To the Members
The Directors have pleasure in presenting the 41st Annual Report and theAudited Statement of Accounts for the year ended March 312016.
1. Financial highlights
(Rs. in lakhs)
|Details || |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Revenue ||14707 ||14156 ||14893 ||14342 |
|EBITDA ||1956 ||2360 ||1822 ||2342 |
|Depreciation ||312 ||355 ||325 ||363 |
|Profit before tax ||1644 ||2005 ||1497 ||1979 |
|Provision for tax ||607 ||670 ||612 ||670 |
|Profit after tax ||1037 ||1335 ||885 ||1309 |
The Directors are happy to recommend a dividend of Rs. 3.50 (Rupees three and paisefifty only) per share (One hundred and seventy five percent-same as in the previous year).
3. Reserves and surplus
The Directors propose to transfer Rupees two crores (Previous year- Rupees four crores)to the General Reserve. Correspondingly an approximate amount of Rupees twenty one crores(Previous year - Rupees twenty crores) would be retained in the Surplus.
4. Review of business operations
Performance highlights: During the year the Company established a state-of-the art'Thermal Spray Coating' services/facilities at Nagpur. This will enable the Company toprovide turnkey solutions to thermal spray coating challenges. The capex involved wasrupees two and half crores entirely funded through internal accruals. Standalone: Inspite of tough economic and market conditions the Company registered growth in revenue.Going forward if the performance of the core sector industries significantly improves itwill surely enable the Company to rebounce with quantum leap in all parameters of businessoperations.
Consolidated: Consolidated Financial Statements pertain to Ador Fontech Ltd. DualrankFontech (M) Sdn. Bhd. (Joint venture) and 3D Future Technologies Pvt. Ltd. (3DFT-Whollyowned subsidiary). As far as 3DFT is concerned it commenced operations in the middle ofthe calendar year 2015 with focus on medical products. Infrastructure requirements havebeen established an initial team of ten employees have come on board and the first 3Dprinter has been installed in Mumbai. The dental range of 3D printed products will besold under the brand name 'Flash' and is expected to enter the market by August 2016. 3DFTwill strive to achieve break even position within the next two years.
5. Board and its composition
The Company recognises the importance of diverse Board with Members possessingdifferent perspectives skills knowledge etc. Further the current policy is to have anappropriate mix of Executive and Independent Directors maintain independence of the Boardand separate its functions of governance and management. At present there are six Memberson the Board of whom two are Executive and four are Non-Executive Directors. Amongst theNon-Executive Directors three of them are Independent. They represent varied fields ofeminence including legal marketing technical organisational development etc. The Boardand its Committees had met four times during the financial year 2015-16.
6. Directors' responsibility statement
The Board of Directors of the Company hereby confirm that:
a. In the preparation of the Annual Accounts the applicable accounting standards havebeen followed along with proper explanations relating to material departures if any.
b. The Directors have selected applicable accounting policies and applied themconsistently as also have made judgements and estimates that are reasonable and prudentto give a true and fair view of the state of affairs as at the end of the financial yearand of the profits of the Company for that period.
c. The Directors have taken proper and sufficient care (i) for maintenance of adequateaccounting records in accordance with the provisions of the Companies Act. (ii) forsafeguarding the assets of the Company. (iii) for preventing/detecting frauds and otherirregularities.
d. The Directors have prepared annual accounts on a going concern basis.
e. The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls in the opinion of the Board areadequate.
f. The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
Mrs. N Malkani Nagpal will retire by rotation at the ensuing Annual General Meeting andis eligible for re-appointment. Further all three Independent Directors have provideddeclaration that they meet the criteria of independence as provided under Section 149(6)of the Companies Act 2013 and comply with Regulation 25 of SEBI (LODR).
8. Details of changes in Directors and/or Key Managerial Personnel
There were no changes in the appointment or resignation of the Board and Key ManagerialPersonnel. In the Board meeting held on Oct 30 2015 Mr. A T Malkani took over as theChairman. Further the Board placed on record the exemplary work of Mrs. N Malkani Nagpal.
9. Board evaluation
The Company has conducted a formal annual performance evaluation of the Board of itsown performance including its Committees Individual Directors & Senior ManagementExecutives. Detailed manner of evaluation has been explained in the Corporate GovernanceReport.
Statutory Audit: In respect of the financial year 2015-16 there are noqualification(s) or reservation(s) or adverse remark(s) or disclaimer(s) specified in theAudit reports. Hence explanations or comments on the same do not become applicable.
Secretarial Audit: The Secretarial audit report forms part of the DIRECTORS' Report& there are no adverse remarks expressed therein. Cost Audit: As per regulations andconfirmation by the erstwhile Cost Auditor it is not mandatory for the Company to havecost audit undertaken as revenues from business segments warranting cost audits are withinthreshold limits. Nonetheless as per best practice the Company maintains cost accountingrecords and has cost control measures in place besides ensuring conduct of cost audits byexternal qualified Cost Auditors year on year.
Internal Financial Controls: In house quarterly audits and annual external audits areconducted to ensure that internal financial controls are adhered and function effectively.
