Your Directors present the 30thAnnual Report of the Company together withthe Audited Accounts for the year ended Mar 31 2015.
1. Financial Highlights / Performance
The Operating results of your Company for the year ended Mar 31 2015 are given below
(Rs in Lakhs)
|Particulars ||Year ended Mar 31 2015 ||Year ended Mar 31 2014 |
|Sales ||4719.37 ||6338.89 |
|Other Income ||137.81 ||114.86 |
|PBIDT ||1368.28 ||1586.20 |
|Interest ||404.29 ||470.37 |
|Depreciation ||1012.40 ||1096.13 |
|Profit before Taxation ||(48.40) ||19.70 |
|Tax / Deferred Tax ||(13.18) ||(12.48) |
|Profit after Taxation ||(35.22) ||32.18 |
Though your Companys production remained the same during both the financialyears drop in Average Selling Price has resulted in depressed receipts. Due to increasein employee cost as compared to the previous financial year a marginal loss has resultedduring the year.
Due to the loss for the year dividend could not be paid during the year.
The reserves of the Company has been reduced from Rs 4152.38 lakhs to Rs 4085.75lakhs at the end of the year due to transition to Schedule II of the Companies Act 2013relating to depreciation (net of deferred tax) Rs 31.41 lakhs and due to the loss for theyear Rs 35.22 lakhs.
4. Company Performance
The Financial Year 2014-15 had seen a cyclical performance in terms of order receipts.The first quarter was soft followed by robust second quarter. The Customer demandsfurther slowed down in third & fourth quarters. This is due to the drop in demand fromend Customers like delayed product launches drop in product Sales etc. & excessinventory situation. In particular the demand drop from a major US brand mobilemanufacturer from third quarter was predominant.
The business with most of the Important / Growing / emerging Customers is on the rise.There have been improved orders new product introductions & Customer additions duringthis year. This was made possible due to the Engineering Application support from SPELapart from the QCDS factors (Quality Cost Delivery Service).
SPEL was able to strengthen relationship with its one of the biggest European Customersand the volumes are growing. The outlook for FY 2015-16 is good and other strategicpartnership for new projects like Smartcard Module manufacturing are being discussed.
The demand for the packages supported by SPEL is steady for leaded packages and growingfor QFNs and contribution is expected to increase in future years.
a. Leaded Packages SPEL is able to find opportunities for increased loading fromexisting Customers to utilize the available capacity. No new Capacity additions have beenplanned
b. QFN Packages Demand is growing. Flip Chip QFN is witnessing more growth thannormal QFN and SPEL is planning to have this capability in the next Financial Year.
5. Human Resources Development
Your Company has enthroned the attributes listed below as its core values. TheManagement will assiduously practice and enthuse its Employees to imbibe these virtues.Towards this end training is imparted every month every Employee goes throughout thedrill at least once in six months
a. Business Ethics : defines us as a Company b. Professionalism : defines us asIndividuals c. Citizenship : defines our contribution to Society
SPELs medium for Corporate Social Responsibility (CSR) is through Socio-EconomicContribution (S-E-C) and SPEL Employees Social Service Organization (SESSO). For mostpeople the idea of Social Service is donating money to a social organization - perhaps anold-age home or an orphanage or similar. This however is the easy part. The difficult partis volunteering ones time to improve society.
When can we make a contribution to Society?
During Phase 1 of our lifetime perhaps up to the age of 35 we are so focused onbuilding our careers starting our families & establishing a name for ourselves
During Phase 2 perhaps from age of 35 thru 65 we are the most active in our workworking as a team being able to significantly contribute to Economic Development.
During Phase 3 perhaps from age 65 onwards we are most able to contribute our time onan increased basis to social causes
S-E-C at SPEL is all about how we can contribute socially during Phase 2 itself whilealso handling Economic Development. Towards this there are 3 areas that each of us canassist by making these a part of our day to day approach :
1. Following discipline in any and everything we do.
2. Providing a helping hand to people around us in any way we possibly can.
3. Showing the right path forward to people around us.
S-E-C in SPEL is primarily done by One-to-One Mentoring as each person encourages &motivates the other towards a more purposeful & effective lifestyle.
As part of the core values following activities were undertaken through SESSO : i)Educational assistance to the needy people in and around Factory. ii) Voluntary BloodDonation camp. iii) Assistance to orphanage and old age home located near Factory.
6. Material changes affecting the financial position of the Company which haveoccurred between the end of Financial Year and the date of the report.
A section of the workers of the Company has gone on strike since mid Apr 2015 raising acharter of demands. This has affected the normal production and the execution of theorders from the Customers. The Companys Management has taken all possible steps andthe normalcy has been restored as the strike has been called off on Jun 18 2015.
7. Details of significant and material orders passed by the Regulators or Courtsor Tribunals impacting the going concern status and Companys operations in future.
