessories for the voice, video and data transmission and offers a complete range of optical fibres, optical and copper cables and connectivity systems.

Raw Material

Our Company’s present and proposed consumption of Raw material is as under:

(Qty. in kg)

Product category

Existing (2017-18)

Proposed (2018-19)

Copper

289008840

317909724

PVC Resin

31910295

35101325

Aluminium

11752879

12928167

Infrastructure facilities

- Power : Presently, we have 400 KVA of power supply sanctioned by Uttarakhand Power Corporation Limited, of which we utilize approximately 325 KVA of power for our present business operations. In addition, to avoid any disruption in the power supply, our Company has already installed a DG set of 250 KVA capacity. Therefore, we envisage that our further requirement of power for our proposed modernization at our Haridwar facility can be easily met from the present supplies.

- Fuel : Our Company mainly requires HSD for operating the DG sets. The present monthly consumption of HSD is about 1000 litres. The HSD is being supplied by retail outlets of IOC, HPCL and BPCL.

- Water : Water is basically required for drinking and other domestic purpose. Our present requirement at our Haridwar unit is about 5000 litres per day. Our entire water requirement is met fromour own borewell. The water supply is regular and sufficient to meet entire requirements. The proposed modernization at our Haridwar facility will require additional 2000 litres of water per day. There is no difficulty in obtaining this because of the presence of a number of borewell and the water level in the area being high due to proximity to nearby canal and a river, Ganga.

- Manpower : Our Company has adequate manpower at all levels at present and does not envisage any difficulty in getting the requisite personnel for our business operations at existing locations. Following are the details of our manpower:

Category

Nos.

Top management

3

Managerial & Supervisory staff

6

Office staff

68

Skilled workers

55

Unskilled workers

370

Total

502

- Effluent Treatment and Disposal : Our Company does not generate any industrial effluents which is hazardous to the environment. The waste produced during the manufacturing operations is re-used and/ or recycled.

- Environmental Clearance : We have got all the necessary approvals from the local authorities to operate our business.

- Safety standards : Quality and safety are the hallmarks of our diverse range of products, which are designed and manufactured to the very highest standards such as ISO 9001 and approved by the leading approvals organisations nationally and internationally.

- Our Strategy : Further research in process and product engineering to ensure the best manufacturing process for our products in order to enhance competitiveness in the markets is one of our goals. Research and development in electrical accessories and other allied products will better enable a competitive position in the market. Further enhancement of operations by improving the existing assets to yield better output and installation of new assets to enhance and attract new markets are also in the horizon.

- Capacity and capacity utilization

Particulars

Projected

Actual

FY 2017-18

FY 2018-19

FY 2017-18

Wires & Cables

Installed Capacity

20 Lacs Bundles

20.00 Lacs Bundles

20.00 Lacs Bundles

Capacity Utilization (in %)

40%

40%

31.45%

Production

8.00 Lac Bundles

8.00 Lac Bundles

6.29 Lac Bundles

Electrical Accessories

Installed Capacity

600 Lac pieces

600 Lac pieces

600 Lac pieces

Capacity Utilization (in %)

30%

30%

15.57%

Production

180 Lac pieces

200 Lac pieces

126 Lac pieces

- Insurance

Our Company has taken up a range of insurance policies including:

1. Fire policies for our units, buildings and offices, raw materials, work-in-progress and finished goods;

2. Marine policy for transit of raw materials and finished products in India and Marine Export policy;

3. Accidental & Health insurance facility for field staff;

4. Gratuity policy;

These insurance policies are reviewed annually to ensure that the coverage is adequate. All the policies are in existence and the premiums have been paid thereon.

Risks and Concerns:

1. Common Risks: Accidents in the work place, fires, earthquake, tornadoes, and any other natural disasters

2. Legal Risks, fraud, Theft, etc

3. Uncertainties in financial markets

4. Failure in Projects

5. Credit Risks

6. Outstanding Debtors

7. Security and Storage of Data and Records

8. Competitors have market standing out of Rajasthan.

Internal Control System

- The Company has put in place an adequate system of internal control commensurate with its size and nature of business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company and ensuring compliance with corporate policies. The Audit Committee reviews adherence to internal control systems and internal audit reports.

