BOARD'S REPORT Your Board hereby present their 55th Annual Report and the Audited Accounts for the year ended 31st March, 2016. DIVIDEND In the absence of distributable profits, no dividend is recommended. TRANSFER FROM GENEARL RESERVE The Company has transferred Rs.648 lakhs from General Reserve to Profit and Loss Account to bring down the accumulated losses. PERFORMANCE HIGHLIGHTS SILVER ZINC BATTERIES The Company recorded a turnover of Rs.1961.83 lakhs during the year, as against Rs.2213.84 lakhs achieved during the previous year. The reduction in turnover was due to late receipt of major Defence orders, non-receipt of critical materials, due to delayed payment to creditors and non-clearance of development items for production by DRDO Laboratories. NICKEL CADMIUM BATTERIES During the year, the Company could make a turnover of Rs.183.01 lakhs only due to paucity of orders, as against Rs.414.08 lakhs achieved during the previous year. LEAD ACID BATTERIES (LAB) During the year, the turnover in LAB Division was only Rs.90.70 lakhs, as against the turnover of Rs. 600.38 lakhs achieved during the previous year. The production was kept on- hold due to severe price competition from established players, market demand for increased credit limit, as well as extended credit period and inordinate delay in collection of receivables in the 'aftermarket' segment. Efforts are on to change the marketing strategy to focus on 'private labeling'. The Company is negotiating with few parties which are in an advanced stage. The Company is confident of increasing the production to reasonable levels by middle of the current financial year. EXPORT With recession in the global economy and cut in Defense expenditure by developing countries, the Export Turnover was only Rs.61.91 lakhs, as compared to Rs.817.86 lakhs achieved in the previous year. CURRENT YEAR - 2016-17 Presently, the Company has substantial orders for Silver Zinc Division which will help the Company achieve reasonable turnover and posting positive results for the current financial year. However, as stated earlier, Lead Acid Batteries Division will operate to reasonable levels of production from the third / fourth quarter of the current financial year. FINANCE As mentioned in the last year's Report, the poor liquidity position severely affected the Company's operations. However, the infusion of funds by one of the Group Companies and sale of shares held in Ponni Sugars (Erode) Limited, helped the Company in improving its financial position and submit a bankable proposal to the Bankers. ISO SYSTEMS The company continues to be certified both under ISO 9001:2008 and ISO 14001:2004 (Revised) Systems. RESEARCH AND DEVELOPMENT The Company has taken up the development cum supply of 330 kW Silver Zinc Batteries to NSTL, Vizag. The development qualifications of new Batteries to Missile System Division of DRDO are in progress. SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 With a view to consolidate and streamline the provisions of Listing Agreement for different segments of the capital market, SEBI has notified (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) on 2nd September 2015. The Listing Regulations have been structured to provide ease of reference by consolidating into one single document across various types of securities listed on the Stock Exchanges. Your Company has executed an agreement with BSE for continuing the listing of securities on the Exchange. CORPORATE GOVERNANCE Compliance with the provisions of Corporate Governance is not mandatory to the Company, as your company's paid-up capital and net worth is less than the limit prescribed under Regulation 15(2) of the SEBI (Listing Obligations and Disclosure Requirements Regulations, 2015. However, utmost importance has been given to good Corporate Governance in all its activities. A report on Corporate Governance is annexed herewith, marked as Annexure - 1 to this Report. Section 134(3) of the Companies Act, 2013 requires the Board's Report to include several additional contents and disclosures. The applicable contents and disclosures have accordingly been made in the Corporate Governance Report at the appropriate places which forms an integral part of this Report. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is given in Annexure - 2. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, your Board confirms that: (a) in the preparation of the annual accounts, the applicable Accounting standards have been followed. (b) the directors have selected such accounting policies and applied them consistently and made judgements 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 loss 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 this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. (d) the directors have prepared the annual accounts on a going concern basis. (e) the directors have laid down internal financial controls to be followed by the company and that said internal financial controls are adequate and were operating effectively. (f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The company did not give any Loan or Guarantee or provided any security or make investment covered under Section 186 of the Companies Act, 2013 during the year. