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Stovec Industries Ltd.

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Directors Report

Market Cap.(`) 514.70 Cr. P/BV 5.72 Book Value (`) 430.62
Bookclosure 11/05/2017 FV/ML 10/1 P/E(X) 20.63
EPS (`) 119.47 Div Yield (%) 1.26
You can view full text of the latest Director's Report for the company.
Year End :2015-12 

our Directors are pleased to present the 42nd Annual Report and the Audited Financial Statement of the
Company for the year ended December 31, 2015.

 

  1. FINANCIAL RESULTS

 

Particulars Current Year Previous Year

31.12.2015 31.12.2014

(' in Millions) (' in Millions)

Revenue from Operations 1,567.02 949.09

Other Income 35.55 31.40

  1. Total Income: 1,602.57 980.49

  2. Total Expenditure: 1,240.34 789.19

Gross Profit before Depreciation

and Amortisation expenses 362.23 191.30

Less: Depreciation & Amortization expenses 51.57 26.15

Operational Profit/Profit Before Tax 310.66 165.15

Less: Current Tax 104.65 50.59

Deferred tax 2.06 3.55

Excess provision of income

tax of earlier years (Net) (1.44) 105.27 - 54.14

205.39

111.01

253.48


  1. 32.36

6.63

11.50

314.00

519.38

60.55

12.33

21.00

(0.038)

425.54

314.00

Profit After Tax

Add: Profit brought forward
from previous year

Profit available for appropriation

Dividend on equity shares
Tax on Dividend

Amount transferred to General Reserves.

Short (Excess) Provision on earlier year's
Dividend Distribution Tax

Profit carried forward to Balance Sheet

 

  1. PERFORMANCE OVERVIEW
    Standalone

 

Your Company has demonstrated excellent performance during the year and outshined all its
previous records for revenue by recording standalone revenue from operations of
Rs. 1,567.02 Million (Previous year Rs. 949.09 Million), a growth of about 65 % in comparison to
prior year. The increase in revenue was contributed by growth in sales of all product lines and
more particularly Rotary Screen Printing Machine and its Spare Parts, Nickel Perforated Rotary
Screens and Sugar Screens and was driven by increased market presence. The Company has
achieved standalone Profit before Tax of Rs. 310.66 Million (Previous year Rs. 165.15 Million), a
remarkable growth of about 88 % in comparison to prior year.

 

Consolidated

 

The consolidated revenue from operations stood at Rs. 1621.98 Million (Previous year Rs. 1023.44
Million), an impressive increase of about 58 % in comparison to prior year. The Company's
consolidated Profit before Tax for the financial year 2015 stood at Rs. 331.79 Million (Previous year
Rs. 172.52 Million).

RESERVES AND SURPLUS

 

Out of the Net Profit of Rs. 205.39 Million for the year under report, an amount of Rs. 21 Million is
transferred to the General Reserve.

 

    1. DIVIDEND

 

Considering the Company's financial performance, the Board of Directors have recommended payment
of Final Dividend of Rs. 29/- per equity share (290 %) for the financial year ended on December 31,

This Final Dividend is subject to the approval of Members in the 42nd Annual General Meeting.

 

SUBSIDIARY COMPANY

 

Atul Sugar Screens Private Limited ("ASSPL") is a Wholly Owned Subsidiary of the Company. Your
Company has obtained a certificate from the Statutory Auditors of the Company certifying that the
Company is in compliance with the Foreign Exchange Management (Transfer or issue of security by
a person resident outside India) Regulations, 2000 with respect to the downstream investments
made in Atul Sugar Screens Private Limited.

 

A Summary of Performance of ASSPL is provided below:

 

The revenue from operations of ASSPL during the financial year 2015 stood at Rs. 154.88 Million
[Previous year (For 9 months from April 1, 2014 to December 31, 2014) Rs.106.53 Million]. ASSPL
recorded Profit before tax of Rs. 22.96 Million (Previous year Rs. 8.8 Million).

 

Pursuant to the provisions of Section 129 (3) of the Companies Act, 2013 ("Act"), a statement
containing the salient features of financial statements of ASSPL in the prescribed Form AOC-1 is
provided in Annexure-I forming part of this report. The Audited Financial Statements of ASSPL are
available on the Company's website at
www.stovec.com and the same are also available for
inspection at the registered office of the Company as per the details mentioned in the Notice of
42nd Annual General Meeting. Your Company will also make available these documents upon
written request by any Member of the Company interested in obtaining the same.

