CG Power & Industrial Solutions Ltd.
|BSE: 500093||Sector: Engineering|
|NSE: CGPOWER||ISIN Code: INE067A01029|
|BSE LIVE 15:40 | 26 Apr||78.25||
|NSE 15:54 | 26 Apr||78.05||
|Mkt Cap.(Rs cr)||4904.32|
|Mkt Cap.(Rs cr)||4904.32|
CG Power & Industrial Solutions Ltd. (CGPOWER) - Director Report
Company director report
To The Members
Your Directors are pleased to present their Seventy Ninth Annual Report on the businessand operations of the Company (or "CG") alongwith the audited accounts for thefinancial year ended 31 March 2016.
THE YEAR IN RETROSPECT
The Stand-alone and Consolidated financials of the Company represents the continuingoperations for the year ended 31 March 2016. The operations assets and liabilities of thediscontinued operations have been presented under separate head.
The continued consolidated net revenue of the Company during 2015-2016 de-grew by 4.2%at Rs.5272 crore as compared with Rs.5505 crore last year.
The Company has achieved a stand-alone net turnover from continued operations ofRs.3960 crore during the year under review as compared with Rs.4230 crore during theprevious year a decline of 6.4%.
Consolidated profit before tax from continuing operations decreased to Rs.87 crore ascompared with Rs.356 crore in the previous year a decrease of 75.4% over last year.Stand-alone profit / (loss) before tax from continuing operations decreased from Rs.342crore to Rs.(1150) crore a decrease of 436.6%.
Consolidated loss before tax from discontinued operations increased to Rs.(343) crorefrom Rs.(182) crore in the previous year an increase of 88.7%.
Consolidated profit after tax from continuing operations is Rs.75 crore as comparedwith consolidated profit after tax of Rs.368 crore in the previous year a decrease of80%. The Company recorded a stand-alone profit / (loss) after tax from continuingoperations of Rs.(1188) crore a decrease of 444.3% from Rs.345 crore last year.
The Sales and Profit Before Interest and Tax (PBIT) of the respective Business Groupscompared with last year are given in Table 1.
A detailed review of the operations and performance of the Company and each of theBusinesses including its International operations is contained in the Management
01 SALES AND PROFIT BEFORE INTEREST AND TAX (PBIT)
Discussion and Analysis Report which is given as a separate chapter in this AnnualReport.
The financial performance of your Company for the continuing operations for the yearended 31 March 2016 is given in Table 2.
DEMERGER OF CONSUMER BUSINESS
Pursuant to the approval of shareholders of the Company accorded on 13 August 2015 forthe Scheme of Arrangement (Scheme) between the Company and Crompton Greaves ConsumerElectricals Limited (CGCEL) the Company has completed with the demerger of its ConsumerProducts Business with effect from 1 October 2015 upon sanction of the Scheme by theHon'ble High Court Bombay on 20 November 2015 and filing the same with the Registrar ofCompanies on 31 December 2015 by the Company. Pursuant to the Scheme the shareholders ofthe Company have been allotted one equity share of Rs.2/- in CGCEL for every equity shareof Rs.2/- each held in the Company as on 16 March 2016 being the Record Date fixed forthis purpose which were listed on the BSE and NSE with effect from 13 May 2016.
DIVESTMENTS AND OTHER DEVELOPMENTS
With the strategic objective of debt reduction and focusing on its core operations inPower business in India and in its Industrial Systems business the following divestmentshave been completed / undertaken by the Company:
The Company has sold the Power Assets held by its subsidiary CG Power SystemsCanada Inc thereby exiting from the Power business in Canada.
The Company has divested its entire stake in the Joint Venture CG LucySwitchgear Limited (presently Lucy Electric India Private Limited) to W Lucy & CoLimited UK-the Joint Venture Partner while retaining its distribution and supplyarrangements with Lucy Electric India Private Limited.
