Spel Semiconductor Ltd
Directors Reports
Your Directors present the 36th Annual Report of the Company together with the
Audited Accounts for the year ended Mar 31, 2021. Financial Highlights / Performance/ the
Operating results of your Company as per IndAS Financial Statements for the year ended Mar
31, 2021 are given below:
1. Financial Highlights/Performance
| Particulars |
Year ended Mar 31, 2021 |
Year ended Mar 31, 2020 |
| Sales |
1,592.11 |
3,653.74 |
| Other Income |
545.23 |
179.65 |
| PBIDT |
(17.36) |
778.22 |
| Finance Cost |
116.45 |
142.61 |
| Depreciation |
430.44 |
498.24 |
| Profit / (Loss) before Before Exceptional items |
(564.25) |
137.37 |
| Exceptional items |
280.08 |
2.72 |
| Profit / (Loss) before Tax |
(844.33) |
134.65 |
| Tax Expense |
19.17 |
29.29 |
| Profit / (Loss) after Taxation |
(863.50) |
105.36 |
Company's performance
During the year under review the overall performance of your Company has shown negative
growth rate due to lock down imposed for sevetral months as a result of impact of
Covid-19. The turnover of the company has come down by 56.43% as compared to the previous
year. Sincere efforts taken by the marketing team together with the sustained marketing
strategy evolved by the company yielded sufficient growth with better prospects in the
years to come.Your Company had maintained good relationship with all its Customers in US
& Europe and has seen good improvement in capturing business from one of the big
Customers in the US. It is expected to improve production orders in FY 2021-22. The
outlook for FY 2021-22 is good and SPEL has plans to induct new Customers from Europe
& US regions.
2. Dividend
Due to insufficiency of profits during the year under review, dividend could not be
paid during the year.
The Global Semiconductor Industry:
The Semiconductor Industry Association (SIA) today announced global semiconductor
industry sales were $40.0 billion for the month of January 2021, an increase of 13.2% over
the January 2020 total of $35.3 billion and 1.0% more than the December 2020 total of
$39.6 billion. Monthly sales are compiled by the World Semiconductor Trade Statistics
(WSTS) organization and represent a three-month moving average. SIA represents 98% of the
U.S. semiconductor industry by revenue and nearly two-thirds of non-U.S. chip firms.
Global semiconductor sales got off to a strong start in 2021, increasing both year-to-year
and month-to-month in January . Global semiconductor production is on the rise to meet
increasing demand and ease the ongoing chip shortage affecting the auto sector and others,
and annual sales are projected to increase in 2021.
Regionally, year-to-year sales increased across all markets: Asia Pacific/All Other
(16.0%), the Americas (15.4%), China (12.4%), Japan (9.6%), and Europe (6.4%).
Month-to-month sales increased in China (3.4%), Europe (2.0% percent), and Asia
Pacific/All Other (1.5%), but were down in Japan (-1.0%) and the Americas (-3.0%).
A. Market Drivers
Despite the global pandemic and resulting economic downturn, the global semiconductor
industry remained resilient with revenue growth of 6.5% to reach the $440bn mark in
2020.As per the 2021 Global Semiconductor Industry Outlook, the logic and memory chips
segments were among the fastest growing with over 10% growth reported from each of these
sub-categories in 2020.
A significant growth area for semiconductors over the coming decade is likely to be the
Internet of Things (IoT), whereby devices are embedded with sensors and software and
connect to each other over the internet.
The potential applications are enormous. Smart factories are a key example, enabling a
shop floor to be monitored remotely. Everything from a machine's energy usage to its
downtime can be monitored, as can warehouses and inventories, helping to improve
efficiency, free up capacity and reduce costs.
Another example is connected homes, allowing lighting and appliances to be controlled
from a phone or tablet. IoT devices could also be used to improve security, enabling
remote monitoring of any open windows, leaks or smoke. According to Statista, the number
of IoT connected devices is forecast to rise from 7.74 billion in 2020 to 25.44 billion in
2030
B. Semiconductor Mergers:
Five big acquisition announcements and more than a dozen smaller deals in 2020 pushed
the total value of M&A agreements in the year to an all-time high of $118.0 billion,
surpassing the previous record of $107.7 billion reached in 2015 The five biggest 2020
M&A agreements announced in July, September, and October had a combined value of $94.0
billion, which represented about 80% of the total for the entire year.