The Annual Audited Consolidated Financial Statements together with the Report of Auditor's
thereon forms part of this Annual Report.

 

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

 

Information as required to be given under Section 134(3)(m) of the Act read with Rule 8(3) of the
Companies (Accounts) Rules, 2014 is provided in Annexure II forming part of this Report.

FINANCIAL YEAR

 

The application made by the Company and its Indian wholly owned subsidiary M/s Atul Sugar
Screens Pvt. Ltd., to the Company Law Board, seeking approval for continue to follow calendar
year as financial year was approved and accordingly the Company and its Indian wholly owned
subsidiary would follow the calendar year (i.e. January 1 to December 31) as financial year.

 

FIXED DEPOSITS

 

For the year ending December 31, 2015, the Company has not accepted any deposits falling within
the purview of Section 73 of the Act and rules made there under.

 

CORPORATE GOVERNANCE

 

A separate report on Corporate Governance Compliance and a Management Discussion and
Analysis Report as stipulated in Regulation 34 (3) of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ("Listing Regulations") forms part of the Director's Report as
Annexure-III and IV respectively along with the required Certificate from the Practicing Company
Secretary regarding compliance of the conditions of Corporate Governance.

 

AUDIT COMMITTEE

 

The Company has in place an Audit Committee in terms of requirements of the Act read with rules
framed thereunder and Listing Regulations. The details relating to the Audit Committee are given
in the Corporate Governance Report forming part of this report. The recommendations of Audit
Committee were duly accepted by the Board of Directors.

 

DIRECTORS AND KEY MANAGERIAL PERSONNEL

 

The Board of Directors ("Board") in its meeting held on February 16, 2016 has appointed
Mr. Eiko Ris, as an Additional Director on the Board of the Company w.e.f. February 16, 2016, who

holds office up to the date of the forthcoming Annual General Meeting and is eligible for
appointment as a Director of the Company. The Board welcomed Mr. Eiko Ris on the Board of
Directors of the Company.

 

Mr. Aschwin Nicolai Hollander, due to his other pre-occupations has resigned from the Board of the
Company w.e.f. February 16, 2016. The Board placed on record its appreciation for the
outstanding contribution made by him in the growth of the Company.

 

At the 42nd Annual General Meeting, Mrs. Everdina Herma Slijkhuis retires by rotation and being
eligible, offers herself for re-appointment.

 

The Members at the 41st Annual General Meeting, appointed Mr. Khurshed. M. Thanawalla (DIN:
00201749) and Mr. Marco Wadia (DIN: 00244357) as an Independent Director of the Company for
a consecutive term of five years as per requirement of the Act. The abovenamed Independent
Directors have furnished declarations to the Company, confirming that they meet the criteria
prescribed for Independent Directors under Section 149 (6) of the Act and Regulation 16(1)(b) of
the Listing Regulations.

 

The tenure of Mr. Shailesh Chandrakrishna Wani, as a Managing Director of the Company expires
on September 30, 2016. The Board of Directors in its meeting held on February 16, 2016, noted
that Company has grown under his leadership and it will be in the interest of the Company to
re-appoint him. The Board has re-appointed Mr. Shailesh Chandrakrishna Wani, as a Managing
Director of the Company for a further period of three years w.e.f. October 1, 2016, subject to the
approval of Members of the Company and of the Central Government, if required.

 

Mr. Girish Deshpande, Chief Financial Officer retired from the Company w.e.f. July 1, 2015 and
Mr. Paras Mehta was appointed as the Chief Financial Officer of the Company w.e.f July 1, 2015.
The Board placed on record its appreciation for the contribution made by Mr. Girish Deshpande in
his role as a Chief Financial Officer of the Company.

 

BOARD MEETING

 

During the financial year ended December 31, 2015, five meetings of the Board of Directors were
held. The details of the attendance of Directors at the Board Meeting are mentioned in the
Corporate Governance Report annexed hereto.

 

    1. PERFORMANCE EVALUATION

 

The details of Annual Performance Evaluation of Individual Directors including Chairperson, Board
of Directors and Committees of Board of Directors are mentioned in the Corporate Governance
Report.