The Company has signed a Share Purchase Agreement (SPA) for sale of its PowerBusinesses in Europe North America and Indonesia. The completion of the SPA is envisagedby 31 October 2016 subject to requisite consents and regulatory approvals. Uponcompletion the Company would exit completely from its overseas Power businesses.
The Company has also initiated the process of identifying investors for it'sother international B2B businesses including Automation Business.
02 FINANCIAL HIGHLIGHTS
IN RS. CRORE FOR THE YEAR ENDED 31 MARCH 2016 AND 31 MARCH 2015
The above steps will enable the Company to improve its Balance Sheet and enhanceshareholders value by refocusing on operations and growth in India considering theopportunities in India in view of the emphasis of the Government on the Power sector andthe growth in demand of the products in the Industrial Systems' business in India andoverseas.
During the year the Distribution Franchisee Agreement (DFA) of the Company withMaharashtra State Electricity Distribution Company Limited (MSEDCL) for power distributionat Jalgaon in Maharashtra was terminated by MSEDCL exercising its step- in rightsconsequent to certain unresolved disputes. The Company is confident of arriving at anamicable settlement with MSEDCL on all pending issues under the DFA.
No dividend has been recommended or paid for the year ended 31 March 2016.
The Reserves on stand-alone basis at the beginning of the year were Rs.4490 crore.The Reserves at the end of the year are Rs.4003 crore.
As at 31 March 2016 the authorised share capital of the Company wasRs.4076000000-(Rupees four hundred seven crore sixty lacs) divided into 2038000000equity shares of Rs.2/-(Rupees Two) each.
As at 31 March 2016 the paid-up share capital of the Company stood at Rs.1253492284(Rupees one hundred twenty five crore thirty four lacs ninety two thousand two hundredeighty four only) consisting of 626746142 equity shares of Rs.2/-(Rupees Two) each.
DIRECTORS AND KEY MANAGERIAL PERSONNEL BOARD OF DIRECTORS
As on the date of this report the Company's Board comprises of ten Directors. TheChairman Mr Gautam Thapar is a NonExecutive Director and represents the Promoter Group.Mr K N Neelkant is the CEO and Managing Director.
Mr Madhav Acharya is the Executive Director Finance and CFO. Five otherNon-Executive Directors Mr Shirish Apte Mr Sanjay Labroo Ms Meher Pudumjee DrValentin Von Massow and Ms Ramni Nirula are independent in terms of Regulation 16 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations') and Companies Act 2013.
Two other Directors Mr B Hariharan and Dr Omkar Goswami are Non-ExecutiveDirectors. The Directors are reputed professionals with diverse functional expertiseindustry experience educational qualifications ethnicity and gender mix relevant tofulfilling the Company's objectives and strategic goals.
Mr Laurent Demortier resigned from his role as a CEO and Managing Director of theCompany with effect from 3 February 2016 thereafter he continued to serve as aWhole-time Director upto 31 March 2016.
Dr Colette Lewiner Independent Director stepped down from her directorship of theCompany with effect from 14 March 2016.
The Board places on record its gratitude and appreciation for Mr Demortier and DrLewiner for their guidance to the Company during their tenure as Directors.
Mr K N Neelkant was appointed as the CEO and Managing Director with effect from 3February 2016.
Mr Madhav Acharya was appointed as Executive Director Finance with effect from 1April 2016 in addition to his role as the CFO of the Company.
Ms Ramni Nirula was appointed on the Board as an Independent Non-Executive Directorwith effect from 6 April 2016.
Retirement by Rotation
In terms of the provisions of Section 152 of the Companies Act 2013 and the rules madethereunder and Article 114 of the Articles of Association of the Company
Dr Omkar Goswami and Mr B Hariharan retire by rotation at the ensuing Annual GeneralMeeting of the Company and being eligible have offered themselves for the re-appointment.The profile details of Dr Omkar Goswami and Mr B Hariharan are contained in theaccompanying Notice of the forthcoming Annual General Meeting and in the CorporateGovernance Report. The Board recommends their re-appointment.