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY Since the company remains outside the purview of Section 188(1) read with Rule 15 of Companies (Meeting of Board and its Power) Rules, 2014, the reporting requirements there under are not applicable. MATERIAL CHANGES AND COMMITMENTS There is no change in the nature of business of the company during the year. There are no material changes and commitments in the business operations of the company since the close of the financial year as on 31st March 2016 to the date of this report. CONSERVATION OF ENERGY ETC. Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure -3 CORPORATE SOCIAL RESPONSIBILITY (CSR) Section 135 of the Companies Act, 2013 has imposed CSR mandate on companies having minimum threshold limit of net worth, turnover or net profit as prescribed. Since the company does not meet any of these criterion, it remains outside the purview of Section 135 and consequently the reporting requirements there under are not applicable. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished in Annexure -4. ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS 1) The company has laid down adequate systems and well drawn procedures for ensuring internal financial controls. It has appointed an external audit firm as internal auditors for periodically checking and monitoring the internal control measures. 2) Internal auditors are present at the Audit Committee meetings where internal audit reports are discussed alongside of management comments and the final observation of the internal auditor. 3) The Board of Directors have put in place budgetary control and monitoring measures for ensuring the orderly and efficient conduct of the business of the company, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. DIRECTORS In accordance with Article 106 of the Articles of Association of the Company, Mr N Gopalaratnam, Director retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting. Mr T R Sivaraman, Director, has resigned from the post of Director (Finance) with effect from 13th August 2015. Mrs. T V Rajalakshmi, Independent Woman Director has resigned with effect from19th March 2016, due to other pre-occupations. All the Independent Directors have given the declaration that they comply with the criteria on independence, as laid down under Section 149(6) of the Companies Act, 2013. The performance evaluation of independent directors has been done by the entire Board of Directors, excluding the director being evaluated at its meeting held on 19th March 2016. The Board on the basis of such performance evaluation determined to continue the term of appointment of all the Independent Directors who have been appointed by the Company at its 53rd AGM for a fixed term up to 31st March 2019. Woman Director Pursuant to the Provision of Section 149, 152 of the Companies Act, 2013 and read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, every listed Company shall appoint atleast one Woman Director. The Board of Directors, on the recommendation of the Nomination-cum-Remuneration Committee Meeting held on 28th May 2016, appointed Mrs Lalitha Lakshmanan as an Additional Director of the Company with effect from 28th May 2016, to hold office up to the date of AGM of the Company. The Board recommends the Resolution, to be placed in the AGM, in relation to appointment of Mrs Lalitha Lakshmanan, as an Independent Director, not liable to retire by rotation, under section 149 of the Companies Act, 2013, for a fixed term from 30th July 2016 to 31st March 2021. ADDITIONAL CHIEF FINANCIAL OFFICER According to Section 203(1)(iii) of the Companies Act, 2013, Mr R Swaminathan was appointed as Additional Chief Financial Officer of the Company from 28th May 2016. Mr R Swaminathan holds a Masters in Commerce Degree and has 29 years experience in various industries in the fields of Costing, Budgeting, Pay Roll, Stores Accounting and purchase accounting. He joined the Company as Senior Manager (Accounts) in 2013 and is in-charge of Accounts. AUDITORS M/s. R. Subramanian & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of the Company till the conclusion of 56th Annual General Meeting, requisite resolution for ratifying their appointment is proposed in the manner stated in the Notice for the 55th AGM. Particulars of Statutory Auditors, Cost Auditor, Internal auditor and the Secretarial Auditor are given in the Corporate Governance Report that forms an integral part of this Report. Secretarial Audit Report, as required by Section 204(1) of the Companies Act, 201 3, is attached Annexure - 5. ACKNOWLEDGEMENT Your Directors wish to express their sincere thanks to (i) the Defence Services, DRDO Laboratories, ISRO and Ministry of Defence for the whole-hearted support and encouragement provided by them for indigenization efforts on sophisticated high energy batteries; (ii) the Overseas customers, who have reposed utmost faith and confidence in our products; (iii) the Lead Acid Battery Customers, Dealers, Distributors and Institutional Indenters, like Postal and Railways. (iv) the Bankers, for extending timely financial support for the continued successful performance of the Company and (v) to all suppliers and Shareholders for their continued support. (For the Board of Directors) N. GOPALARATNAM Chairman PLACE : Chennai 600 034 DATE :May 28, 2016 |