To the Members of
Commercial Engineers & Body Builders Co Ltd
Your Directors present the 36th Annual Report of the Company together with the AuditedAccounts for the year ended 31st March 2016.
|Particulars ||2015-16 ||2014-15 |
|Gross Sales ||14887.06 ||15238.46 |
|Net Sales (Excluding Excise Duty) ||10816.00 ||11844.38 |
|Other Income ||112.72 ||239.98 |
|Total Expenditure ||15648.06 ||18120.44 |
|Profit/(Loss) Before Tax and exceptional items ||(4719.34) ||(6036.08) |
|Exceptional Item (impairment of assets) ||5367.00 ||6300.00 |
|Provision/ (Writeback) of Income Tax ||389.87 ||(2081.47) |
|Profit/(Loss) After Tax ||(10476.21) ||(10254.47) |
|Balance (Brought Forward From Previous Year) ||(7988.00) ||2266.61 |
|Balance (Carried Forward to Balance Sheet) ||(18464.21) ||(7988.00) |
Performance at Glance
The Company has recorded gross sales of Rs. 14887.06 Lakhs in the closed financial year2015-16 which is 2.31% lower as compared to the previous financial year.
Further your Company has recorded loss before tax & exceptional item of Rs.4719.34 Lakhs (Previous year loss : Rs. 6036.08 Lakhs).
The loss after tax is at Rs. 10476.21 Lakhs in the current year. (Previous year loss:Rs.10254.61 Lakhs).
No dividend is recommended for distribution to the members for the year under reviewas the company has incurred losses.
Erosion of NetWorth
In terms of requirements of Section 23(1)(b) of the Sick Industrial Companies (SpecialProvisions) Act 1985 (SICA) a report of the Board of Directors on erosion of more than50% of the Company's peak net worth during the immediately preceding four financial yearsalong with its causes is being submitted herewith to the Members of the Company.
The accumulated losses as at the end of financial year ended March 31 2016 stood atRs.184.64 Crore which are more than 50% of its peak net worth of Rs. 137.02 Crore duringthe four financial years preceding the financial year.
Causes of Erosion of the relevant Net Worth:
CEO and Management made a presentation to the Board at the meeting held on 30th May2016 and explained the causes of above referred erosion of net worth which were reviewedby the Board.
The following are the major factors which have significant impact on the performance ofthe Company:
The company entered into a new business segment in the year 2010 related to Railwaywagon refurbishment / Manufacturing considering its Market potential. A substantialamount of investment of Rs 184 Crores was made in Fixed Assets relating to Railway unitbesides some investment in Inventory & other working capital requirements. For thispurpose an External Commercial Borrowings of USD 12400000 (equivalent of Rs. 62.00 CroresApprox.) was raised to partly finance the same. Initially the company did little businessmainly for wagon Refurbishment. There has been severe price competition affecting abilityof the company to take the orders and subsequently due to market slowdown the tenderswere not released by the Railways Department.
The accumulated losses and erosion of net worth are mainly on account of the following:
(a) Impairment Loss of Rs 116.67 Crores provided for Railway Assets (Rs 53.67 Crores inFY 15-16 & Rs. 63.00 Crores provided in FY 14-15)
(b) Loss of Rs. 16.64 Crores (Rs 14.34 Crores in FY 15-16 Rs 0.19 Crores in FY 14-15& Rs 2.10 Crores) on account of provisioning for doubtful debts and advances.
(c) Loss of Rs. 7.99 Crores (Rs 3.13 Crores in FY 15-16 & Rs 4.86 Crores in FY14-15) due to write off / provisioning made for slow & Non Moving Inventory relatingto Discontinued Businesses/ Projects.
(d) The Company's interest cost increased significantly on account of borrowing for therailway project and consequent borrowings to fund the losses and operational Losses dueto underutilization of capacity & working capital constraints.
(e) Due to funding constraints the volume were adversely affected and also compelledthe Company to procure certain raw material by paying higher prices.