- Company has formed the Risk Management Committee for the assessment and monitoring of the risks involved in the Company.

- Preparation and issue of financial reports to shareholders and the markets, including the Annual Report and consolidated financial statements, is overseen by the Audit Committee. The Company’s financial reporting process is controlled using documented accounting policies and reporting formats, supplemented by detailed instructions and guidance on reporting requirements. The Company’s processes support the integrity and quality of data, including appropriate segregation of duties. The financial information of the parent entity and all subsidiary entities, which form the basis for the preparation of the consolidated financial statements are subject to scrutiny by Group level senior management. The Company’s financial reports, financial guidance, and Annual Report and consolidated financial statements are also reviewed by the Audit Committee of the Board in advance of being presented to the full Board for their review and approval;

- Detailed budgetary process which includes identifying risks and opportunities and which is ultimately approved at Board level;

- Board approved capital expenditure and Audit Committee approved treasury policies which clearly define authorization limits and procedures;

- An internal audit function which reviews key financial/business processes and controls, and which has full and unrestricted access to the Audit Committee;

- Established systems and procedures to identify control and report on key risks. Exposure to these risks is monitored by the Risk Management Committee; and

- A risk management programme in place throughout the Company whereby Risk Management executive reviews and monitors the controls in place, both financial and non financial, to manage the risks facing the business.

Details of Subsidiaries

The Company has two subsidiary Companies. One in Jaipur and the other in Duabi, UAE. On May 29th 2017 Veto Electricals Private Limited has inaugurated its manufacturing plant (100% Export Unit) at Mahindra SEZ, Jaipur and has started commercial Production on July 1st 2017.

Pursuant to provisions of Section 129(3) of the Companies Act, 2013 a statement containing salient features of the Company’s subsidiaries are provided in the Annexure-I to the Board of the Company.

In terms of provisions of Section 136 of the Companies Act, 2013 the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, and are also available on the website of the Company. These documents shall also be available for inspection at the registered office of the Company during business hours up to the date of ensuing AGM. On 22nd November, 2014 Veto Electricals Private Limited became the Wholly Owned Subsidiary Company of the Company. Same has been disclosed in Annexure-I

On 11th October 2015 Veto registered a wholly owned subsidiary in Dubai by the name of “Veto Overseas Private FZ.E. It has earned total revenue of 70,735,181 AED for the year ended 31st March 2018. The Company has declared profit of 6,523,040 AED. It is headed by Mr. Ashish Goklani as its Manager. The copy of the Consolidated audited accounts, together with the independent auditor’s report, is provided in a separate section of this Annual Report.

Performance and Financial position of Subsidiary Company

The details with respect to subsidiary Companies in Form AOC-1 as on March 31, 2018 have been discussed in Annexure II.

3. Human Resource Management Employee Relations

VETO encourages a culture of trust and mutual respect. Employees are aligned on common objectives and take pride in the quality of the products that leave the factory for sale in the markets. We have over the years realized the importance of human capital and duly acknowledge it in its business operations. Your Company has managed to create “Lifers” at VETO- people who have been associated with your Company, many having started their earning life at VETO. It gives the much needed stability and satisfaction when we realize that our partners in success trust us to such an extent that they stand by us at all times.

Their experience, skills, knowledge, ideas and enthusiasm are an invaluable asset. We humbly acknowledge their contributions with competitive compensation and benefits that appropriately reward performance. Pay revisions and other benefits are designed in such a way to compensate good performance of the employees of the Company.

The talent pool of your Company has steadily evolved with changing times with fresh talent being infused to meet demanding situations. The Company has a scalable recruitment and human resource management process which enables us to attract and retain high caliber minds.

Inspired by its commitment to quality and core values of honesty and transparency, your Directors and employees look forward to the future with confidence and stand committed to creating an even brighter future for all stakeholders.

Managerial Remuneration

A) Information as per Rule 5(1) of Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

The Nomination and Remuneration Committee continuously reviews the performance of the Managing Director, Whole Time Director and Other Directors.

1. Remuneration paid to Directors

(in Lacs.)

