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Aluminium Industries Ltd.

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Aluminium Industries Ltd. (ALUMINIUMINDS) - Director Report

Company director report

To

The Members

Your directors present their Seventieth Annual Report together with the auditedstatement of accounts of the Company for the financial year ended 31 st March 2016.

1. Financial Results

The performance of the Company for the financial year 2015-16 is as under:

(Rs in Lakhs)

2015-16 2014-15
Gross Turnover & other Income 3647 2748
Profit / (Loss) before Int Depreciation & Tax (261) (1005)
Add: Interest & Finance Charges 541 119
Add: Depreciation 38 57
Profit/Loss after Tax (317) (1182)
Less: Effect of capital reduction as per BIFR scheme . 693
Loss Brought forward (48752) (48263)
Loss Carried forward (49069) (48752)

2. Scheme of Rehabilitation

The Hon’ble Board for Industrial and Financial Reconstruction ("BIFR")vide its order dated 12.02.2014 has sanctioned the Rehabilitation Scheme of the Company[herein called as the Sanctioned Scheme (SS - 14)].

(a) The Scheme envisages the following broad strategy for revival of the Company:

i. Settlement with secured creditors at 100% of the principal amount.

ii. Technical Restructuring of Conductor division Switchgear division Relay DivisionMachinery Division through in house research and development & by making substantialinvestment in up gradation of technology and strengthening the after sale servicesnetwork.

iii. Conversion of preference share capital into equity share capital at par.

iv. Sacrifices by promoters and equity shareholders involving write down of theircapital by 90% and infusion of fresh loans / Equity for working capital and /or shortfallsif any.

v. Mobilisation of Funds: The promoters propose to bring Rs 153 crores towards revivalof the company. Present promoters have arranged M/s. Volta Impex Pvt Ltd as strategicinvestor ("SI") and the SI proposes to bring 30 % of the amount proposed to bebrought in by the promoters.

vi. Restructuring of existing outstanding liabilities (except secured loans) keeping inview the expected future cash flows in order to achieve complete repayment of dues of theCompany.

vii. Payment of all outstanding labour dues as per the agreement entered /to be enteredinto between the Company and labour unions. The dues will be paid within three months ofthe sanction of scheme by BIFR.

viii. Grant of reliefs and concessions from Central Government and Authorities /Departments and Bodies thereof various State Governments and Authorities / Departmentsand Bodies thereof Secured Creditors and other Stakeholders / Parties concerned.

3. DIVIDEND:

Since your Company has incurred loss this year the Directors do not recommend anydividend for the Financial Year 2015-16.

4. RESERVES: .

The Company has not transferred any amount to the reserves during the current financialyear.

5. STATE OF COMPANY’S AFFAIRS

Your company is manufacturing Circuit Breakers Vaccum Interrupters numerical controlsand relay panel. The turnover of the Company has increased from Rs. 24.73 Crores inF.Y.14-15 to Rs. 29.78 Crores in F.Y. 15-16.

6. CHANGE INTHE NATURE OF BUSINESS:

During the year under review there has been no change in the nature of business of theCompany.

7. MATERIAL CHANGES AND COMMITMENTS:

There have been no material changes that have occurred subsequent to the close of thefinancial year of the Company to which the Financial Statements relates and the date ofthe report.

8. DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES:

The Company doesn’t have any subsidiary or associate or joint venture company ason the date of this report.

9. PUBLIC DEPOSITS:

The Company has not invited or accepted deposits from the public covered under Section73 of the Companies Act 2013 ("the Act") and The Companies (Acceptance ofDeposits) Rules 2014.

10. AUDITORS:

At the Annual General Meeting held on 30th September 2015 M/s. Balakrishnan & Co.(FRN No. 011890S) Chartered Accountants were appointed as statutory auditors of thecompany to hold office till the conclusion of the 74th Annual General Meeting subject toratification by members annually.