Statutory Audit: At the Annual General Meeting held on August 20 2014 M/s. AmarnathKamath and Associates Chartered Accountants were appointed as Statutory Auditors of theCompany to hold office till the conclusion of the Annual General Meeting to be held in thecalendar year 2017. In terms of the first proviso to Section 139 of the Companies Act2013 the appointment of Auditors shall be placed for ratification at every Annual GeneralMeeting. Accordingly the appointment of M/s. Amarnath Kamath and Associates as StatutoryAuditors of the Company is placed for ratification of the Shareholders. In this regardthe Company has received a certificate from the Auditors to the effect that if they arere-appointed it would be in accordance with the provisions of Section 141 of theCompanies Act 2013.
Secretarial Audit: The Board has appointed Ms. Manjula Narayan (ACS Membership No.28374 & CP No.10150) Practicing Company Secretary having office at No. 22/A 4thCross Devasandra Krishnarajapuram Bengaluru-36 as Secretarial Auditor for 2016-17. CostAudit: M/s. Rao Murthy and Associates (Firm Registration No. 000065) having office at23/33 SurveyorRs.s Street Basavanagudi Bengaluru-04 have been appointed as CostAuditors for 2016-17.
12. Joint venture and subsidiary
Wholly owned subsidiary - 3D Future Technologies Private Limited
The Company had infused additional investment of rupees one crore during the financialyear 2015-16 in 3DFT aggregating its capital contribution to rupees two crores. The whollyowned subsidiary has utilised the same towards purchase of fixed asset primarily animported 3D printer which is a pre-requisite for its functioning. Further the Company hasalso provided lien on its mutual fund investments as security to enable 3DFT to meet itsworking capital requirements. The rationale is to support 3DFT at its nascent stage butat the same time external funding and servicing of debt will ensure that 3DFT maintainsfinancial prudence and discipline with mandated prior approval(s) from the parent companyat each threshold limits of rupees fifty lakhs over and above an initial utilisation ofrupees two crores. The Company has filed requisite documents in this regard with theRegistrar of Companies. The current utilisation of overdraft facility by 3DFT as on March312016 is rupees eighty six lakhs.
Joint venture-Dualrank Fontech (M) Sdn. Bhd.
The Company has made provision for dimunition in the value of investment of rupeesseventy six lakhs as a matter of conservative approach and to take care of anycontingencies as the Malaysian AuditorsRs. have expressed reservations on the goingconcern status of the venture. With initial gestation period of five years complete theCompany is closely monitoring and evaluating the functioning of the joint venture in termsof project viabilities and future sustenance.
The Company's products are manufactured to international standards and marketed underregistered trade-marks.
14. Fixed deposits
The Company did not accept fixed deposits during the year.
While the Company continues to be debt-free working capital of the Company has been onan increase in the recent. Concerted efforts are being made to reduce enhanced cycle timefrom procurement of raw materials to debtor's collection. As in the past amount requisitefor payment towards employees compensation creditors and dividend are being maintained inthe form of investments/bank deposits to suffice one financial year's requirement.
16. Particulars of loans guarantee and investments
During the financial year the Company had provided inter-corporate- deposits (ICD) toits Associate Ador Powertron Limited. Prior to extending this facility the Company hadsought legal opinion that it shall be within the compliance of legislative provisions. TheICD including interest has been repaid in full as at March 31 2016. Further the Companyhad also provided loans in tranches during the year to Dualrank Fontech (M) Sdn. Bhd.amounting to Rs. 25 lakhs to tide over its working capital requirements with anapproximate equivalent contribution coming in from Duralrank (M) Sdn. Bhd.
17. Transactions with related parties
Transactions with related parties are in the ordinary course of business and on an armslength basis. The same is based on legal opinion(s) approval/ratification of the AuditCommittee (on a quarterly basis) and subject to compliance of transfer pricing regulationsand audit.
18. Material changes commitments and orders
There has been no significant material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year and thedate of this report. There were no significant orders passed against the Company by theRegulators or Courts or Tribunals impacting the going concern status and the Company'soperations in the future.
19. Risk management
The Company has in place risk management framework to analyse and manage variousfinancial and non-financial risks. Most of the strategic policy decisions are facilitatedthrough consultative process of the top Management team. The Board further states thatthere are no elements of risks which threaten the existence of the Company.
The Company has sufficient insurance coverage on all its assets. They are renewed ontime.
As has been in the past the industrial relations with the employees of the Companycontinue to be harmonious and cordial. The Company has Vigil mechanism/Committees in placeto prevent harassment and redress grievances if any.
The following reports have been annexed/appended and forms part of the DIRECTORS'Report. (i) Management discussion and analysis report (ii) Corporate governance report.(iii) Report on CSR activities including policy amounts spent & reasons for shortfallin spend. (iv) Nomination and remuneration policy (v) Extract of annual return. (vi)Conservation of energy technology absorption foreign exchange earnings and outgo. (vii)Particulars of arrangements made with related parties. (viii) Particular of employees.(ix) Secretarial audit report.
The Board of Directors thank the Shareholders Authorised Dealers Channel PartnersOverseas and Inland Business Associates Bankers and the various Government agencies fortheir continued patronage and support. Further wish to place on record specialappreciation to the contribution made by employees at all levels.
| ||On behalf of the Board |
| ||For Ador Fontech Limited |
| ||A T Malkani |
|Mumbai ||Chairman |
|May 09 2016 ||DIN: 01585637 |