8. Adequacy of internal financial controls with reference to the FinancialStatements.
Details in respect of internal financial controls and their adequacy are included inthe MDA which forms part of this report.
9. Subsidiary/Joint Ventures/Associate Companies
The Wholly Owned Subsidiary Company SPEL America Inc. in California USA has beenrendering marketing services to your Company resulting in enhanced Customer base andsatisfaction. There has been no material change in the nature of the business of theSubsidiary Company.
Pursuant to provisions of Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Companys Subsidiary in Form AOC-1 isattached to the financial statements of the Company.
Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited accounts in respect of the Subsidiary Company are available in the website of theCompany www.spel.com.
The annual accounts of the Subsidiary Company and related detailed information are keptin the Registered Office of the Holding Company and will be made available to theShareholders during working hours.
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
11. Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s. M.S. Krishnaswami & Rajan Chartered Accounts (Firm Registration No.01554S) wereappointed as Statutory Auditors of the Company from the conclusion of the 29thAnnual General Meeting (AGM) of the Company held on Sep 15 2014 till the conclusion ofthe 33rd Annual General Meeting of the Company to be held in the year 2018subject to ratification of their appointment at every AGM.
12. Reply to Auditors Comments in their Report
The Auditors have commented in their report that
a) in respect of the procedures of physical verification of work-in-progress(including box stock) adopted by the Management the periodicity of verification of thesaid stock need to be improved considering the quantity and value of the said stocks.
The Management is taking appropriate steps to improve the periodicity of physicalverification of work-in- progress (including box stock) as suggested by Auditors duringthe current year.
b) the Company not regular in depositing undisputed Provident Fund Employee StateInsurance and Income tax (TDS) and Property dues during the year.
Due to decline in the performance during the year and attendant financial constraintsthe Company has been making the payments of statutory dues with a delay of 23months. The Company expects to improve the performance based on the measures taken andalso improve liquidity ensure that the statutory dues will be paid regularly in future
13 . Share Capital
There has been no change in the share capital of the Company during the year.
14. Extract of the Annual Return
As provided under Section 92 (3) of the Act the extract of Annual Return is given inannexure in the prescribed Form MGT9 which forms part of this report.
15 . Conservation of energy technology absorption and foreign exchange earningsand outgo
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows :
Conservation of Energy
The Company has in place an Energy Committee which meets once a month. This Committeeconsists of Cross-functional Executives. It assesses the potential areas devises means tosave energy and implements the plan with the approval of the Management.
Measures were taken during the year to conserve water and electricity resorting toreuse of Dicing process water rain water harvesting power factor improvement andmodification of the condenser in the Air conditioner. The savings achieved were :
|Power ||Water |
|918333 Units ||2750 KL |
The particulars regarding Technology Absorption are not applicable to your Company.
Foreign Exchange Earnings and Outgo
Your Company is a 100% Export Oriented Unit and is constantly striving to increase itsexports.
Foreign Exchange used during the year : Rs 2710.32 Lakhs Foreign Exchange earnedduring the year : Rs 5245.52 Lakhs
16. Research & Development (R&D)
The Company has carved out an ambitious plan of investment in R&D. This willinclude investment in Package Intellectual Property thereby assisting Companysrevenue and profitability in the future years.
17. Directors and Key Managerial Personnel
Dr. A. Besant C. Raj Mr. N. Sivashanmugam Dr. T. S. Vijayaraghavan & Mr. N.Ramakrishnan resigned from the Board of the Company w.e.f Jun 19 2014 Jul 30 2014 Sep8 2014 & Sep 12 2014 respectively. The Board places on record its appreciation oftheir invaluable contribution and guidance provided by them.
Pursuant to the provisions of Section 149 of the Act Mr. K. Ravikumar was appointed asIndependent Director at the Annual General Meeting of the Company held on Sep 15 2014 tohold office till Sep 14 2019 not liable to retire by rotation. The terms and conditionsof appointment of Independent Director are as per Schedule IV of the Act.
They have submitted a declaration that they meet the criteria of Independence asprovided in Section 149 (6) of the Act and there has been no change in the circumstanceswhich may affect their status as Independent Directors during the year.
Pursuant to the provisions of Section 203 of the Act Mr. R. Venkatesh Kumar ChiefFinancial Officer as Key Managerial Personnel w.e.f Sep 15 2014 was formalized.
18. Number of meetings of the Board
7 (Seven) Meetings of the Board were held during the year. For details of the meetingsof the board please refer to the Corporate Governance Report which forms part of thisreport.
19. Audit Committee
The details pertaining to composition of audit committee are included in the CorporateGovernance Report which forms part of this report
20. Vigil mechanism for Directors and Employees
The Company has a vigil mechanism by way of Whistle Blower Policy to provide a VigilMechanism for Employees and Directors to report genuine concerns. The provisions of thispolicy are in line with Section 177 (9) of the Act and Clause 49 of the Listing Agreement.A copy of policy is uploaded in the website of the Company.
