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Directors Report Sr. No. Particulars Current Year Previous Year 1 Revenue (Net of Excise Duty) 43218.95 38423.18 2 Profit before Interest & Depreciation 4229.71 2978.01 Less: i) Interest 1049.85 904.63 ii) Depreciation 885.83 625.79 3 Profit before Tax 2294.03 1447.59 Less: Provision for Taxation 793.64 515.18 4 Profit after Tax 1500.39 932.41 Sr. No NAME AND ADDRESS OF THE COMPANY CIN/GLN SUBSIDIARY 1 Polycab Electrical Industries Private Limited U31401MH2013PTC241569 Subsidiary 2 Polycab Electronics Private Limited U32109DL2005PTC142512 Subsidiary 3 Polycab Wires Industries Private Limited U31401MH2007PTC175153 Subsidiary 4 Datar Nouveau Energietechnik Limited U31908MH2012PLC232089 Subsidiary 5 Jaisingh Wires Private Limited U31300MH1995PTC094751 Subsidiary 6 Tirupati Reels Private Limited U20232DL2015PTC275797 Subsidiary 7 Polycab Wires Italy SRL/Milano Italy N.A.– Foreign Subsidiary 8 Jaisingh Wires FZE/ Ras Al Khaima ,UAE N.A. Step Down Subsidiary Name of the statute Nature of dues Amount (INR in Millions) Period to which the amount relates Due date Date of payment Employees state insurance Act, 1948 Employees state insurance 0.04 2014–15 Various dates in FY 14–15 May 5,2015 Bihar Value Added Tax Act 2005 Value added Tax 0.32 2014–15 Various dates in FY 14–15 October 15,2015 Year Total Unit consumed from GEB (KWH) Total Units Generated from Wind mill (KWH) Balance units payable to GEB (KWH) % of Wind contribution 2014 – 15 38465182 13476241.43 24988940.57 35.03% Proposal for installing 5 MW Roof Top Solar plant submitted to management, planning to install 2 MW in FY 2016–17.
Your Directors have pleasure in presenting their 19th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015.
1. Financial highlights of the Company (Standalone)
(Amount in INR Millions)
2 REVIEW OF OPERATIONS
The year under review witnessed difficult market conditions. The GDP growth in 2014–15 was at 7.3% marginally above the GDP of 2013–14 of 6.9 %. Capital spending had not accelerated and Corporates were holding on to their capex spending. The real estate sector, which impacts the sales of house wires was also sluggish and the number of unsold inventory of housing units being very high. In these trying circumstances, the Company did very well to achieve a turnover of INR 43218.95 Millions, which is 10.79 % over the previous year. The growth in turnover was achieved primarily due to expanding the dealer and distributor network in markets where the Company’s market share was low. The Company invested in creating infrastructure in various regions and this helped growth in South and East. The Company’s continued cost focus ensured that the EBIDTA was at INR 423 Millions, which is 41% more than 2013–14.The EBIDTA % increased to 9.8% from 7.7% in 2013–14. The PBT increased to INR 229 Millions in 2014–15, a growth of 1.67% over the figures achieved in 2013–14.
a) An interim dividend on 70602919 equity shares of Rs. 10/– each @ 10% i.e. INR. 1/– per share was declared on 18th September, 2014 for financial year 2014–15. (Already paid)
b) Final dividend recommended on 141205838 equity shares of Rs. 10/– each @ 5% i.e. INR. 0.5/– per share.
4 CREDIT RATING
During the year under review the credit rating of the Company was upgraded from A+ to AA– as per Credit Rating report issued by Fitch India Ratings.
5 DETAILS OF SUBSIDIARIES
6 FIXED DEPOSITS
The Company has not accepted any deposits from public.
7 STATUTORY AUDITORS
M/s S. R. B. C & CO. LLP, were appointed as Statutory Auditors of your Company at the last Annual General Meeting held on 20th September, 2014 for a term of five consecutive years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors needs to be ratified by shareholders at every Annual General Meeting.
The Report given by the Auditors on the financial statements of the Company forms part of the Annual Report.
Explanation /comments by Board on qualification ,reservation or adverse remark or disclaimer made by the auditor:
Auditors Report on other Legal Requirements(Annexure referred to in paragraph 1 under the heading “Report on other Legal and Regulatory requirements”
(ii) (c) Auditors remarks: The closing inventory of work–in–Progress is determined and recorded based on physical verification and hence we are unable to comment on the discrepancy, if any,
Directors Comments: The Company follows the methodology of conducting physical verification followed by inventory based verification. The auditors view is that in the absence of inventory in the books, the Company has not compared the physical stock with the book stock and therefore, they are unable to comment on any discrepancy. Since there was no inventory of work in progress in the books, the Auditors were unable to comment on the same.