 

CORPORATE SOCIAL RESPONSIBILITY

 

In accordance with Section 135 of the Act and Rules framed thereunder, the Company has
constituted a Corporate Social Responsibility ("CSR") Committee of Directors. The details of
composition of CSR Committee are given in the Corporate Governance Report. The details of CSR
policy and CSR spending by the Company have been provided as Annexure-V to this report, as
required under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

 

REMUNERATION POLICY

 

The details of the Remuneration Policy are mentioned in the Corporate Governance Report. 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 provided as
Annexure VI forming part of this Report.

 

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

 

The Company has an Internal Control System, commensurate with the size, scale and complexity
of its operations. The scope of Internal Audit is well defined in the organization. The Internal Audit
report regularly placed before the Audit Committee of the Board. The Management monitors and
evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with
operating systems, accounting procedures and policies. Based on the report of Internal Auditors,
process owners undertake corrective action in their respective areas and thereby strengthening
the controls continuously. Significant audit observations, if any, and corrective actions suggested
and taken are presented to the Audit Committee of the Board.

 

EXTRACTS OF ANNUAL RETURN

 

The extracts of Annual Return in Form MGT-9 as required under Section 92(3) of the Act read with
Rule 12 of the Companies (Management and Administration) Rules, 2014, forms part of this Report
as Annexure VII.

 

PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

 

During the year under review, all the Related Party Transactions were entered into by the
Company in the ordinary course of business and on arm's length basis. Hence reporting in Form
AOC-2 is not applicable to the Company.

 

PARTICULARS OF LOANS, GUARANTEE OR INVESTMENTS

 

A statement providing particulars of Loans, Guarantees or Investments under Section 186 of the
Act is provided as Annexure VIII forming part of this Report.

 

    1. VIGIL MECHANISM

 

As per the provisions of Section 177(9) of the Act, the Company is required to establish an Vigil
Mechanism for Directors and Employees to report genuine concerns. The Company has a Whistle
Blower Policy (also known as Vigil Mechanism) in place and the details of the Whistle Blower Policy
are provided in the Report on Corporate Governance forming part of this Report.

 

The Company has disclosed information about the establishment of the Whistleblower Policy on its
website at
www.stovec.com at http://www.sDaDrints.com/include/files/About us/Stovec/Policies/
Whistle Blower Policy.pdf.

 

    1. RISK MANAGEMENT

 

The Company has formulated Risk Management Policy in order to monitor the risks and to address/
mitigate those risks associated with the Company. The Board of Directors do not foresee any
elements of risk, which in its opinion, may threaten the existence of the Company.

 

    1. DIRECTORS RESPONSIBILITY STATEMENT

 

Pursuant to the provisions of Section 134 (3)(c) and 134 (5) of the Act, your directors confirm, to
the best of their knowledge and belief that:

 

  1. in the preparation of the annual financial statements for the year ended December 31, 2015,
    the applicable accounting standards have been followed and that no material departures have
    been made from the same;

     

  2. they have selected such accounting policies and applied consistently and made judgment and
    estimates that were reasonable and prudent, so as to give a true and fair view of the state
    of affairs of the Company as at December 31, 2015 and of the profit of the Company for the
    year ended on that date;

     

  3. they 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;

     

  4. they have prepared the annual financial statements for the year ended December 31, 2015,
    on a going concern basis;

     

  5. proper internal financial controls are in place in the Company and that such internal financial
    controls are adequate and are operating effectively; and

     

  6. proper systems have been devised to ensure compliance with the provisions of all applicable
    laws and that such systems are adequate and operating effectively.

 

    1. POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

 

The Company has in place a Policy on Prevention of Sexual Harassment of Women at Workplace in
line with the requirements of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 and Rules framed thereunder and Internal Complaints
Committee has also been set up to redress complaints regarding sexual harassment. During the
year, no complaint with allegations of sexual harassment was received by the Company.

 

REPORTING OF FRAUDS

 

There have been no instances of fraud reported by the Statutory Auditors under Section 143(12)
of the Act and Rules framed thereunder, either to the Company or to the Central Government.