Name of Director

Title

Remuneration in Year 2017-18

Remuneration in Year 2016-17

% increase in Remuneration in comparison to last year

Ratio of Remuneration to MRE

Mr. Akshay Kumar Gurnani

Managing Director

15,00,000

15,00,000

0.00

5.64

Whole-

Mr. Narain Das Gurnani

Time Director CFO

12,00,000

12,00,000

0.00

4.51

Ms. Jyoti Gurnani

Director

6,00,000

6,00,000

0.00

2.25

1. The remuneration disclosed here is upto 31st March 2018 as per the audited Financial Statements.

2. The Median Remuneration of Employees is Rs. 2,66,136 approx.

3. Median Remuneration is calculated on the basis on annualized salary, MRE - Median Remuneration of employees.

4. No employee received remuneration in excess of the highest paid Director.

5. The median remuneration of employees was Rs. 266131 as on 31st March 2018 and Rs. 2,12,000 as on 31st March, 2017. There was an increase in MRE during the financial year 2017-18 of 24.18%.

6. On 31st March 2018, the total number of permanent employees on the rolls of Company is 502 employees.

7. Average Salary increase of non-managerial employees was 12.78 % and that of managerial employees 22.64 % in financial year 2017-18. There are no exceptional circumstances in increase in managerial remuneration.

8. There has been no change in the remuneration of any other director.

9. Remuneration paid during the year ended 31st March 2018 is as per the Remuneration Policy of the Company.

Particulars of Employees

Your Directors confirmed that no employee fall under the particulars of Section 197 of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

4. Corporate Governance

Corporate Governance Report

Corporate Governance refers to laws, regulations, and acceptable business practices that determine relationships between corporation owners and its managers, on one hand, and its investors, on the other hand. It was born and evolved in response to corporate failures, crises, and misdeeds. In many types of economies, corporate governance concentrates on at least four important factors: Ensuring disclosures of all relevant information to shareholders and creditors; including business risk analyses; Building a system of rules and voluntary practices that will guide the board of directors; Establishing independent audit committees composed of outside directors; Monitoring and controlling management. On the other hand, developing economies, focus on strengthening and improving the legal and regulatory systems that will help ensure better enforcement of contracts and protection of property rights.

Your Company is committed to achieving and maintaining high standards of Corporate Governance and places high emphasis on business ethics. Your Company has set up a Remuneration Committee under Annexure 1-D of SME Equity Listing Agreement, which was later reconstituted under the name ‘Nomination and Remuneration Committee’ pursuant to provisions of Section 174 of The Companies Act, 2013.

A report on corporate governance confirming compliance of conditions as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 has been included in Annexure III of this report. The Company has laid down a well-defined Code of Conduct, which fairly addresses the issues of integrity, conflict of interest and confidentiality and stresses the need of ethical conduct, which is the basis of good Governance. This code is applicable to all members of the Board and the Senior Management Personnel. The declaration regarding compliance with Veto Switchgears and Cables Limited-Code of Conduct and Ethics for all Board Members and Senior Management Personnel of the Company has been included in Annexure VII of this report.

5. Directors and Key Managerial Personnel (KMP)

Change in directors and KMP during the year

On 13th February, 2017 appointed Mr. Kanwarjeet Singh as an Independent (Non Executive) Director.

Sr. No.

Name Of Director

Designation

Date of Appointment

1.

Mr. Akshay Kumar Gurnani

Executive Managing Director and CEO

27/08/2014

2.

Mr. Narain Das Gurnani

Whole -Time Director and CFO

28/09/2016

3.

Ms. Jyoti Gurnani

Director

27/08/2014

4.

Mr. Mohan Sukhani

Non -exe cutive Independent Director

31/08/2012

5.

Mr. Govind Ram Thawani

Non -executive Independent Director

31/08/2012

6.

Mr. Kanwarjeet Singh

Non -executive Independent Director

06/ 08/ 2017

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, that of its Committees and individual Directors. Relevant details have been provided in the Corporate Governance Report.

Remuneration Policy

I. For Labours:

For fixing the Remuneration for the Labours Minimum Wages Act, 1948 is applicable. Remuneration is payable on Hours basis.