The Company has implemented the new ERP / Oracle in which inventory of work in progress was incorporated into the books. The Company has carried out and comparing all physical inventories and inventories of books and thus this comment of Auditors would not appear henceforth.
(iv) Auditors remarks: In our opinion and according to the information and explanations given to us there in an adequate internal control system commensurate with the size of the company and the nature of its business for purchase of fixed assets and sale of goods except for recognition of revenue at the year end in the correct accounting period The internal control system for purchase of inventory is adequate except documentation of quotation analysis for Engineering Procurement and Construction (EPC) business and vendor selection which needs strengthening . Except for the foregoing , there is no continuing failure to correct any major weakness in the internal control system of the company
Recognition of revenue:
The Company implemented the new ERP –Oracle and planned cut off period from Apr, 1st to Apr, 15th for the transition from Navision to Oracle. Since the Company was not in a position to ship the goods to the customers during the first fortnight of April, 15 in respect of Orders placed till 31st March, 2015, and the Company had to honor all these Orders as books were closed at mid night of 31st March, 2015 since invoices raised dated in March, 2015, but some of the shipments could only take–place in April, 2015. The Company to reverse sales books on March 31st, 2015. This was one of the event that not would not repeat.
The Company got into EPC Contracts during the year 2014–15. Since this was a new business the Company came up with the process relating to documentation of quotation analysis which was not in place. The Company has since rectified this and set up a process for documentation of quotation analysis.
In the year 2013–14 with a view to improving efficiency , Metal purchases and taking the benefit of falling premia for commodities, the Company got into contract with Vendors without the normal practice of vendor comparison and vendor due–diligence. This was one time transaction which continued in 2014–15 and since has been terminated. The Company now does not get into any new contract without following the due process for vendor selection.
(vii) (a) Auditors remarks: Undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.
Slight delay in few cases in payment of Provident Fund and Employees State Insurance Corporation was due to inadvertent errors and this has since been rectified.
(vii) (b) Auditors remarks: According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education protection fund, employees state insurance, income tax, sales tax, wealth tax,, service tax, customs duty, excise duty, cess and other material statutory dues which were outstanding, at the year end, for a period or more than six months from the date they became payable, are as follows:
Delay in payment of Employees State Insurance and Bihar Value Added Tax was due to inadvertent errors and this has since been rectified.
8 COST AUDITORS
M/s. N. Ritesh & Associates Mumbai, Cost Accountants were appointed for issuing Cost Audit Report and appointment of M/s. N.N.T. & Co. Mumbai, Cost Accountants, for compilation of data for such Cost Audit Report for the Financial Year 2015–16.
The subsidiaries company viz. Polycab Electronics Private Limited having registered office at National Capital Territory New Delhi has filed necessary petition with retrospective effect from 1st April, 2014 with Delhi High Court for its amalgamation with Polycab Wires Private Limited and the subsidiaries viz. Jaisingh Wires Private Limited, Polycab Wires Industries Private Limited, Polycab Electrical Industries Private Limited and Datar Nouveau Energietechnik Limited all having registered office in Maharashtra, have filed necessary petitions with retrospective effect from 1st April, 2014 with Bombay High Court for their amalgamation with Polycab Wires Private Limited, on 23rd July, 2015. Amalgamation orders in this regards are pending from respective High courts.
A INCREASE IN AUTHORISED SHARE CAPITAL FOR ISSUE OF BONUS SHARES
The authorized capital of the company was increased from Rs. 920 Million to Rs. 1500 Million for issuing bonus shares.
B INCREASE IN PAID UP SHARE CAPITAL PURSUANT TO ISSUE OF BONUS SHARES
The Company has issued bonus shares in the proportion of 1 (One) Equity share for every equity share held, by capitalizing the reserves. Consequently, the issued equity share capital now stands at Rs. 141, 20,58,380.
11 EXTRACT OF THE ANNUAL RETURN
The extract of the annual return in Form No MGT – 9 shall form part of the Board’s report as Annexure 1
12 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:
A) Conservation of energy:
(i) the steps taken or impact on conservation of energy;
All motors installed in machine are operating with VFD ( Variable Frequency Drive)
In last one year 40 % of MH (Metal Halide) lights are replaced with LED light resulting 30 % of energy saving in lighting.
Installed VFD in Air compressors to save 15 % of power in energy consumed by Air compressors.
Pumping system are in close loop with VFD and pressure transducer, resulting energy saving of 15 % in pumping.
In Rolling mill we have installed Oxygen analyzer to optimize fuel consumption ( Out two rolling mill it is in operation in one rolling mill, 2nd under installation).