The 2H20 wave of huge acquisition agreements began in July when Analog Devices
announced it would buy Maxim Integrated Products for $21 billion in stock. Analog Devices
expects the purchase to be completed by the summer of 2021 and believes the acquisition
will boost its market share in analog and mixed-signal ICs for automotive systems
(especially in autonomous vehicles), power management, and application-specific IC
designs. Before the Maxim purchase was announced, semiconductor acquisition agreements in
the first six months of 2020 had a combined value of just $2.1 billion. The M&A total
was only $352 million in 2Q20, when the initial surge of Covid-19 virus crisis was sinking
the entire global economy.
After a handful of other smaller acquisition agreements in July and August of 2020,
graphics processor leader Nvidia blew the M&A lid off the coronavirus-plagued year
when it announced a $40 billion megadeal in September to buy processor-design technology
supplier ARM in the U.K. from holding company SoftBank in Japan. For more than a decade,
ARM has licensed nearly all of the central processor technology used in smartphones, and
it is expanding its into many other applications just like Nvidia including data center
systems, automotive automation, robotics, and acceleration of machine learning and
artificial intelligence (AI). The prospects of Nvidia owning ARM, its design cores,
instruction sets, and microarchitectures has raised concerns among major SoC processor
developing companies, which license the technology including Qualcomm, Samsung, MediaTek,
and Apple. To quell concerns, Nvidia immediately promised to maintain
ARM's independence in terms of licensing its intellectual property (IP) to other IC
suppliers and systems makers. The acquisition is expected to be completed by March 2022,
but must win clearance from regulatory agencies in the U.S., U.K., European Union, South
Korea, Japan, and China.
Four weeks after Nvidia announced the largest semiconductor acquisition in history,
more large M&A agreements were announced in October 2020. It started with Intel
announcing the sale of its NAND flash memory business and 300mm wafer fab in China to SK
Hynix in South Korea for $9 billion. In the last week of October 2020, Advanced Micro
Device announced an agreement to buy programmable logic leader Xilinx for about $35
billion in stock. This deal is scheduled to be completed by the end of this year. Also at
the end of October, Marvell Technology announced it would acquire high-speed interconnect
and mixed-signal IC supplier Inphi in Silicon Valley for $10 billion in stock and cash.
The acquisition is expected to close in the second half of 2021.
It is important to note that IC Insights' M&A list covers purchase agreements for
semiconductor companies, business units, product lines, chip intellectual property (IP),
and wafer fabs, but it excludes acquisitions of software and system-level businesses by IC
companies. For instance, the M&A list excludes Intel's $900 million acquisition of
mobile-application software supplier Moovit in Israel in May 2020. Moovit's urban mobility
software apps will be used by Intel to increase its capability to automate ground travel
and planning with Internet connections, but the Israeli startup is not a semiconductor
company. IC Insights' acquisition list also excludes transactions between semiconductor
capital equipment suppliers, material producers, chip packaging and testing companies, and
design-automation software firms.
As in recent years, semiconductor acquisitions in 2020 were driven by large IC
companies looking to sharpen their positions in emerging and high-growth market
opportunities, such as embedded machine-learning and AI capabilities, self-driving cars,
all-electric vehicles, expansion of data centers for cloud-computing services and
proliferation of the sensors and systems connected to Internet of Things. Industry
consolidation also continued to play a key role in many of the 2020 acquisition
agreements.
The top-five acquisition agreements in 2020 were among the largest of the 51
semiconductor M&A deals made over the past 21 years that were valued at $1.0 billion
or more. Three of the 2020 agreements rank in the top five with No. 1 being Nvidia's $40
billion bid for ARM, No. 3 being AMD's planned $35 billion purchase of Xilinx, and No. 5
being Analog Devices' move to buy Maxim for $21 billion. More than half of the top 51
semiconductor industry acquisition agreements 32 of them have occurred in the past six
years (2015-2020).
C. Outsourced Assembly and Test (OSAT) Industry
A global semiconductor shortage and increased demand for microchips are likely to boost
the cash flows from operations for foundries and outsource assembly and testing (OSAT)
companies in 2021 as per the Fitch Ratings. Foundries like TSMC and Samsung are likely to
be the key beneficiaries of the robust 2021 chip demand as they will enjoy strong pricing
power. TSMC with its market share of over 50% in the foundry industry is likely to see
revenue growth of 10-15% in 2020-25. Additionally, the revenue growth for the OSAT
companies is likely to see substantial growth in 2021 as higher chip demand will boost the
need for assembly and testing services .The chip shortage could also lead to a cyclical
uptrend for larger IDMs and fabless companies like Intel (INTC), Texas Instrument (TXN),
Nvidia (NVDA), Advanced Micro Devices (AMD).
