DIRECTORS' REPORT

Your Directors are pleased to present the Thirty Sixth Annual Report on the business and operations of your Company and the financial accounts for the year ended 31st March 2016 approved by the Board:

DIVIDEND:

The PAT has doubled from Rs 74 lacs in the previous year to Rs 150 lacs during the year under report. However, the Board has not recommended any dividend distribution, with a perspective to strengthen financial position of your company and increase value to the shareholders investment. Such a measure eventually will nurture and nourish shareholders wealth.

PERFORMANCE:

Aggregate sales and other income for the year were marginally lower by 0.6% compared to the previous financial year. However the PBDIT has recorded an increase by 2% at Rs 2608 lacs as compared to Rs.2558 lacs in the previous year. The improvement in operating margin and also reduction in finance cost has helped the company to increase the profit by 100% over previous year. The Net Profit after Tax stood at Rs.150 lacs for the year against profit of Rs. 74 lacs in the previous year.

BUSINESS PERSPECTIVE:

Globally, India is the second largest in GDP growth and fourth largest economy in terms of purchasing power parity (PPP). The packaging industry in India is one of the fastest growing industries which has its influence on all industries, directly or indirectly.

The Indian packaging industry is growing continuously. The total worth is about USD 24.6 billion. The average annual growth rate is about 13 - 15%. However, there is great growth potential since India's per capita consumption of packaging is only 4.3 kgs whereas neighboring Asian countries like China and Taiwan show about 6 kgs and 19 kgs, respectively.

The highlights of the industry trend, the outlook and the opportunities ahead for the company are discussed in detail in the Management Discussion and Analysis Report attached as Annexure – IV to this report.

EXPORTS:

In the year 2015-16, the export turnover was Rs.2285 lacs as compared to the previous year turnover of Rs.2677 lacs, representing a decline of 15% over the previous year. The decline in export sales is mainly due to sluggish global demand coupled with a volatile global currency market.

SUBSIDIARY:

The statement pursuant to Section 129 of the Companies Act 2013 containing details of financial highlights of the subsidiary company forms part of the Annual Report.

CONSOLIDATED FINANCIALS:

In compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in accordance with Accounting Standard AS-21 on Consolidated Financial Statements, the audited Consolidated Financial Statements incorporating the operations of the company and its subsidiary company viz., M/s Shetron Metropak Private Ltd are provided in this Annual Report.

Further, the report on the performance and financial position of the subsidiary and salient features of the financial statement in the prescribed Form AOC-1 is annexed to this report [Annexure VIII].

The audited financial statements of subsidiary shall be kept for inspection during business hours by any shareholders at the registered office of the Company and of the subsidiary company. The Company will also make available the audited financial accounts and related information of the subsidiary companies, upon request by any shareholder of the company.

AWARDS & LAURELS:

In recognition for Decoration & Printing Quality under Cans Category the company was awarded Gold Winner by CANMAKER for the year 2015 for reproduction of three piece welded tin plate can. The company was also awarded with IMDA award for the Excellence in Printing Quality under "Best of Category Closures" for the year 2015.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In terms of Section 161 of the Companies Act, 2013 - Mr.Mohan Narayan Menon who was appointed as Additional Director and Independent Director on 16 May 2016 and hold the said office till the date of the Annual General Meeting. We have received a notice under Section 160(1) of the Companies Act, 2013 from a member proposing his candidatures to the office of the Directorship.

In terms of Section 161 of the Companies Act, 2013 - Mr. Praveen Mally who was appointed as Additional Director on 08-Feb-2016 and hold the said office till the date of the Annual General Meeting. Subsequently, at the Board Meeting held on 16th May 2016, Mr. Praveen Mally has been appointed as Joint Managing Director to hold office for a period of three years on a remuneration recommended by the Nomination and Remuneration Committee, subject to the approval of the shareholders at the ensuing AGM. We have received a notice under Section 160(1) of the Companies Act, 2013 from a member proposing the candidature of Mr. Praveen Mally as Joint Managing Director. Brief resumes of the Mr. Praveen Mally and Mr. Mohan Narayan Menon being appointed are attached to the Notice of the Annual General Meeting.

In accordance with the decision taken by the Board of Directors at the meeting held on 16th May 2016 to reconstitute the Board and appoint two Joint Managing Directors, Mr.Kartik Nayak has been re-designated as Joint Managing Director.

Further the Board noted that the three year tenure of Mr. Diwakar S Shetty, Executive Chairman and Whole Time Director and Mr. Kartik Nayak, Joint Managing Director shall expire on 31st August 2016. The Board has decided subject to the shareholders approval at the ensuing AGM for the appointment and the continuation of Mr. Diwakar Shetty as Whole Time Director after attaining age of 70 years for a period of three years and also for the appointment of Mr. Kartik Nayak as Joint Managing Director for a period of three years.