Accordingly the appointment of M/s. Balakrishnan & Co. (FRN No. 011890S)Chartered Accountants as statutory auditors of the Company is placed for ratification bythe shareholders. In this regard the Company has received a certificate from the auditorsto the effect that if they are reappointed it would be in accordance with the provisionsof Section 141 of the Companies Act 2013.

11. AUDITORS’REPORT

Audit Qualifications

The qualifications in the attached Auditor’s Report read with the notes onaccounts are self explanatory except those points which are being explained as below:

The Company has prepared accounts for the year 201516 based on the concept of GoingConcern for all the divisions. Certain provisions were made on the estimated basis and forknown expenses were accounted in full. Your Directors have also noted the observation ofthe auditors along with the notes on accounts and wish to comment / clarify on theimportant observations as follows:

1. The Company is steadily maintaining its books of accounts on the concept of"going concern basis" as the Flon’ble BIFR has approved the scheme (SS -14) on 12.02.2014. The Company is on the revival path on account of approved scheme byBIFR. The Company is planning to modernize and enhance its operations on a substantialscale. As envisaged by the recent management these measures shall show significantimprovement in the performance of the Company in future years. Accordingly the Companycontinues to follow its decision taken in the previous years to maintain the accounts onthe concept of going concern basis.

2. 9.5% Redeemable Cumulative Preference Shares were due for redemption in 2000.However due to financial crisis the Company could not redeem the same. However in termsof scheme sanctioned by Hon'ble BIFR the preference share would be converted in to EquityShares.

3. The Company has requested for waiver of interest and penalties on the delays ofpayment of statutory dues and has further taken steps to deposit the balance amount withthe statutory authorities.

4. Since the various concessions and reliefs as mentioned in Sanctioned Scheme arestill in the process of approval and confirmation and as prudent approach company has notcrystallized the effect of the scheme. Thus the required accounting adjustments in respectof Preference Share Redemption / Conversion Securities Premium Account InvestmentAllowance Reserves Secured Loans and other liabilities etc. are not given effect to inthese accounts

5. Records showing full particulars including quantitative details and situation offixed assets are being updated and verified for all the units during the year. Physicalverification of the assets is in progress so as to cover most of the fixed assets of theCompany.

6. The Company is in the process of conversion of preference share capital in to equityshare capital.

7. Remedial steps are being taken on other qualifications raised in the Auditor’sReport.

12. 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 the board has appointedM/s Makarand Patwardhan & Co Practicing Company Secretaries as Secretarial Auditorsof the Company. The Secretarial Audit Report for the financial year ended 2016 is annexedherewith as "Annexure 1".

Your Directors have also noted the observation of the Secretarial auditors and wish tocomment/verify on the important observation as follows:

1. The Company is taking remedial steps to avoid such delay in filing form with MCA.

13. SHARE CAPITAL:

In terms of the shareholders’ approval obtained at the Annual general meeting heldon September 302015 (a) The Authorised Capital of the Company has been increased to Rs.1300000000 (Rupees One Hundred Thirty Crores only) consisting of 128.00. 00.000 (OneHundred Twenty Eight Crores) Equity Shares of Re.1/- (Rupee One only) each and 2.00. 000(Two Lakhs) Preference share of Rs. 100/- (Rupees One Hundred only) each.

As envisaged in the Sanctioned Scheme during the year 2015-16 your Company raised anaggregate amount of Rs. 38.98 Crores by issue of 38.98.00. 000 number of equity shares ofRe. 1/- each to the promoters and strategic investors.

Subsequently by way of Special Resolution passed by the Shareholders at theExtra-Ordinary General Meeting of the Company held on on 17th May 2016the AuthorizedCapital of the Company was raised from Rs. 1300000000 Rupees One Hundred Thirty Croreonly) consisting of 128.00. 00.000 (One Hundred Twenty Eight Crores) Equity Shares ofRe.1/- (Rupee One only) each and 2.00. 000 (Two Lakhs) Preference share of Rs. 100/-(Rupees One Hundred only) each to Rs. 145.00. 00.000 (One hundred & forty Five Crores)divided into 1430000000 (One Hundred Forty Three Crores) Equity Shares of Re. 1/- eachand 2.00. 000 (Two Lakhs) Preference Shares of Rs. 100/- (Rupees One Hundred) each.

