DIRECTORS REPORT Dear Members, Your Directors have pleasure in presenting the 21st Annual Report on the business and operations together with the Audited accounts for the year ended 31st March, 2015. The performance of the Company for the year ended on 31st March, 2015 is summarized below: Dividend In view of losses, your Directors do not recommend any dividend on Share Capital (Previous year 7.5% i.e. f 0.75 per Equity Share). Review of Operations For the year ended 31st March, 2015, your Company has reported standalone total revenue of Rs. 54,519.23 Lacs and net loss of Rs. 645.20 Lacs as compared to previous year's total revenue of Rs.72,232.20 Lacs and net profits of Rs. 480.51 Lacs. During the current year, the Company has incurred loss mainly on account of lower turnover. The Company could not achieve turnover growth due to delay in realizing target order inflow and the power sector in the Country continued to grapple with multiple bottlenecks. Effective from 1st April, 2014, there is a change in useful lives of assets as per Schedule II of the Companies Act, 2013 which has resulted into higher depreciation to the tune of Rs. 202.32 Lacs, adversely affecting bottomline of the Company. Share Capital The Paid up Equity Share Capital as at 31st March, 2015 stood at Rs. 1,325.64 Lacs. During the year under review, the Company has not issued any Share Capital. MVA Production During the year 2014-15, Your Company has manufactured 15925 MVA, out of which Changodar unit produced 4405 MVA, Moraiya unit produced 10760 MVA & Odhav unit produced 760 MVA, against the last year's total of 20650 MVA. Consolidated Financial Statements The Consolidated Financial Statements of the Company pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India are attached herewith this Annual Report. Order Book As on 27th May, 2015, the Company has Order Book position of Rs. 77,263 Lacs. The table below indicates the division of our order book between our business segments Exports During the year, the Company has achieved export sales of Rs. 1,726.88 Lacs. Fixed Deposit The Company has neither accepted nor invited any deposit from public, falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. Particulars of Loans, Guarantees and Investments Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statement. Achievements Dispatch of highest Green rating transformer to Columbia During the year, your Company had dispatched the India's highest rating 75 MVA, 115 kV, three-phase Power Transformer to Columbian utility which is filled with Envirotemp FR3 natural ester fluid. It has measured a very low noise level, below 55 dBA with which the Company marks its foot print in the manufacture of eco-friendly silent green transformers. The development of transformer was done by in house R&D efforts. Entered into Technology Agreement with Fuji Electrical Co. Ltd During the year your Company had entered into the Technology license agreement with Fuji Electrical Co. Limited ("Fuji"), Japan, a leading manufacturer of Power Transmission and Distribution equipment. Their strength lies in developing business in Energy Creation, Energy Management and Energy Conservation with Power Electronics as the core. As a part of this Technology License Agreement, Fuji grants the license to the Company in India to use its technology and know-how; to design, manufacture, assemble, inspect and sale of • Generator step up transformers with single phase or three phase, 420 kV Voltage and up to 1000 MVA bank capacity; • Shunt reactors with three phase 420 kV voltage and up to 125 MVAr capacity; • Shunt reactor with single phase, 765 kV voltage and up to 133 MVAr capacity. The Technology License Agreement will remain valid for the period of 10 years; a dedicated team of the Company will work with Fuji to absorb and deploy this technology. This Technology transfer will provide an important milestone to the Company which will help to enter into new horizons in manufacturing of high end reactors and transformers. Subsidiary, Associates & Joint "Venture Companies As on 31st March, 2015 your Company has Four (4) Subsidiaries namely Transweld Mechanical Engineering Works Limited (wholly owned subsidiary), TARIL Infrastructure Limited (wholly owned subsidiary), Savas Engineering Company Private Limited (wholly owned subsidiary) and Transpares Limited (51% holding). Further there has been no material change in the nature of business of the subsidiaries. There are no associate and joint venture Companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). The Board of Directors of the Company has formulated a policy for determining "Material Subsidiaries" to comply with the requirement of Clause 49 of the Listing Agreement for such Material subsidiaries. However, Company has no Material Subsidiary Company as defined under Clause 49 of the Listing Agreement. The policy for determining "Material Subsidiaries" may be accessed on the Company's website at the link: <http://www.transformerindia.com/download/Policy-material-Sub.pdf.> During the year under review, the Company has acquired the Shares of Savas Engineering Company Private Limited and hence the company has become the wholly owned subsidiary of the Company. Shareholders interested in obtaining a copy of the Audited Annual Accounts of the Subsidiary Companies may write to the Company Secretary. In terms of proviso to sub-section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiaries is set out in the prescribed form AOC-1, which forms part of the Annual Report. The Performance of Subsidiary Companies are as under Transweld Mechanical Engineering Works Limited Transweld Mechanical Engineering Works Limited ("Transweld") is the wholly owned subsidiary of the Company. For the year ended Transweld achieved net sales of f 1,275.13 Lacs against f 1,106.21 Lacs during the previous FY 2013-14. Total profit before tax for the FY 2014-15 is f 25.98 Lacs as against the total profit before tax of f 15.50 