II. For Office Staff:

The Committee will recommend the remuneration to be paid to the Managing Director, Whole-time Director, KMP and Senior Management of the quantity required to run the Company successfully. The relationship of remuneration to performance should be clear and meet appropriate performance benchmarks. Minimum 5% increment to the Management of the Company may provide excess of remuneration on the basis of outstanding performance of employee only, if the Company is not satisfied with the performance of the Employee than they can restrict the increment. The remuneration should also involve a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

a. Managing Director

The remuneration and commission to be paid to the Managing Director shall be in accordance with the provisions of the Companies Act, 2013, and the rules made thereunder. Increments to the existing remuneration/ compensation structure may be recommended by the Committee to the Board which should be within the limits approved by the Shareholders.

b. Directors

The remuneration/compensation/commission etc. to Directors will be determined by the Committee and recommend to the Board for approval.

c. Non executive Independent Directors

The Non Executive Independent Director may receive remuneration by way of Sitting Fees for attending meetings of the Board thereof. Provided that the amount of such fees shall be subject to ceiling/limits as provided under Companies Act, 2013 and rules made thereunder or any other enactment for the time being in force.

d. KMPs/ Senior Management Personnel

The Remuneration to be paid to KMPs/Senior Management Personnel shall be based on the experience, qualification and expertise of the related personnel and governed by the limits, if any prescribed under the Companies Act, 2013 and rules made thereunder or any other enactment for the time being in force.

e. Directors’ and Officers’ Insurance

Where any insurance is taken by the Company on behalf of its Directors, KMPs/Senior Management Personnel etc. for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel.

This Policy is updated based on the provisions of the Companies Act, 2013 and rules made thereunder and requirements of the relevant rules and regulations issued by SEBI from time to time.

In case of any subsequent changes in the provisions of the Companies Act, 2013 or any other regulations which makes any of the provisions in the policy inconsistent with the Act or regulations, then the provisions of the Act or regulations would prevail over the policy and the provisions in the policy would be modified in due course to make it consistent with Law.

This Policy shall be reviewed by the Nomination and Remuneration Committee as and when any changes are to be incorporated in the policy due to change in regulations or as may be felt appropriate by the Committee. Any changes or modification on the policy as recommended by the Committee would be given for approval of the Board of Directors.

No. of meetings of the Board

Six (6) Board meeting were held during the year 2017-2018 and the gap between two meetings did not exceed four months. The dates on which the Board Meeting was held are as follows:

Detail of Board Meetings held:

Sr. No.

Date of Board Meeting

1.

06th May 2017

2.

30th May 2017

3.

6th September 2017

4.

14th September 2017

5.

14th December 2017

6.

12th February 2018

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

All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The terms & conditions for the appointment of Independent Directors are given on the website of the Company and separately disclosed in the Corporate Governance Report. http://www.vetoswitchgears.com/investor/corporate-governance/indpedndent-drectors.

6. Committees of Board

There are currently four Committee of the Board which is as follows:

a) Audit Committee;

b) Nomination, Remuneration & Compensation Committee

c) Corporate Social Responsibility (CSR) Committee;

d) Stakeholders’ Relationship Committee

Details of all the Committees along with their composition, charters Duties, Responsibilities and activities and meetings held during the year, are provided in the “Report on Corporate Governance”, a part of this Annual Report.

Name of Committee

Composition of Committee

Audit Committee

1. Mr. Govind Ram Thawani - Chairman

2. Mr. Mohan Sukhani

3. Mr. Narain Das Gurnani

Nomination and Remuneration Committee1

1. Mr. Govind Ram Thawani - Chairman

2. Mr. Kanwarjeet Singh

3. Mr. Mohan Sukhani

Shareholders’/Investors’ Grievance Committee

1. Mr. Govind Ram Thawani - Chairman

2. Mr. Narain Das Gurnani

3. Mr. Mohan Sukhani

Corporate Social Responsibility Committee

1. Mr. Govind Ram Thawani - Chairman

2. Mr. Mohan Sukhani

3. Mr. Narain Das Gurnani

7. Risk Management

The Company has framed and implemented a Risk Management Policy to identify the various business risks. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company’s competitive advantage. The risk management policy defines the risk management approach across the enterprise at various levels including documentation and reporting.