(ii) The steps taken by the company for utilizing alternate sources of energy;
Polycab has 5 wind mills ( 3 Nos. of 1.5 MW and 2 Nos. of 1.8 MW), 35 % of total energy consumed in manufacturing unit ( Polycab– Halol) are generated by renewable sources, details for FY 14–15 are as follows.
(iii) the capital investment on energy conservation equipments
LED Lights – INR 12.553 Millions.
VFD for pump and Compressor – INR 2.382 Millions.
B) Technology absorption:
(i) the efforts made towards technology absorption; Nil
(ii) the benefits derived like product improvement, cost reduction, product development or import substitution; Nil
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) Nil
the details of technology imported; Nil
the year of import; NA
whether the technology been fully absorbed; Nil
if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and Nil
(iv) the expenditure incurred on Research and Development. Nil
C) Foreign exchange earnings and Outgo
The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.
Earning in Foreign Exchange during the year was 2730.85 Millions
CIF value of Imports was 7949.25 Millions
Expenditure in foreign currency amounted to 96.52 Millions
13 CONSOLIDATED FINANCIAL STATEMENT
The Consolidated financial statements of the Company and its subsidiary companies which form part of the annual report have been prepared in accordance with section 129(3) of the Companies Act, 2013. Further, a statement containing the salient features of the financial statement of subsidiaries companies in the prescribed format AOC – 1 is annexed herewith as Annexure 2 to this report. The statement also provides the details of performance and financial position of the Subsidiary Companies
14 KEY MANAGERIAL PERSONNEL
Mr. Chandrashekar Ponnuswamy – President & Group CFO was appointed as Key Managerial Personnel of your Company, in accordance with the provisions of Section 203 of the Companies Act, 2013.
15 CORPORATE SOCIAL RESPONSIBILITY (CSR)
The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure 3.
16 NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met 6 times during the financial year ended 31st March, 2015 in accordance with the provision of Companies Act, 2013 and rules made there under.
17 DETAILS OF ESTABLISHMENT OF WHISTLE BLOWER POLICY FOR DIRECTORS AND EMPLOYEES
A Whistle Blower Policy for Directors and employees of the company is constituted, to provide a mechanism which ensures adequate safeguard to employees and Directors from any victimization on rising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statement and reports, etc.
18 PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement, the company has in place The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’) and Rules made there under.
19 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
The Company has not given any loans, directly or indirectly or made any investment covered under section 186 of Companies Act, 2013. However, company has given a corporate guarantee to the tune of INR 695.2 Million towards working capital facilities to its subsidiary company viz Jaisingh Wires Pvt Ltd .
20. RISK MANAGEMENT POLICY
The Company has in place a risk management Policy.
21. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
During the financial year 2014–15, your company has entered into transactions with related parties as defined under section 2 (76) of the Companies Act, 2013 read with Companies (Specification of definitions details) rules, 2014, which were in the ordinary course of business and on arms length basis and in accordance with the provisions of Companies Act, 2013 and Rules made there under.
The form AOC – 2 pursuant to section 134(3)(h) of the Companies act read with rule 8(2) of the companies (Accounts) Rules, 2014 is set out as Annexure 4 to this report depicting the details of related party transaction as required under accounting standard 18 and as per section 188 of the Companies Act 2013.
22. PARTCULARS OF EMPLOYEES RELATED DISCLOSURES
The information required under Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel ) Rules, 2014, and forming part of the Directors report for the year ended 31st March, 2015 is given in Annexure 5
Revenue (Net of Excise Duty)
Profit before Interest & Depreciation
Less: i) Interest
Profit before Tax
Less: Provision for Taxation
Profit after Tax
NAME AND ADDRESS OF THE COMPANY
Polycab Electrical Industries Private Limited
Polycab Electronics Private Limited
Polycab Wires Industries Private Limited
Datar Nouveau Energietechnik Limited
Jaisingh Wires Private Limited
Tirupati Reels Private Limited
Polycab Wires Italy SRL/Milano Italy
Jaisingh Wires FZE/ Ras Al Khaima ,UAE
Step Down Subsidiary
Name of the statute
Nature of dues
Amount (INR in Millions)
Period to which the amount relates
Date of payment
Employees state insurance Act, 1948
Employees state insurance
Various dates in FY 14–15
Bihar Value Added Tax Act 2005
Value added Tax
Various dates in FY 14–15
Total Unit consumed from GEB (KWH)
Total Units Generated from Wind mill (KWH)
Balance units payable to GEB (KWH)
% of Wind contribution
2014 – 15
Proposal for installing 5 MW Roof Top Solar plant submitted to management, planning to install 2 MW in FY 2016–17.