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Century Enka Ltd.

BSE: 500280 Sector: Industrials
NSE: CENTENKA ISIN Code: INE485A01015
BSE LIVE 15:48 | 23 Oct 365.15 6.10
(1.70%)
OPEN

363.00

HIGH

381.15

LOW

362.00

NSE 15:53 | 23 Oct 368.80 8.40
(2.33%)
OPEN

363.00

HIGH

381.75

LOW

358.55

OPEN 363.00
PREVIOUS CLOSE 359.05
VOLUME 46896
52-Week high 454.00
52-Week low 256.30
P/E 9.48
Mkt Cap.(Rs cr) 798
Buy Price 365.50
Buy Qty 22.00
Sell Price 0.00
Sell Qty 0.00
OPEN 363.00
CLOSE 359.05
VOLUME 46896
52-Week high 454.00
52-Week low 256.30
P/E 9.48
Mkt Cap.(Rs cr) 798
Buy Price 365.50
Buy Qty 22.00
Sell Price 0.00
Sell Qty 0.00

Century Enka Ltd. (CENTENKA) - Director Report

Company director report

FOR THE YEAR ENDED 31ST MARCH 2017

Dear Shareholders

Your Directors present the 51st Annual Report and Audited Financial Statements of theCompany for the year ended 31st March 2017.

Profit after Finance Cost but Before Tax has increased by 58% during the year. This wasdue to overall improvement in plant operations higher sales both in quantitative term aswell as value and lower finance cost.

FINANCIAL RESULTS

Rs / Lacs

This Year Previous
Net Revenue from Operations 118531 114848
(Net of Excise Duty)
Profit before Depreciation Finance 19736 14624
Cost Exceptional Items and Tax
Add / (Less) :
Depreciation (4237) (4094)
Finance Cost (562) (956)
Exceptional Item (Note 1) (958) (754)
Taxation (Net) (4882) (2910)
Net Profit 9097 5910

Note 1: Exceptional item in this year represents impairment loss for some polyesterspinning machines (previous year write-down of Continuous Polyester Polymerisation Unit).Figures for previous year have undergone change consequent to transition to Ind AS onfirst time adoption of Ind AS.

DIVIDEND

We recommend a dividend at the rate of 70% (i.e. Rs 7/- per Equity Share of Rs 10/-each) for the year ended 31st March 2017 (Previous year dividend at the rate of 75% i.e.Rs 7.50 per equity share of Rs 10/- each which includes a special dividend to commemorateGolden Jubilee Year at the rate of 15% i.e.

Rs 1.50 per equity share).

TRANSFER TO RESERVES

It is proposed to transfer Rs 900 lacs (Previous year Rs 600 lacs) to General Reserve.

COURSE OF BUSINESS AND OUTLOOK

The Management's Discussion and Analysis Report as required under the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is forming a part of this report and gives the state of affairs of the business ofthe Company.

The business engineering undertaken in earlier years by converting polyester spinningmachines into nylon spinning machines with strong in-house technical support has given

2 good results and led your Company to market leadership in a fragmented market withlarge number of players. Nylon Tyre Cord Fabric (NTCF) plants at both the sites areoperating at full capacity. High energy cost is a matter of concern and continuous effortsare made in that direction to procure cheaper power. Your Company has been able toconclude a long term Open Power Purchase Agreement effective from 6th April 2017 for itsBharuch Site that will result in savings in power cost.

EXCISE DUTY DEMAND

The Company has filed an appeal against the order of Commissioner of Central Excise forthe alleged excise duty demand of Rs 22927 lacs equal amount of penalty and interest onduty amount before Customs Excise and Service Tax Appellate Tribunal (CESTAT) Mumbaidenying benefit of Notification No. 6/2000 CE dated 01.03.2000 for specific excise duty.The appeal has been admitted and on pre-deposit of

Rs 700 lacs stay granted. Your Company has been advised by the legal experts that ithas a fair chance of ultimately succeeding in the matter and accordingly no provision isrequired to be made in books of account.