14. EXTRACT OF ANNUAL RETURN:

The Board hereby attaches as "Annexure 2" an extract of annual return in FormMGT-9 as envisaged under the provisions of the Companies Act 2013.

15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGSANDOUTGO:

Particulars of conservation of energy technology absorption and foreign exchangeearnings and outgo as required under Section 134(3)(m) of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 are given in the "Annexure 3" heretoand forms part of this report.

16. DIRECTORS:

The following are the Board of Directors of the Company as on the date of this report:

DIN Directors Date of Appointment
01762233 Mr. K.VijayaChandran 22/07/2002
00075690 Mr. PrashantSomani 10/02/2007
00218125 Mr. Jugal K.Choudhury 29/06/2011
02808196' Mr. Jayakumar K. Chettiyar 31/08/2009
03216880 Mr. RajkumarGupta 29/06/2011
00353729 Mr.V.S.C. Bose 28/02/2014
00667410 Mr.K.V.Rao 28/02/2014
07285837 Mrs. Shweta Parakh 03/03/2014

a. Change in Directorship during the period:

There has been no changes in directorship during the period under review.

b. Statement on declaration given by Independent Directors under sub-section (6) ofSection 149:

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as laid down under Section 149(6)of the Companies Act 2013.

d. Non-independent directors:

0

In accordance with the provisions of section 152 of the Companies Act 2013 Mr.Jayakumar K. Chettiyar (DIN: 02808196)retire by rotation and being eligible has offeredhimself for re-appointment. Your Directors recommend his appointment as Directors of theCompany.

e. Key Managerial Personnel:

Mr. Bimal Agarwal resigned as the CFO of the Company w.e.f. 01.01.2016 and Mr. NitinKothari has been appointed as the CFO of the Company w.e.f 1st March 2016.

17. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the financial year ended 31st March 2016. Eight Board Meetings were helddetails of which are given in the Corporate Governance Report. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013.

18. MEETINGS OF INDEPENDENT DIRECTORS

During the year under review a meeting of Independent Directors was held on 1s'March 2016 wherein the performance of the Non-Independent Directors and the Board as awhole was reviewed. The Independent Directors at their meeting also assessed the qualityquantity and timeliness of flow of information between the Company’s management andthe Board of Directors of the Company.

19. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186:

Loans and investments covered under Section 186 of the Companies Act 2013 form part ofthe Notes to the Audited Financial Statements provided in this Annual Report.

20. PARTICULARS OF 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 are disclosed inForm No. AOC - 2 (enclosed as Annexure 4).

21. PARTICULARS OF EMPLOYEES:

None of the employees of the Company is in receipt of remuneration exceeding the limitsprescribed under Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.

22. DIRECTORS’RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Sections 134(3)(c) and 134(5) of the Companies Act2013 with respect to Directors’ Responsibility Statement the Directors herebyconfirm that:-

(i) in the preparation of the annual accounts for the year ended 31st March 2016 theapplicable accounting standards have been followed and there are no material departuresfrom the same.

(ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at the end of the financial year andof the loss of the Company for that period save and except provided in the Notes toAccounts;

(iii) the Directors had taken proper and sufficient care for the maintenance ofadequate accounting recording accordance with the provisions of this Act for safeguardingthe assets of the Company in the working units namely Relays Division at TrivandrumSwitchgear Division at Mannar and Machinery Division at Hyderabad and efforts are beingmade to maintain proper records and in respect of other units and for preventing anddetecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a ‘goingconcern’ basis on the basis of relief and concessions granted by the BIFR uponapproval of SS-14.

(v) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

(vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

23. CORPORATE GOVERNANCE:

A separate report on the practices followed by the Company on Corporate Governance isannexed and forms a part of this report.

24. MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis for the year under review is presented in a separatesection forming part of this Annual Report.

25. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with its size requirement andthe nature of operations. The Company’s system of internal control has been designedto provide a reasonable assurance with regard to maintenance of proper accountingcontrols monitoring of operations protecting assets from unauthorized use or lossescompliance with regulations and for ensuring reliability of financial reporting.