21. Nomination and Remuneration Committee
The details pertaining to Nomination and Remuneration Committee are included in theCorporate Governance Report which forms part of this report
22. Loans Guarantees or Investments
Particulars of Loans Guarantees and Investments have been disclosed in the financialstatements
23. Contracts or arrangements with related parties
The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arms length transactions under third proviso thereto have beendisclosed in Form No. AOC -2.
24. Secretarial Audit Report
Secretarial Audit Report is given as annexure which forms part of this report.
25. Formal Annual evaluation of Board on its own performance Committees of the Boardand the individual Directors
The Board of Directors has carried out an annual evaluation of its own performanceCommittees of the Board and the individual Directors pursuant to the provisions of the Actand Corporate Governance as prescribed under Clause 49 of the Listing Agreement.
In a separate meeting of the Independent Directors performance of the Non-IndependentDirector and performance of the Board as a whole was evaluated
26. Familiarisation programme for Independent Directors
The Company has prepared and presented a power point presentation for IndependentDirectors inorder to enable them to familirise with the Companys policies andpractices
27. Risk management
A Risk Management Committee to identify and monitor the risks has been formed with aresponsibility to review the risks and evolve mitigation plan required. Periodical actionis taken to address the major risks identified.
28. Corporate Governance Certificate
The Corporate Governance Certificate from the Auditors regarding compliance ofconditions of Corporate Governance as stipulated in Clause 49 of the Listing agreement isannexed with this report.
With regard to the comment on the post of Company Secretary being vacant the Companyhas already appointed a Company Secretary who is expected to join the Company in August2015.
29. Reply to comments by Secretarial Auditor in his report
With regard to the comment on the post of Company Secretary being vacant the Companyhas already appointed a Company Secretary who is expected to join the Company in August2015.
Regarding the comment that the Company is not regular in depositing un disputed PFESI Income Tax (TDS) and Property dues it is clarified that it is due to decline in theperformance during the year and attendant financial constraints the company has makingthe payment of statutory dues with delay of two three months. The Company expects toimprove the performance based on the measures taken also improve liquidity and ensure theStatutory dues will be paid regularly in future.
Regarding the comment on industrial unrest and strike it is clarified that a sectionof the workers of the Company has gone on strike since mid Apr 2015 raising a charter ofdemands. This has affected the normal production and the execution of the orders from theCustomers. The Companys Management has taken all possible steps and the normalcy hasbeen restored as the strike has been called off on Jun 18 2015.
Regarding the comment that MR-1 has not been filed it is clarified as the Company hasfiled E Form DIR-12 for appointment of Mr. D. Balakrishnan as Whole Time Director of theCompany the Company felt that no new form has to be filed for re designating him as KeyManagerial Personnel (E Form MR-1) as he has been continuing as the CEO of the Companysince 5 years.
As regards an instance of not filing MGT -14 for FY 2013-14 it is clarified that theCompany has filed E Form MGT- 14 for the approval of all four quarterly financials of FY2014-15 as per the provisions of Companies Act 2013 except for the approval of financialsof FY 2013-14 and Boards Report. Since it was during the initial days of new CompaniesAct the Company has inadvertently omitted to file the said Form and the board ofdirectors of the Company will ensure compliance.
Other comments on occurance of theft attrition of Directors and Inter CorporateDeposits it is clarified that comments given by Secretarial Auditor are self explanatoryin nature.
30. Directors Responsibility Statement
Pursuant to Section 134 (5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that (a) in the preparation of theannual accounts the applicable accounting standards have been followed along with properexplanation relating to material departures (b) they have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the loss of the Company for that period (c)they have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities
(d) they have prepared the annual accounts on a going concern basis (e)they have laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and operating effectively and
(f) they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Internal Statutory andSecretarial Auditors and External Consultants and the reviews performed by the Managementand the relevant board committees including the Audit Committee the Board is of theopinion that the Companys internal financial controls were adequate and effectiveduring the Financial Year 2014-15.
Your Directors place on record their gratitude to the Government of India theGovernment of Tamil Nadu Financial Institutions Bankers Insurance Companies Customs& Excise authorities valued overseas Customers & Vendors and the Promoters forthe continued assistance and support extended to the Company.
Yours Directors wish to place on record their appreciation of the efficient and loyalservices rendered by the Employees at all levels to the Company. Yours Directors wish tothank the Shareholders who constitute the mainstay of the Company for their unstintedsupport forbearance confidence reposed on the Management.
| ||By order of the Board |
| ||for SPEL Semiconductor Limited |
|Chennai ||D. Balakrishnan |
|Jul 23 2015 ||Whole Time Director & CEO |
| ||DIN: 02131242 |