EXPANSION AND MODERNISATION

During the year your Company has commissioned nylon textile mother yarn spinningmachine and further converted part of polyester yarn spinning machines into nylon yarnspinning machines. Your Company continues its focus on conversion of polyester spinningmachines into nylon spinning machines and will convert some more polyester spinningmachines during the year. The Company plans to undertake debottlenecking of its NTCFdipping capacity and would install required machines for conversion of additionalquantities of tyre cord into tyre cord fabric. Your Company to widen its product basketis actively considering to use a part of its conversion and dipping capacity for polyestertyre cord fabric and also use dipping facility for rayon tyre cord fabric.

The Company has planned to replace some old equipment to improve efficiency and savingsin energy cost.

HEALTH SAFETY AND ENVIRONMENT

The report on Management's Discussion and Analysis includes observations on healthsafety and environment compliances by the Company.

All Plant sites of the Company are environment regulations compliant.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars in respect of conservation of energy technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act2013 read with Companies (Accounts) Rules 2014 are set out in a separate statementattached hereto and forming part of the report. (Annexure-I).

CORPORATE GOVERNANCE

Your Company reaffirms its commitment to Corporate Governance and is fully compliantwith the conditions of Corporate Governance stipulated in Clause ‘C' of Schedule V onAnnual Report pursuant to Regulation 34(3) of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015. A separate section ofdisclosure on Corporate Governance and a Certificate from the firm of Practising CompanySecretaries dated 10th May 2017 in this regard are annexed hereto and form part of theReport.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION :

(including criteria for determining qualification positive attributes independence ofa Director policy relating to remuneration for Directors Key Managerial Personnel andother employees).

Policy on Directors' appointment

Policy on Directors' appointment is to follow the criteria as laid down under theCompanies Act 2013 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015. Emphasis is given to persons from diversefields or professions.

Policy on Remuneration

Guiding Policy on remuneration of Directors Key Managerial Personnel and employees ofthe Company is that -

Remuneration to unionised workmen is based on the periodical settlement with theworkmen union.

Remuneration to Key Managerial Personnel Senior

Executives Managers Staff and Workmen (non Unionised) is industry driven in which itis operating taking into account the performance leverage and such factors so as toattract and retain quality talent.

For Directors it is based on the shareholders resolutions provisions of the CompaniesAct 2013 and Rules framed thereunder circulars and guidelines issued by CentralGovernment and other authorities from time to time.

ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE ITS COMMITTEES AND INDIVIDUALDIRECTORS

The Board of Directors of the Company has initiated and put in place evaluation of itsown performance its committees and individual directors. The results of the evaluationare satisfactory and adequate and meet the requirement of the Company.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(7) of the Companies Act 2013 Independent Directors of theCompany have made declarations confirming the compliance of the conditions of theindependence stipulated in Section 149(6) of the Act.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(3)(c) of the Companies Act 2013 and on thebasis of explanation and compliance certificate given by the executives of the Companyand subject to disclosures in the Annual Accounts and also on the basis of discussionswith the Statutory Auditors of the Company from time to time we state as under : a) thatin the preparation of the annual accounts the applicable accounting standards had beenfollowed alongwith proper explanation relating to material departure; b) that thedirectors had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period; c) that the directors had taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) that the directors had prepared the annualaccounts on a going concern basis; e) that the directors had laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; and f) that the directors had devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.

DIRECTORS

In accordance with Articles of Association of the Company Mrs. Rajashree BirlaDirector of the Company will retire by rotation and being eligible offers herself forre-appointment.

Mr. G.M. Singhvi's tenure as a Whole-time Director of the Company will come to an endon 15th May 2017. Your Company wishes to place on record its appreciation for thevaluable services rendered by Mr. G.M. Singhvi during his long tenure with the Company.

Mr. O.R. Chitlange has been appointed as Managing Director for a period of 5 yearseffective from 16th May 2017 subject to approval of the members in the forthcomingAnnual General Meeting of the Company.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

The Board of Directors have met 5 times and Independent Directors once during the yearended 31st March 2017.

DETAILS OF COMMITTEES OF DIRECTORS

Composition of Audit Committee of Directors Nomination and Remuneration Committee ofDirectors Corporate Social Responsibility Committee of Directors StakeholdersRelationship/Grievance Committee of Directors and Share Transfer Committee of Directorsnumber of meetings held of each Committee of Directors during the financial year 2016-17and meetings attended by each member of the Committee as required under the Companies Act2013 are provided in Corporate Governance Report and forming part of the report.