D. The Indian Semiconductor Industry
The Indian semiconductor industry offers high growth potential areas as the industries
which source semiconductors as inputs are themselves witnessing high demand. The end-use
industries such as mobile devices, telecommunication equipment, information technology,
office automation (IT & OA), industrial machinery, automobiles and several other
industries have applications for computing in some form or other and thereby necessarily
have growing demand for semiconductors. Now with the concept of Internet of Things (IoT)
picking up momentum, the next generation of interconnected devices would further increase
the demand for intelligent computing, thereby creating sustainable demand for
semiconductors.
India has a very fast growing electronics system design manufacturing (ESDM) industry.
India also has a strong design base with more than 120 units. According to the Ministry of
Electronics and Information Technology (MeitY), nearly 2,000 chips are being designed
every year in India and more than 20,000 engineers are working on various aspects of chip
design and verification. The government has a strong focus in developing the ESDM
ecosystem in India. Several subsidies and other incentives are on offer for setting up
electronics manufacturing units in India.
3. Human Resources Development
Your Company has enthroned the attributes listed below as its core values. The
Management will assiduously practice and enthuse its Employees to imbibe these virtues.
Towards this end training is imparted every month, every Employee goes throughout the
drill at least once in six months :
Business Ethics : defines us as a Company
Professionalism : defines us as Individuals
Citizenship : defines our contribution to Society
SPEL's medium for Corporate Social Responsibility (CSR) is through Socio-Economic
Contribution (S-E-C) and SPEL Employees Social Service Organization (SESSO). For most
people, the idea of Social Service is donating money to a social organization - perhaps an
old-age home or an orphanage or similar. This however is the easy part. The difficult part
is volunteering one's 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 on
building 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 work,
working 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 on
an increased basis to social causes S-E-C at SPEL is all about how we can contribute
socially during Phase 2 itself while also handling Economic Development. Towards this,
there are 3 areas that each of us can assist 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 Blood
Donation camp. iii) Assistance to orphanage and old age home located near Factory.
4. Material changes affecting the financial position of the Company which have
occurred between the end of Financial Year and the date of the report. Nil
5. Details of significant and material orders passed by the regulators or courts or
tribunals impacting the going concern status and Company's operations in future Nil
6. Adequacy of internal financial controls
The Company's internal financial controls systems are commensurate with the nature of
business and the size and complexity of its operations. These are routinely tested by the
Internal Auditors and cover all key business areas.
7. Subsidiary/Joint Ventures/Associate Companies
Your Company had incorporated a Wholly Owned Subsidiary Company during FY 2017-18, in
the name and style of SPEL Semiconductor Packaging Limited. This Company is yet to
commence production. It is envisaged to commence production after getting due statutory
approvals from the authorities.
8. Deposits
The Company has not accepted any deposits from public and as such, no amount on account
of principal or interest on deposits from public was outstanding as on the date of the
Balance Sheet.
9. Statutory Auditors
Mr.K.Nadhiswaran, CharteredAccountant, has expressed his consent for the re-appointment
as Statutory Auditor for the Financial Year 2021-22 and has confirmed that the
appointment, if made, will be in accordance with the limits specified under Section 139 of
the Companies Act2013.
10. Share Capital
There has been no change in the share capital of the Company during the year.
11. Extract of the Annual Return
Pursuant to the provisions of Section 92 (3) and 134 (3) (a) of the Companies Act,
2013, extract of the Annual Return (Form MGT-9) for the year ended March 31, 2021 will be
placed on the website of the Company at http://www.natronix.net/forms.html.
12. Conservation of energy, technology absorption and foreign exchange earnings and
outgo:
The details of conservation of energy, technology absorption, foreign exchange earnings
and out go are as follows:
Conservation of Energy
The Company has in place an Energy Committee which meets once a month. This Committee
consists of Cross-functional Executives. It assesses the potential areas, develops means
to save energy and implements the plan with the approval of the Management.