8. Directors Responsibility Statement

The Board of Directors acknowledge the responsibility for ensuring compliances with the provisions of Section 134(3) (c) read with Section 134(5) of the Companies Act, 2013 in preparation of annual accounts for the year ended 31st March 2018 and state that :

(a) in the preparation of the annual accounts for the financial year ended 31st March 2018, the applicable accounting standards have 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 prudent so as to give a true and fair view of the state of affairs of the as at 31st March 2018 and profit of the Company for that period;

(c) the Directors have taken proper and sufficient care 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;

(d) the annual accounts have been prepared on a going concern basis;

(e) proper internal financial controls have been laid down which are adequate and are operating effectively.

(f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

9. Related Party Transactions

All transactions entered with Related Parties for the year under review were on arm’s length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. Further, there are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. The Company has developed a framework through Standard Operating Procedures for the purpose of identification and monitoring of such Related Party Transactions.

All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained on a yearly basis for transactions which are of repetitive nature. Transactions entered into pursuant to omnibus approval are audited and a statement giving details of all Related Party Transactions are placed before the Audit Committee and the Board for review and approval.

The Company has put in place a mechanism for certifying the Related Party Transactions Statements placed before the Audit Committee and the Board of Directors from an Independent Chartered Accountant. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company viz. www.vetoswitchgears.com. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company. Pursuant to the provision of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has framed a Policy on Material Subsidiaries and the same is available on Company’s website http://www.vetoswitchgears.com/investor/corporate-governance/policies-and-related-documents under the head Policy on Material Subsidiary.

However, you may refer to Related Party transactions in the relevant notes of the Standalone Financial Statements.

10. Listing of Shares

The shares of the Company are listed at BSE Limited & National Stock Exchange of India Ltd. and the listing fee for the year 2017-18 has been duly paid.

11. Prevention of Insider Trading

In compliance with the provisions of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Board has adopted a code of conduct and code of practices and procedures for fair disclosure of unpublished price sensitive information to preserve the confidentiality of price sensitive information prevent misuse thereof and regulate the trading by Insiders. The code of practice and procedures for fair disclosure unpublished price sensitive information is also available on the Company’s website i.e. www.vetoswitchgears.com.

12. Auditors and Auditor’s Report Statutory Auditors

The company as appointed M/s. K. M. Tulsian & Associates (Firm Registration No. 111075W), as the Statutory Auditor(s) of the Company for a period of 5 years commencing from the conclusion of the 10th Annual General Meeting till the conclusion of 15th Annual General Meeting to be held in the year 2022 .

Our comments on financial statements referred to in the Auditor’s Reports under Section 145 of the Companies Act, 2013 are given below:

a) With regard to the Emphasis of Matter appearing in the Auditor’s Report, your attention is drawn to the notes forming part of financial statements of the year which are self explanatory.

b) With respect to the comments of the Auditors in their report on the Consolidated Audit Report, our responses are given in the Notes to the Financial Statements, which is self-explanatory.

Cost Auditors

Pursuant to the provisions of Section 148 of The Companies Act, 2013 the company is required to conduct cost audit as per Companies (Cost Record & Audit ) Rules, 2014 applicable from 1st April 2015.

The Board of Directors, on the recommendation of Audit Committee, has appointed M/s Rajesh & Company & Co., Cost Accountants, (Firm Registration Number No. 000031) as Cost Auditor to audit the cost accounts of the Company for the financial year 2018-19. As required under the Companies Act, 2013, a resolution seeking member’s approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.

Secretarial Audit Report

The Board has appointed Ms. Nisha Agarwal Practicing Company Secretary, to conduct Secretarial Audit for the Financial Year 2017-18. The Secretarial Audit Report for the Financial Year ended 31st March 2018 is annexed herewith marked as Annexure V to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Corporate Governance Certificate

The Company is promptly submitting a “Quarterly Compliance Report on Corporate Governance” as per SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges.

The certificate from the Practicing Company secretary, Ms. Nisha Agarwal, C.P No. 8584, confirming compliance of conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 has been included in Annexures of this report.

Reservation and Qualification on Auditor Report

The report doesn’t contain any reservation, qualification or adverse remark. Information referred in Auditor’s Report are self-explanatory and don’t call for any further comments.

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

There are no significant and material orders that are passed by the regulators or courts or tribunal impacting the going concern status and Company’s operations in future.

However an appeal is pending with the Sales Tax Department, Gujarat regarding assessment order issued and the details have been provided in the Independent Auditors Report.