The Board has also revised the remuneration for both Mr. Diwakar Shetty and Mr. Kartik Nayak as recommended by the Nomination and Remuneration Committee.

The appointment/remuneration package of Mr. Diwakar Shetty, Mr. Kartik Nayak and Mr. Praveen Mally require approval of the shareholders at the General Meeting hence form part of the Agenda for the 36th Annual General Meeting.

During the year under review, the Board of Directors met four times.

The Independent Directors have submitted their declaration that they fulfill the requirements as stipulated in Section 149 (6) of the Companies Act, 2013.

Pursuant to Clause VII (1) of Schedule IV of the Companies Act, 2013, the Independent Directors had a separate meeting on 08-Feb -2016.

DIRECTORS' RESPONSIBILITY STATEMENT:

The Board 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, the reviews performed by Management and the relevant Board Committees, including the Audit Committee, it is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2015-16.

Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

1) In the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2) The Directors had 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 and loss of the company for that period;

3) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

4) The Directors had prepared the Annual Accounts on a Going Concern basis;

5) The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

6) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 and Listing Agreement with the stock exchange, the Board has carried out an annual performance evaluation of its own performance, and of the directors individually, as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in detail in the Corporate Governance Report, which forms part of this Annual Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE:

During the year the company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by company are given in the notes to the financial statements.

EXTRACT OF ANNUAL RETURN:

Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT 9 as a part of this Annual Report (Annexure - I).

ADDITIONAL DISCLOSURES:

In line with the requirements of Listing Agreements and Accounting Standards, your company has made additional disclosures in respect of Related Party Transactions and Segment Reporting in notes to accounts.

DEPOSITS:

In terms of the provision of Section 73, 74 & 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, your company has not accepted/ renewed any fixed deposits from the public during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure - III and is attached to this report.

STATUTORY AUDITORS:

M/s. Pal and Shanbhogue, Chartered Accountants, who was appointed as Statutory Auditors of the Company at the AGM held on 29th September 2014 for a period of three financial years i.e., upto the conclusion of 37th AGM to be held in the year 2017. As required by the provisions of the Companies Act, 2013, their appointment should be ratified by members each year at the AGM. Accordingly, requisite resolution forms part of the notice convening the AGM.

COST AUDITORS:

The Company has appointed M/s Vishwanath Bhat & Co., Cost Auditors to conduct the Cost Audit of the Company for the Financial Year 2015-16.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. SNM & Associates, Company Secretaries, was appointed to undertake the Secretarial Audit. The Report of the Secretarial Audit for the year ended 31st March, 2016 is attached to the Board Report (Annexure - II).

AUDITORS REPORT:

There was no qualification, reservations or adverse remarks made either by the Statutory Auditors or by the Practicing Company Secretary in their respective reports and their report is annexed to this Report as annexure.

REPORT ON CORPORATE GOVERNANCE:

Your Company has taken adequate steps to adhere to all the stipulations laid down in Regulation 27 of SEBI (Listing Obligations and Disclosure Requirements). A report on compliance of the code is annexed herewith (Annexure - VII).

Certificate from the Statutory Auditors of the company confirming the compliance with the conditions of Corporate Governance as stipulated under Regulation 27 of SEBI(LODR) Regulation 2015 is attached to this report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. All contracts / arrangements / transactions with related parties are placed before the Audit Committee as also the Board, as may be required, for approval.

The policy on materiality of related party transactions and also on dealing with related party transactions as approved by the Audit Committee and Board of Directors is displayed on the company's website www.shetrongroup.com.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. Details of contracts / arrangements / transactions with related parties are given in the notes to the financial statements.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:

Adhering to the provisions of Companies Act, relevant amounts which remained unpaid or unclaimed for a period of Seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has been employing women employees in various cadres within its office and factory premises. The Company has in place a policy against Sexual Harassment in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee is set up at shop floor level to redress any complaints received. All employees are covered under the policy. There was no compliant received from any employee during the financial year 2015-16 and hence no complaint is outstanding as on 31.03.2016 for redressal.

HEALTH, SAFETY AND ENVIRONMENT PROTECTION

Your Company has complied with all applicable environment laws and labour laws. The Company has been taking all the necessary measures to protect the environment and maximize worker protection and safety. The Company's policy require conduct of operation in such a manner so as to ensure safety of all concerned, compliance of environment regulations and preservation of natural resources.

DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION) RULES, 2014:

Disclosures required under section 197 of the Companies Act, 2013 read with rule 5 of the Companies (Appointment & Remuneration) Rules, 2014 have been annexed as “Annexure VI”.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report as required is annexed as Annexure IV.

ACKNOWLEDGMENTS:

Your Directors wish to place on record their sincere thanks to Bankers, Business Associates, Consultants, various Government Authorities and employees at all levels in the Company for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.

SHETRON LIMITED

By the order of the Board

For Shetron Limited

Diwakar S Shetty

Chairman  

Place : Bangalore

Date : 16th May, 2016