The Board in its meeting held on 10th August 2016 also approved Report of even date tosuch erosion and causes for such erosion for consideration of the shareholders in theExtra Ordinary General Meeting to be convened on Saturday 24th September; 2016.The saidReport is enclosed as an Annexure to the Notice of the Extra Ordinary General Meeting. Interms of the requirement of SICA the Company shall also report to Board for Industrialand Financial Reconstruction (BIFR) the fact of erosion after consideration of the Reportby the shareholders in the ensuing Extra-Ordinary General Meeting.
Due to working capital constraints the Company is not in position to target highervolumes. It continues to depend on support given by its major customers for production.
The Board after considering the various steps implemented and/or to be undertaking forimprovement of performance of the Company is optimistic that the Company would be able toimplement effective measures to revive the operations. Accordingly the financialstatements for the financial year 2015-16 have been prepared on a going concern basis.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance Requirements set out by SEBI. Pursuant to Regulation34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations a separate Report on Corporate Governance and a certificate from the Auditorsof the Company regarding compliance of the conditions of Corporate Governance forms partof the Annual Report.
Contracts and Arrangements with Related Parties
All related party transactions that were entered into during the financial year 2015-16were on an arm's length basis and were in the ordinary course of the business. Nomaterially significant related party transactions were made by the company with PromotersKey Managerial Personnel or other designated persons which may have potential conflictwith interest of the company at large.
The Policy on Material related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelinkhttp://www.cebbco.com/docs/profile_for_investors.html.
Members attention is drawn to Note 34 of the financial statement which sets out relatedparty disclosures.
Disclosure in Subsidiaries
The Company does not have any subsidiary.
Corporate Social Responsibility (CSR)
A Corporate Social Responsibility Policy (CSR Policy) demonstrating the activities tobe undertaken by the Company has been formulated by the Corporate Social ResponsibilityCommittee (CSR Committee) and recommended to the Board which has been approved by theBoard.
The CSR Policy may be accessed on the Company's website at the link:http://www.cebbco.com/docs/profile_for_investors.html.
The Annual Report on CSR activities has been annexed herewith as ANNEXURE - I
Internal Financial Controls
Details of internal financial control and its adequacy are included in the managementdiscussion and analysis report which forms part of this report.
Directors and KMP
The Board of Directors comprises -
|Dr. Kailash Gupta ||Non Executive Promoter Director |
|Mr. Prakash Y Gurav ||Independent Director |
|Mr. Prabhakar Dalal ||Independent Director |
|Mr. M Venkat Rajarao ||Independent Director |
During the year following changes have occurred in the Board of Directors due toresignation/cessation:
Mr. Anil Gopal Joshi Independent Director ceased to be member of the Board after hissad demise.
Mrs. Nandini Malpani Non Executive Promoter Director ceased to be member of the Boardconsequent to her resignation dated 19th May 2016. The Board recognises the contributionmade by these directors during their tenure.
In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. Kailash Chand Gupta Director of the Company retires by rotation at theensuing Annual General Meeting and being eligible has offered himself for re-appointment.
Furthermore we confirm that the Company has received declarations from all theIndependent Directors confirming that they meet the criteria of independence as prescribedunder Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The Company has devised aPolicy for performance evaluation of Independent Directors Board Committees and otherindividual Directors which include criteria for performance evaluation of thenon-executive directors and executive directors.
On the basis of recommendations of the Policy for performance evaluation of IndependentDirectors Board Committees and other individual Directors an evaluation process wasfollowed by the Board for its own performance and that of its Committees and individualDirectors.
The details of programmes for familiarization of Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company and related matters are put upon the website of the Company at the link:http://www.cebbco.com/docs/profile_for_investors.html
M/s Deloitte Haskins & Sells LLP (Firm's registration number-117366W/W-100018)Chartered Accountants 32nd Floor Tower 3 India Bulls Finance Centre Senapati BapatMarg Elphinstone (west) Mumbai-400 013 Statutory Auditors of the Company would retireat the conclusion of this Annual General Meeting and being eligible offer themselves forreappointment. In accordance with applicable provisions of section 139 and otherapplicable provisions if any of the Companies Act 2013 ("Act") read with theCompanies (Audit and Auditors) Rules 2014 and other applicable provisions if any theBoard Recommends their reappointment as Statutory Auditors of the Company to hold officefrom the conclusion of this Annual General Meeting (AGM) till the conclusion of the nextAGM of the Company.