Measures were taken during the year to conserve water and electricity resorting to
reuse of Dicing process water, rain water harvesting, power factor improvement and
investment on air cooled chillers and air compressors.
| Savings in Electricity |
52,246 Units |
| Savings in consumption |
Water 3,510 |
KL |
Technology Absorption
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 its
exports. Foreign Exchange used during the year:$3.00 Lakhs Foreign Exchange earned during
the year :$5.32 Lakhs
13. Research & Development
The Company has carved out an ambitious plan of investment in R&D. This will
include investment in Package Intellectual Property, thereby assisting Company's revenue
and profitability in the future years.
14. Directors and Key Managerial Personnel
Mr.K.Ravikumar, is retiring by rotation, being eligible, offers himself for
re-appointment.
15. Number of meetings of the Board
Four Meetings of the Board were held during the year. For details of the meetings of
the board, please refer to the Corporate Governance Report, which forms part of this
report.
16. Audit Committee
The details pertaining to composition of Audit Committee are included in the Corporate
Governance Report, which forms part of this report
17. Vigil mechanism for Directors and Employees
The Company has a Vigil Mechanism by way of Whistle Blower Policy to provide a Vigil
Mechanism for Employees and Directors to report genuine concerns. The provisions of this
policy are in line with Section 177 (9) of the Act. A copy of the policy is uploaded in
the website of the Company.
18. Nomination and Remuneration Committee
The details pertaining to Nomination and Remuneration Committee are included in the
Corporate Governance Report, which forms part of this report
19. Loans, guarantees or investments
Particulars of loans, guarantees and investments have been disclosed in the financial
statements.
20. Contracts or arrangements with Related Parties
The particulars of every contract or arrangements entered into by the Company with
related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013
including certain arm's length transactions under third proviso thereto have been
disclosed in Form No. AOC -2.
21. Managerial Remuneration
Managerial Remuneration is given in annexure which forms part of this report.
22. Secretarial Audit Report
Secretarial Audit Report is given as annexure, which forms part of this report.
23. Formal Annual Evaluation of Board on its own performance, Committees of the Board
and the individual directors
The Board of Directors has carried out an annual evaluation of its own performance,
Committees of the Board and the individual directors pursuant to the provisions of the Act
and Corporate Governance as prescribed under Regulation 17 (10) of SEBI (LODR) Regulation
2015. In a separate meeting of the independent directors, performance of the
Non-Independent Director and performance of the Board as a whole was evaluated.
24. Familiarization Programme for Independent Directors
The Company has prepared and presented a power point presentation for Independent
Directors in order to enable them to familiarize with the Company's policies and
practices.
25. Risk management
A Risk Management Committee to identify and monitor the risks has been formed with a
responsibility to review the risks and evolve mitigation plan required.Periodical action
is taken to address the major risks identified.
26. Corporate Governance Certificate
The Corporate Governance Certificate from the Auditors regarding compliance of
conditions of Corporate Governance as stipulated in Regulation 23(4) of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 is annexed with this report.
27. Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the
best of their knowledge and ability confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards have
been followed along with proper explanation relating to material departures
(b) they have 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 loss of
the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding the
assets of the Company 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
that such internal financial controls are adequate and operating effectively and
(f) they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
(g) 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 and external consultants and the reviews performed by the management
and the relevant board committees, including the audit committee, the Board is of the
opinion that the Company's internal financial controls were adequate and effective during
the Financial Year 2020-21.
Acknowledgements
Your Directors place on record their gratitude especially to the Promoters, who had
assisted significantly towards the recovery bath. Directors also placed on record their
gratitude to the Government of India, the Government of Tamil Nadu, Financial
Institutions, Bankers, Insurance Companies, Customs& Excise authorities, valued
overseas Customers & Vendors and the Promoters for the continued assistance and
support extended to the Company.
Yours Directors wish to place on record, their appreciation of the efficient and loyal
services rendered by the supportive Employees at all levels of the Company. Yours
Directors wish to thank the Shareholders who constitute the mainstay of the Company for
their unstinted support, forbearance confidence reposed on the Management.
|
By order of the Board |
|
|
for SPEL Semiconductor Limited |
|
| N. Suryanarayanan |
D. Balakrishnan |
S. Chandramohan |
| Director |
Whole Time Director &CEO |
Director |
| DIN 02282919 |
DIN: 02131242 |
DIN 00052571 |
23rdAugust 2021
Chennai
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