Lacs for the previous FY 2013-14. Profit after tax (PAT) was f 26.88 Lacs during the year as against the previous year profit of f 8.59 Lacs. TARIL Infrastructure Limited TARIL Infrastructure Limited ("TARIL") is the wholly owned subsidiary of the Company. For the year ended TARIL achieved net sales of Rs. 1,186.04 Lacs against Rs.1,263.66 Lacs during the previous FY 2013-14. Total profit before tax for the FY 2014-15 is Rs.40.60 Lacs as against the total profit before tax of Rs. 61.08 Lacs for the previous FY 2013-14. Profit after tax (PAT) was Rs. 27.30 Lacs during the year as against the previous year profit of f 42.07 Lacs. Savas Engineering Company Private Limited Savas Engineering Company Private Limited ("Savas") is the wholly owned subsidiary of the Company. For the year ended Savas achieved net sales of Rs.602.03 Lacs against Rs. 1,151.66 Lacs during the previous FY 2013-14. Total loss before tax for the FY 2014-15 is Rs. 371.95 Lacs as against the total loss before tax of Rs. 169.17 for the previous FY 2013-14. Loss after tax was Rs. 267.68 Lacs during the year as against the previous year loss of Rs.131.52 Lacs. Transpares Limited Transpares Limited is the subsidiary of the Company. For the year ended Transpares Limited achieved net sales of Rs. 1,617.79 Lacs against Rs. 1,637.70 Lacs during the previous FY 2013-14. Total profit before tax for the FY 2014-15 is Rs. 18.45 Lacs as against the total profit before tax of Rs. 76.87 Lacs for the previous FY 2013-14. Profit after tax (PAT) was Rs. 25.82 during the year as against the previous year profit of f 58.81 Lacs. Directors The Board of Directors of your Company comprises of Eight (8) Directors of which Four (4) are Executive and Non Independent Directors and Four (4) are Non-Executive and Independent Directors as on 31st March, 2015. In terms of the provision of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a Company shall have atleast one Woman Director on the Board of the Company. Your Company has Mrs. Karuna Mamtora as Director on the Board of the Company since its inception, who is presently the Executive Director of your Company. Members of the Company vide Postal Ballot held on 10th September, 2014 had approved the re-appointed of Mrs. Karuna Mamtora as an Executive Director of the Company w.e.f. 1st April. 2014 for a period of 3 years further to that they also had approved the revision in terms of remuneration of Mr. Jitendra Mamtora, Chairman & Whole-time Director and Mr. Satyen Mamtora, Managing Director of the Company. At the 20th Annual General Meeting, Mr. Rajendra Shah, Mr. Harish Rangwala, Mr. Bhaskar Sen and Mr. Sureshchandra Agarwal, Independent Directors of the Company reappointed for five consecutive years for a term upto 31st March, 2019. As per the provisions of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mrs. Karuna Mamtora being longest in the office shall retire at the ensuing Annual General Meeting and being eligible for re-appointment, offers herself for re-appointment. The Board of Directors of your Company, at their meeting held on 27th May, 2015 has approved the re-appointment of Mr. Vinod Masson as an Executive Director ofthe Company w.e.f 1st July, 2015 for further period of One (1) year subject to approval of shareholders. Accordingly, the approval of shareholders is being sought for his re-appointment as an Executive Director of the Company for the period of One year. Details of Director seeking re-appointment as required under the Listing Agreements are provided in the Notice forming part of this Annual Report. Their re-appointments are appropriate and in the best interest of the Company. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The terms and conditions of the Independent Directors are incorporated on the website of the Company www.transformerindia.com To familiarize the Independent Directors with the strategy, operations and functions of our Company, the Executive Directors / Senior Managerial Personnel make presentations to the Independent Directors about the Company's strategy, business model, operations, service and product offerings, markets, organization structure, finance, human resources, technology, quality, facilities and risk management. Further, the Company has devised a Familiarization Programme for Independent Director and same been placed on the web site of the Company at the Link: http://www.transformerindia. com/download/Familarization-policy-ID.pdf None of the Directors of the Company is disqualified for being appointed as Director as specified in Section 164 (2) of the Companies Act, 2013. Appointments / Resignations of the Key Managerial Personnel Mr. Jitendra Mamtora, Chairman & Whole-time Director, Mr. Satyen Mamtora, Managing Director, Mr. Rahul Shah, Chief Financial Officer and Mr. Chintan M. Trivedi, Company Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and were already in the office before the commencement of the Companies Act, 2013. None of the Key Managerial Personnel has resigned or appointed during the year under review. Number of the Meetings of the Board Regular meetings of the Board are held atleast once in a quarter inter-alia, to review the quarterly results of the Company. Additional Board meetings are convened to discuss and decide on various business policies, strategies and other businesses. Due to business exigencies, certain business decisions are taken by the Board through circulation from time to time. During the FY 2014-15, the Board met Five (5) times i.e. 18th April, 2014, 2nd May, 2014, 8th August, 2014, 20th October, 2014 and 4th February, 2015. Detailed information on the meetings of the Board are included in the report on Corporate Governance, which forms part of this Annual Report. The details of number of meetings of Committees held during the FY 2014-15 forms part of Corporate Governance Report. Committees of the Board Your Company has several Committees which have been established as part of the best Corporate Governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. The Company has following Committees of the Board: • Audit Committee • Stakeholder's Grievance and Relationship Committee • Nomination and Remuneration Committee • Corporate Social Responsibility Committee • Share Transfer Committee • Management Committee The details with respect to the compositions, powers, terms of reference etc. of relevant Committees are given in details in the Corporate Governance Report which forms part of this Annual Report. Corporate Social Responsibility Committee In Compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has established Corporate Social Responsibility (CSR) Committee and statutory disclosures with respect to CSR Committee and an Annual Report on CSR Activities forms part of this Annual Report as Annexure-1. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire was prepared after taking into consideration of the various aspects of the Board's functioning, Composition of the Board and Committees, culture, execution and performance of specific duties, obligation and governance. The performance evaluation of the Independent Directors was completed. During the year under review, the Independent Directors met on 4th February, 2015 interalia, to discuss: • Performance evaluation of Non Independent Directors and Board of Directors as a whole; • Performance evaluation of the Chairman of the Company; • Evaluation of the quality of flow of information between the Management and Board for effective performance by the Board. The Board of Directors expressed their satisfaction with the evaluation process. Policy on Director's Appointment and Remuneration The Company has a "Nomination and Remuneration Committee of Directors" in place. The Committee reviews and recommend to the Board for remuneration for Directors and Key Managerial Personnel and other employee up to one level below of Whole Time Director. The Company does not pay any remuneration to Independent and Non-Executive Directors of the Company other than sitting fee for attending the meetings of the Board and Committees of the Board. Remuneration to the Whole-time Director is governed under the relevant provisions of the Act and approvals. The Company has devised the Nomination & Remuneration policy for the appointment, re-appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. All the appointment, re-appointment and remuneration Directors, Key Managerial Personnel and Senior Management Personnel are as per the Nomination & Remuneration policy of the company. Vigil Mechanism The Company has established a vigil mechanism and accordingly framed a Whistle Blower Policy. The policy enables the employees to report to the management instances of unethical behavior, actual or suspected fraud or violation of Company's Code of Conduct. Further the mechanism adopted by the Company encourages the Whistle Blower to report genuine concerns or grievances and provide for adequate safe guards against victimization of Whistle Blower who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of Vigil Mechanism is reviewed by the Audit Committee from time to time. None of the Whistle blowers has been denied access to the Audit Committee of the Board. The Whistle Blower Policy of the Company is available on the website of the Company www.transformerindia.com Risk Management Policy The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing/ mitigating the same. The Company has framed a formal Risk Management Framework for risk assessment and risk minimization which is periodically reviewed to ensure smooth operation and effective management control. The Audit Committee also reviews the adequacy of the risk management framework of the Company, the key risks associated with the business and measure and steps in place to minimize the same. Sexual Harassment of Women at Workplace There were no incidences of sexual harassment reported during the year under review, in terms of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Directors' Responsibility Statements As stipulated in Section 134(3)(c) read with sub section 5 of the Companies Act, 2013, Directors subscribe to the "Directors' Responsibility Statement", and confirm that: a) In preparation of annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed and that no material departures have been made from the same; b) 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 or loss of the Company for that year; c) The Directors had 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 Directors had prepared the annual accounts for the year ended 31st March, 2015 on going concern basis. e) The Directors had laid down the internal financial controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Insurance Assets of your Company are adequately insured against various perils. Corporate Governance The Company endeavours to maximize the wealth of the shareholders by managing the affairs of the Company with pre-eminent level of accountability, transparency and integrity. A separate section on Corporate Governance standards followed by your Company, as stipulated under Clause 49 of the Listing Agreement entered into with the Stock exchanges is enclosed as an annexure to this Report. A Certificate from Mr. Tapan Shah, Practicing Company Secretary, conforming compliance to the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to this Annual Report. Management Discussion and Analysis The Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented in the separate section forming part of this Annual Report. Material Changes and Commitment Affecting Financial Position of the Company There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of financial year of the Company i.e. 31st March, 2015 and the date of Director's Report i.e. 27th May, 2015. Particular of Employees The ratio of remuneration of each Director to the median employee's remuneration and other details in terms of Subsection 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are forming part of this Annual Report as Annexure - 2. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are forming part of this Annual Report as Annexure - 2. Extract of Annual Return Pursuant to Sub-section 3(a) of Section 134 and Sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 the extract of the Annual Return as at 31st March, 2015 in Form MGT-9 forms part of this Annual Report as Annexure-3. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo Information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo, required under Section 134 (3) (m) of the Companies Act, 2013 forms part of this Annual Report as Annexure-4. Contracts or Arrangements with Related Parties All the related party transactions that were entered during the financial year were in the Ordinary course of business of the Company and were on arm's length basis. There were no materially significant related party transactions entered by the Company with its Promoters, Directors, Key Managerial Personnel or other persons which may have potential conflict with the interest of the Company. All Related Party transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval for normal business transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature and accordingly the required disclosures are made to the Committee on quarterly basis in terms of the approval of the Committee. The policy on Related Party Transactions as approved by the Board of Directors is uploaded on the website of the Company www.transformerindia.com The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, as prescribed in Form AOC - 2. Internal Financial Control Systems and their Adequacy Your Company has laid down the set of standards, processes and structure which enables to implement internal financial control across the Organization and ensure that the same are adequate and operating effectively. To maintain the objectivity and independence of Internal Audit, the Internal Auditor reports to the Chairman of the Audit Committee of the Board. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with the operating systems, accounting procedures and policies of the Company. Based on the report of Internal Auditor, the process owners undertake the corrective action in their respective areas and thereby strengthen the control. Significant audit observation and corrective actions thereon are presented to the Audit Committee of the Board. AUDITORS Statutory Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad (Firm Registration No. 117365W), was appointed as the Statutory Auditors of the Company, to hold the office from the conclusion of the 20th Annual General Meeting to the conclusion of the 23rd Annual General Meeting, subject to ratification of the appointment by the members at every Annual General Meeting. The Company has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Company in the terms of the provisions of the Companies Act, 2013 and the Rules made thereunder. Accordingly the Board of Directors had recommended the ratification of appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants as the Statutory Auditors of the Company to hold the office from the ensuing AGM till the conclusion of the next AGM on such remuneration as may be determined by the audit committee in consultation with the auditors. Internal Audit M/s. Sanjay Vastupal & Co, Chartered Accountants, Ahmedabad has been Internal Auditors of the Company. Internal auditors are appointed by the Board of Directors of the Company on a yearly basis, based on the recommendation of the Audit Committee. The Internal Auditor reports their findings on the Internal Audit of the Company, to the Audit Committee on a quarterly basis. The scope of internal audit is approved by the Audit Committee. Cost Auditor As per Section 148 read with Companies (Audit & Auditors) Rules, 2014 and other applicable provisions, if any, of the Companies Act, 2013 the Board of Directors of your Company has appointed M/s. Rajendra Patel & Associates, Cost Accountants as the Cost Auditor of your the Company for the financial year 2015-16 on the recommendations made by the Audit Committee subject to the approval of the Central Government. The remuneration proposed to be paid to the Cost Auditors, subject to the ratification by the members at the ensuing Annual General Meeting, would be f 75,000/-(Rupees Seventy Five Thousand only) excluding out of pocket expenses, if any. The Cost Audit Report for the financial year 2013-14 was filed within the due date. The due date for submission of the Cost Audit Report for the year 2014-15 is within 180 days from 31st March, 2015. 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, your Company had appointed Mr. Tapan Shah, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the FY 2014-15. The Report of the Secretarial Audit Report for the FY 2014-15 is annexed to this Annual Report as Annexure-5. As Secretarial Audit Report do not call for further explanation or comments it may be treated as the adequate compliance of Section 134 of the Companies Act, 2013. Auditors' Report The Auditors' Report on the accounts of the Company for the accounting year ended on 31st March, 2015 is self-explanatory and do not call for further explanations or comments that may be treated as adequate compliance of Section 134 of the Companies Act, 2013. General Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1) Details relating to deposits covered under Chapter V of the Act. 2) Issue of Equity Shares with differential rights as to dividend, voting or otherwise. 3) Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and ESOS. 4) Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. 5) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. Acknowledgment Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company. By Order of the Board of Directors Jitendra U. Mamtora Chairman (DIN: 00139911) Place: Ahmedabad Date: 27th May, 2015 |