26. INTERNAL FINANCIAL CONTROL

The Company has in place adequate financial controls commensurate with its size scaleand complexity of its operations.The Company has policies and procedures in place toproperly and efficiently conduct its business safeguard its assets detect fraud anderrors maintain accuracy and completeness of accounting records and prepare financialrecords in a timely and reliable manner.

27. PERFORMANCE EVALUATION:

Pursuant to the provisions of the Companies Act 2013 the Board has carried out anannual performance evaluation of its own performance that of its Committees andindividual directors.

The Nomination and Remuneration Committee at its meeting established the criteria basedon which the board will evaluate the performance of the directors. A separate exercise wascarried out to evaluate the performance of individual Directors on parameters such aslevel of engagement and contribution independence of judgment safeguarding the interestof the Company etc. The performance evaluation of the Non Independent Directors and Boardas a whole was also carried out by the Independent Directors. The Directors expressedtheir satisfaction over the evaluation process and results thereof.

28. AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been furnished in theCorporate Governance Report forming a part of this Annual Report. There has been noinstance where the Board has not accepted the recommendations of the Audit Committee.

29. NOMINATION AND REMUNERATION COMMITTEE

The composition and terms of reference of the Nomination and Remuneration Committee hasbeen furnished in the Corporate Governance Report forming a part of this Annual Report.

30. STAKEHOLDERS’ RELATIONSHIP COMMITTEE

The composition and terms of reference of the Stakeholders’ Relationship Committeehas been furnished in the Corporate Governance Report forming a part of this AnnualReport.

31. REMUNERATION POLICY :

The Policy of the Company on Directors’appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under Section 178(3) of Companies Act 2013 is appended as"Annexure-5" to this Report.

32. WHISTLE BLOWER POLICY:

The Company has formed a Whistle Blower Policy/ Vigil Mechanism as required underSection 177 of the Companies Act 2013 and. A Vigil (Whistle Blower) mechanism provides achannel to the employees and Directors to report to the management concerns aboutunethical behavior actual or suspected fraud or violation of the Codes of conduct orpolicy.

None of the officials/personnel of the Company has been denied access to the AuditCommittee. The Vigilance Officer/Chairman of Audit Committee has not received anycomplaint during the financial year ended 31st March 2016.

33. RISK MANAGEMENT

The Company has a defined Risk Management framework to identify assess monitor andmitigate various risks to key business objectives. Major risks identified by thebusinesses and functions are systematically addressed through mitigating actions on acontinuing basis.

34. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTIONPROHIBITION AND REDRES^AL) ACT 2013:

The company has in place an Anti Sexual Harassment Policy in line with the requirementsof Women at the Workplace (Prevention Prohibition & Redressal) Act 2013.

All employees (permanent contractual temporary trainees) are covered under thispolicy. The following is a summary of sexual harassment complaints received and disposedoff during each calendar year:

No. of complaints received: Nil

No. of complaints disposed off: Nil

35. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED IMPACTINGTHE GOING CONCERN STATUSAND COMPANY’S OPERATIONS IN FUTURE:

There has been no material or significant orders that have been passed by theregulators or courts or tribunals impacting the going concern status and company’soperations in future.

36. ACKNOWLEDGEMENTS:

Your Directors acknowledge the continued support received from the Board for Industrialand Financial Reconstruction Lenders Central and State Government Departmentsparticularly Government of Kerala Andhra Pradesh Telangana and Odisha CustomersSuppliers and Shareholders during the year under review. Their continued support is vitaland critical for the successful implementation of the revival scheme duly approved byHon’ble Bl FR vide its order dated 12.02.2014.

Your Directors also wish to place on record their deep appreciation to the employeesfor their commitment and continued contribution to the Company.

For and on behalf of the Board of Directors

Prashant Somani K. Venkateswara Rao
Director Director
DIN :00075690 DIN :00667410
Place: Mumbai
Dated: 31s' August 2016