13. Extract of Annual Return

The details with respect to extract of Annual Return is available at Company’s website: http://www.vetoswitchgears.com/investor- zone/category/financial-information/reports/ .

14. Details in respect of adequacy of internal financial controls with reference to the financial statements

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness is observed.

15. Depository System

Our Company’s Equity Shares are available in dematerialized form through The National Securities Depository Limited (NSDL) and The Central Depository Services of India (India) Limited (CDSL). The Company has set up requisite facilities for dematerialization of its Equity Shares in accordance with the provisions of Depository Act, 1996 with National Securities Depository Limited and Central Depository Services (India) Limited. The Company has entered into agreements with both of the Depositories. Accordingly, all shares post IPO, of the Company is held in demat form.

16. Report under the Prevention of Sexual Harassment Act

As a good corporate citizen, Veto is committed to a gender friendly workplace. It seeks to enhance equal opportunities for men and women, prevent/stop/redress sexual harassment at the workplace and institute good employment practices. Veto has established suitable processes and mechanisms to ensure issues such as sexual harassment, if any, are effectively addressed. Maintaining an open door for repartees, Veto encourages employees to report any harassment concerns and is responsive to complaints about harassment or any other unwelcome and offensive conduct. An Internal Complaints Committee has been constituted to enquire into complaints and recommend appropriate action, wherever required. Veto demands, demonstrates and promotes professional behavior and respectful treatment of all employees. During the year, no complaints of sexual harassment were received.

17. Conservation of energy, technology absorption and foreign earning and outgo

Disclosure pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014.

(A) CONSERVATION OF ENERGY

(i) Steps taken or impact on conservation of energy and the steps taken by the company for utilizing alternate sources of energy; Energy conservation measures taken Company has taken several steps to conserve energy through its “Sustainability” initiatives. The Company continues its endeavor to improve energy conservation and utilization. The Company has always been conscious of the need for conservation of energy and has been sensitive in making progress towards this end. Energy conservation measures have been implemented at all the plants and offices of the Company and special efforts are being put on undertaking specific energy conservation projects like :

1. Lighting: Efforts have been put by Company to reduce or optimize the lighting requirements at all the plants. Replacement of Conventional Light fittings with LED light fixtures, leading to savings in power at office areas. d) Installation of CFL, LED indicators, Use of 54Wx4 T5 lamps for assembly area.

2. Replacement of old equipment with new/ energy efficient equipment.

3. Optimization of Electrical Equipment: In addition to the existing controls on prime production equipment and existing prime utilities equipment, electrical equipment modifications / additions being done are continuous monitoring of Power factor of plant on daily basis, and redesign of pay off fixtures in cable division to reduce energy consumption by 30%.

4. Company believes in sharing and implementing best practices across all plants & stage wise replacement of conventional light fittings to LED light fittings is under progress across the manufacturing units. Impact of measures reduction of energy consumption.

The above measures have resulted in optimizing energy consumption and savings cost of production, reduction on carbon emissions and processing time.

Capital investment on energy conservation equipments - Efforts have been put by Company to reduce or optimize the energy requirements at all the plants. Company encourages capital investment in energy-saving equipment’s, plants or machinery and has invested a significant amount on the same.

(B) ENVIRONMENT, HEALTH AND SAFETY

VETO is committed to caring for people and the planet by integrating environmental and safety principles in all aspects of its business are it from procurement, material-use, manufacturing of sustainable products, creating awareness through marketing, and innovation/R&D for better products and processes. We constantly monitor and better our environmental and occupational health and safety performance through our internal risk management exercise. At the compliance level, your Company conforms to all applicable regulatory Environmental Health & Safety (EHS) requirements wherever it operates.

Our Company is sensitive to environmental and resource conservation and its manufacturing philosophies ensure safety of the worker and surroundings.

Being in a non-polluting category of business, it has minimal impact on the environment but has a huge positive impact on the local community. RoHS or ‘Restriction of Hazardous Substances’ compliance in all its products like CFLs, cables, PCBs, etc. ensures safety across the product life cycle. Our Company strongly believes and promotes energy conservation not only through its products but also within the premises. Energy conservation measures have been adopted at all the plants.