The recommendations of the Audit Committee as and when made to the Board have beenaccepted by it.

KEY MANAGERIAL PERSONNEL

Mr. G.M. Singhvi is the Whole-time Director of the Company whose tenure will come toan end on 15th May 2017.

Mr. O.R. Chitlange has been appointed as the Managing Director of the Companyeffective from 16th May 2017 subject to approval of the shareholders.

Mr. K.G. Ladsaria has been appointed as the Chief Financial Officer (CFO) of theCompany effective from 13th February 2017. Mr. D.B. Roonghta was CFO upto 12th February2017. Mr. C.B. Gagrani is the Company Secretary of the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

There are no transactions with Related Parties which require disclosure under Section134(3)(h) of the Companies Act 2013 and Rule 8(2) of the Companies (Accounts) Rules2014.

LOANS INVESTMENTS AND GUARANTEES BY THE COMPANY

There are no loans given investments made guarantees given or securities provided bythe Company to any entity under Section 186 of the Companies Act 2013.

INTERNAL FINANCIAL CONTROLS

The Company is having in place Internal Financial Control System. The InternalFinancial Controls with reference to the financial statements were adequate and operatingeffectively.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public during the financialyear ended 31st March 2017.

RISK MANAGEMENT

Your Company has developed and implemented a Risk Management Policy includingidentification of elements of risk and the risks that may threaten the existence of theCompany. The Company has constituted a Risk Management Committee of Senior Executives toevaluate the risks and mitigation plans and monitor them. The Risk Management Committeeevaluated various risks and mitigation plans and monitored them. There is no element ofrisk identified by the Management that may in the opinion of the Board threaten theexistence of the Company.

A detailed report on significant risks and mitigations is given under the head RiskManagement in Management's Discussion and Analysis.

WHISTLE BLOWER MECHANISM

Your Company has put in place Whistle Blower Mechanism. The detailed mechanism is givenin Corporate Governance Report forming part of this report.

COROPRATE SOCIAL RESPONSIBILITY

Information on Corporate Social Responsibility (CSR) Policy and initiative taken by theCompany during the financial year 2016-17 pursuant to Section 135 of the Companies Act2013 read with Rule 8 of the Companies (CSR Policy) Rules 2014 is annexed herewith andforming part of the report. (Annexure-II).

ANALYSIS OF REMUNERATION

Pursuant to Rule 5 of the Companies (Appointment and Remuneration) Rules 2014 adisclosure on remuneration related information of employees Key Managerial Personnel andDirectors is annexed herewith and forming part of the report. (Annexure-III).

AUDITORS

M/s. Khimji Kunverji & Co. Chartered Accountants have been appointed as theAuditors of the Company to hold office for a term of 5 (five) consecutive years from theconclusion of 50th Annual General Meeting held on 15th July 2016 until the conclusion ofthe 55th Annual General Meeting subject to ratification of their appointment by themembers at every Annual General Meeting during the remaining term of 5 (five) years.Accordingly being eligible their appointment is required to be ratified at the ensuingAnnual General Meeting.

COST AUDITORS

The Cost Accounts records maintained by your Company for its products – Polyesterand Nylon are subject to yearly audit by qualified Cost Auditors. Your Company hasappointed M/s. D.C. Dave & Co. a firm of Cost Auditors for conducting the audit ofsuch records for the financial year 2016-17.

SECRETARIAL AUDIT REPORT

A Secretarial Audit Report for the year ended 31st March 2017 in prescribed formduly audited by the firm of Practising Company Secretaries M/s. Sanjay Sangani & Co.is annexed herewith and forming part of the report.

PARTICULARS OF EMPLOYEES

Pursuant to the provisions of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the names and other particulars of employees are set out in aseparate statement attached herewith and forming part of the report. (Annexure-IV).

EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract of annual return isannexed herewith and forming part of the report. (Annexure-V).

For and on behalf of the Board of Directors
B. S. Mehta
Place : Mumbai G. M. Singhvi
Date : 10th May 2017 Directors