 

STATUTORY AUDITORS

 

Pursuant to provisions of Section 139 of the Act and rules framed thereunder, M/s. Price
Waterhouse, Chartered Accountants, (Firm Registration No. 301112E) were re-appointed as
Statutory Auditors of the Company for a term of five years to hold office from the conclusion of Forty
first (41st ) Annual General Meeting until the conclusion of the Forty sixth (46th) Annual General
Meeting of the Company to be held in the calendar year 2020, subject to ratification of their
appointment by Members at every subsequent Annual General Meeting. A certificate from Statutory
Auditors has been received to the effect that their appointment as Statutory Auditors of the
Company, if ratified at the ensuing Annual General Meeting, would be according to the terms and
conditions prescribed under Sections 139 and 141 of the Companies Act, 2013 and rules framed
thereunder.

 

The Board of Directors on recommendation of the Audit Committee recommends ratification of
re-appointment of M/s. Price Waterhouse as the Statutory Auditors of the Company from the
conclusion of 42nd Annual General Meeting until the conclusion of next Annual General Meeting.

A resolution seeking ratification of their re-appointment, forms part of the Notice convening the
42nd Annual General Meeting and the same is recommended for consideration and approval of
Members.

 

COST RECORDS AND COST AUDITORS

 

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and
Audit) Amendment Rules, 2014, the Board of Directors on the recommendation of the Audit
Committee, have appointed M/s Dalwadi and Associates, Cost Accountants (Firm Registration
No.000338) as its Cost Auditors to audit the cost records of the Company for the financial year

  1. for conducting the audit of the cost records maintained by the Company for the various
    Company's products as mandated by the Central Government, pursuant to the Companies (Cost
    Records and Audit) Amendment Rules, 2014, and amendment thereof, at a remuneration as
    mentioned in the Notice convening the 42nd Annual General Meeting and subject to the approval of
    the Members on the remuneration to be paid to the Cost Auditor. A certificate has been received
    from the Cost Auditors to the effect that their appointment as Cost Auditors of the Company, if
    made, would be in accordance with the limits specified under Section 141 of the Act and Rules
    framed thereunder. A resolution seeking Member's approval for the remuneration payable to Cost
    Auditors forms part of the Notice of 42nd Annual General Meeting of the Company and the same is
    recommended for the consideration and approval of Members. The Company has filed the Cost
    Audit Report for financial year 2014 on June 26, 2015, which is within the time limit prescribed
    under The Companies (Cost Audit Report) Rules, 2011.

 

SECRETARIAL AUDIT

 

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Sandip
Sheth & Associates, Practicing Company Secretaries (COP No. 4354), for conducting Secretarial
Audit of the Company for the financial year ended on December 31, 2015. The Secretarial Audit
Report is provided as Annexure-IX to this report.

 

AUDITORS REPORT

 

There are no qualifications, reservations or adverse remarks made by M/s. Price Waterhouse,
Chartered Accountants, Statutory Auditors, in their audit report and by M/s. Sandip Sheth &
Associates, Practicing Company Secretaries, Secretarial Auditors in their secretarial audit report
and therefore need not require any comments under section 134(3)(f) of the Act.

 

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING FINANCIAL POSITION OF THE
COMPANY FROM THE END OF FINANCIAL YEAR AND TILL THE END OF THIS REPORT.

 

There have been no material changes and commitments, if any, 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 this Report.

 

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

 

As on date of this report, there are no significant and material orders passed by the Regulators or
Courts or Tribunals impacting the going concern status and operations of the Company in future.

 

PARTICULARS OF EMPLOYEES

 

Your Directors place on record their deep appreciation for the contribution made by the employees
of the Company at all levels.

 

The information on employees particulars as required under Section 197 (12) of the Act read with
Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 is provided in the Annexure forming part of the Report. In terms of Section 136 of the
Act, the Report and Financial Statements are being sent to the Members and others entitled
thereto, excluding aforesaid Annexure. The said information is available for inspection by the
Members at the Registered Office of the Company as per the details mentioned in the Notice of
42nd Annual General Meeting, on any working day (except Saturday, Sunday and Public Holidays)
up to the date of the 42nd Annual General Meeting. Any Member interested in obtaining a copy of
the same may write to the Company Secretary of the Company.

 

  1. ACKNOWLEDGEMENT

 

We wish to place on record our gratitude for the contributions, co-operation and confidence
reposed in the Board of Directors by SPGPrints B.V. and other shareholders, our valued employees
and customers, our bankers, suppliers and other stakeholders.

For and on behalf of Board of Directors

 

Sd/-

Place : Mumbai

Date : February 16, 2016

K.M.Thanawalla

Chairman

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