Our Company follows best practices for health and safety. Employees and workers are regularly trained by industry experts on issues of occupational and industrial health & safety, first-aid and environment management. Healthy lifestyle and well-being are also promoted as a culture at VETO. Our Company also provides life insurance cover, personal accident cover and robust medical & health policies to all field staff against any unfortunate incident. VETO India strongly believes in maintaining a work-life balance and therefore follows strict in-and-out work-timings. This has gone a long way in maintaining a healthy, happy and motivated workforce.

(C) TECHNOLOGY ABSORPTION

The Company is putting continuous efforts in acquisition, development, assimilation and utilization of technological knowledge through its wide advance engineering project portfolio. This has enabled the Company to keep abreast with the latest developments in product technology, manufacturing process and methods, quality assurance and improvement, marketing, management systems and benefit out of mutual experience. To develop our product pipeline, we commit substantial time, efforts, funds and other resources for R&D. Our processes and products currently under development, if and when fully developed and tested, may not perform as we expect and we may not be able to successfully and profitably produce and utilize such products or processes. Therefore, our investments in R&D and new product launches could result in higher costs without a proportionate increase in revenues.

Company is carrying out the following activities to fulfill short term and long term business goals:

- Upgradation of existing product and processes to save cycle time, energy consumption and overall operational efficiency.

- Import substitution and identification of new raw materials for development.

- Technology support to all plants to improve efficiency and enable business growth.

- Optimization of products and processes to minimize waste generation and address environmental and safety concerns.

- Development of smart test methods to speed up testing of incoming raw materials.

- Development of in house domain expertise to support product development.

- Focus on in house product development in the area of smart internet base solution etc.

- The benefits derived like product improvement, cost reduction, product development or import substitution:

(D) Detail of Foreign Exchange Earnings and Outgo.

During the financial year Company’s Foreign exchange earned in terms of actual inflows year was 1,64,09,976 INR and the Foreign Exchange outgo in terms of actual outflows (including machinery imported) was 21,73,177 INR. Hence net foreign exchange inflow is 14236799.374 INR. The information on foreign exchange and outgo is furnished in the relevant notes to the accounts of Standalone Financial results

18. Credit Rating

Your Company has been reaffirmed long-term rating of BBB (ICRA triple B plus) by ICRA Limited. The outlook of long term rating is “Stable”.

19. Employee Stock Options under ESOP 2015

The Company had, vide special resolution passed in the Annual General Meeting held on 26th August, 2015 has approved the company’s ESOP Scheme 2015. The purchase price of the options was approved on 23.05.2016 under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the company. Further, Pursuant to the exercise of stock options under Employee Stock Option Scheme 2015 (“ESOP Scheme 2015”). In accordance with the terms and conditions of the plan the company has granted 916355 stock options on 23.05.2016 and Vested on 23.05.2017 in single tranche. The said options were exercisable within a period of 1 to 3 years from the date of vesting and settled by way of issue of equity shares. The details of the same are as under:

Vesting period

1 to 3 years

Exercise period

3 Years from the date of Vesting of Options

Pricing Formula

Each option carries the right to the holder for one equity share

of the company at Rs. 50

Brief details of option granted

- The above options have vesting period of 1 to 3 years.

- The options shall be exercisable within a period of 3 years after vesting of the same.

- The options carry the right to apply for equivalent number of equity shares of the Company.

Employee wise details of options granted to

i) senior managerial personnel

ii) identified employees who were granted

- Jyoti Gurnani

- Akshay Gurnani

900

6,69,855

option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of

grant

Acknowledgment

We thank our customers, vendors, investors and bankers for their intense support throughout the year. We place on record our appreciation of the contribution made by our employees at all levels. We thank the Government of India, particularly the Ministry of Commerce, Ministry of Finance, Ministry of Corporate Affairs, the Custom and Excise Departments, Income Tax Department, the Reserve Bank of India, the State Governments and other government agencies for their support, and look forward to their continued support in the future.

For and on behalf of the Board of Directors

Date : 07/09/2018 Sd/- Sd/-

Place : Jaipur Akshay Kumar Gurnani Narain Das Gurnani

Managing Director & CEO Whole-time Director & CTO

DIN: 06888193 DIN: 01970599

Director’s Report