The Notes on financial statement referred to in the Auditor's Report are self-explanatory and do not require any further comments and explanations. Further theAuditors' Report does not contain any qualification reservation adverse remark ordisclaimer of opinion.
The Board has appointed Mr. S.K. Gupta Practicing Company Secretary to conductSecretarial Audit for the financial year 2015-16. The Secretarial Audit Report for thefinancial year ended March 31 2016 is annexed herewith marked as ANNEXURE II tothis Report. The Secretarial Audit Report does not contain any qualification reservationor adverse remark.
The CSR Committee comprises Mr. Kailash Chand Gupta(Chairman) Mr. Manchi VenkatRajarao and Mr. Prabhakar Dalal as other members.
The Audit Committee comprises Mr. Prakash Yashwant Gurav (Chairman) Mr. Manchi VenkatRajarao and Mr. Prabhakar Dalal as other members. All the recommendations made by theAudit Committee were accepted by the Board.
The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the SEBI (LODR) Regulations 2015 includes an Ethics Officer and other seniorexecutives of the Company. Protected disclosures can be made by a whistle blower throughan e-mail or dedicated telephone line or a letter to the Ethics Officer and other SeniorOfficers or to the Chairman of the Audit Committee. The Policy on vigil mechanism andwhistle blower policy may be accessed on the Company's website at the link-http://www.cebbco.com/docs/profile_for_investors.html.
Meeting of the Board
6(Six) meetings of the Board of Directors were held during the year. For furtherdetails please refer Report on Corporate Governance of this Annual Report.
Particulars of Loans given Investments made guarantees given and securities provided
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the audited financial statement.
Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Out Go in terms of section 134 (3)(m) of the act read with rule 8 of theCompanies (Accounts) Rules 2014 forming part of the Director report for the year endedMarch 31st 2016.
Conservation of Energy:
1. Company ensures that the manufacturing operations are conducted in the mannerwhereby optimum utilization and maximum possible savings of energy is achieved.
2. No specific investment has been made in reduction in energy consumption.
3. As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.
The Company does not fall under the list of industries which should furnish thisinformation in Form A annexed to the aforesaid Rules.
Company's products are manufactured by using in-house know how and no outsidetechnology is being used for manufacturing activities. Therefore no technology absorptionis required. The Company persistently endeavors for maintenance and improvement in qualityof its products.
Foreign Outgo & Earning
During the year under the review the Company had Foreign Exchange Earnings Nil andForeign
Exchange Outgo of Rs 439.30 Lakhs.
Extract of Annual Return
Extract of Annual Return of the Company is annexed herewith as ANNEXURE III tothis Report.
There is no employee in the company whose particulars are required to be disclosedunder the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of theCompanies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and amendmentthereto.
1) Public Deposit - Your Company has not accepted any deposits within themeaning of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014.
2) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operation in future.
3) Material changes affecting the financial position of the Company which have occurredbetween the end of the financial year of the Company to which the financial statementrelate and the date of this report - This points needs to be reviewed close to the date ofReport
4) Share Capital - The paid up equity capital as on March 31 2016 was Rs.549429640.00.During the previous year the Company issued 2000000 unlistednon-convertible cumulative redeemable preference shares of the Company of the face valueof ` 100/- each for an aggregate value of Rs. 20 Crores at par on a private placementbasis jointly to the promoters i.e. Mr. Kailash Chand Gupta and Mrs. Rekha Gupta. Up toMarch 31 2016 Rs. 13.00 Crores has been paid up. The company has not issued shares withdifferential voting rights nor granted stock options nor sweat equity.
Directors Responsibility Statement
Your Directors state that:
a) in the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards have been followed along with proper explanation relatingto material departures.;
b) 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 March 31 2016 and of the profit orloss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; d)the Directors have prepared the 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 are adequate and are operatingeffectively; and
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.
Your Directors take this opportunity to express their gratitude to the customersemployees bankers /financial institutions and vendors for their continued support andguidance.
For on behalf of the Board
COMMERCIAL ENGINEERS & BODY BUILDERS CO LTD.
|Place: ||Mumbai ||P.Y. Gurav ||Prabhakar Dalal |
|Date: ||10th August 2016 ||DIN:02004317 ||DIN:00544948 |