Attributes Qualification & Independence of Directors & their Appointment
The appointment and remuneration of Directors is governed by the Remuneration Policy ofthe Company which also contains the criteria for determining qualifications positiveattributes and independence of Directors. The Policy along with the CG Board DiversityPolicy aims at attracting and retaining high caliber personnel from diverse educationalfields and with varied experience to serve on the Board for guiding the Management team toenhance organizational performance. The detailed Remuneration Policy is contained in theCorporate Governance section of this Annual Report.
Independent Directors Declaration
All Independent Directors have submitted declarations that they continue to meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16 of the Listing Regulations.
A calendar of meetings is prepared and circulated in advance to the Directors. TheBoard of Directors met 6 times during FY2016. The intervening gap between the meetings waswithin the period prescribed under the Companies Act 2013 and the Listing Regulations.The details of the meetings and the attendance of the Directors are mentioned in theCorporate Governance Report.
The Board has established Committees as a matter of good corporate governance practiceand as per the requirements of the Companies Act 2013. The Committees are Risk and AuditCommittee Nomination and Remuneration Committee Corporate Social ResponsibilityCommittee and Stakeholders' Relationship Committee. The composition terms of referencenumber of meetings held and business transacted by the Committees is given in theCorporate Governance Report.
Annual Board Evaluation
During the year the Board has carried out the annual evaluation of its own performanceas well as the evaluation of the working of its Committees and individual Directorsincluding Chairman of the Board. This exercise was carried out through a structuredquestionnaire prepared separately for Board Committee and individual Directors. Thequestionnaire for Board evaluation was prepared taking into consideration various aspectsof the Board's functioning such as adequacy of the composition and role of the BoardBoard meeting and reporting process effectiveness of strategies risk management systemsexternal relationships ethics and governance framework. Committee performance wasevaluated on the basis of its composition effectiveness in carrying out its mandaterelevance of its recommendations and allocation of adequate time to fulfill its mandate.
Individual and peer assessment of Directors based on parameters such as knowledgecontribution level of engagement communication / relationship with Board and SeniorManagement were received by the Chairman for individual feedback. The Board acknowledgedcertain key improvement areas emerging through this exercise and action plans to addressthese are in progress. The performance evaluation of the Chairman was carried out by theIndependent Directors.
The Directors expressed their satisfaction with the evaluation process and its result.
Familiarization of Independent Directors
The Company has in place the practice of familiarizing the Independent Directors whichinter-alia seeks to update the Directors while their induction on their rolesresponsibilities rights and duties under the Companies Act 2013 and other statutes. Thisprocess helps the Independent Directors to take well
informed decisions in a timely manner. The details of this program can be viewed underthe following link on company's website: http://www.cgglobal.com/frontend/finalnonproduct.aspx?cnl2=yrnPqECUvhk=
KEY MANAGERIAL PERSONNEL
During the year under review Ms Minal Bhosale resigned from the position of CompanySecretary w.e.f. 31 May 2015. The Board of Directors based on the recommendation of theNomination and Remuneration Committee appointed Mr Manoj Koul as the new CompanySecretary of the Company w.e.f. 3 August 2015.
The Company is a part of the Avantha Group one of India's leading diversifiedconglomerates. Led by Chairman Mr Gautam Thapar the Avantha Group has a global footprintand operates in 90 countries with more than 25000 employees worldwide.
As required under the Listing Regulations
CG periodically discloses its promoter group and persons acting in concert in theshareholding pattern and other filings with the Stock Exchanges.
As on 31 March 2016 the Company has three Indian subsidiaries and 31 foreignsubsidiaries. The particulars are mentioned in Annexure 6 to this Report in Form No. MGT 9(Extract of Annual Return).
Pursuant to Section 136 of the Companies Act 2013 the audited accounts of each of theCompany's subsidiaries are placed on the website of the Company and not enclosed in thisAnnual Report. If any Member of the Company so desires the Company will be happy to makeavailable the Annual Accounts of the subsidiaries to him / her on request. The physicalcopies of the aforesaid documents will also be available at the Company's RegisteredOffice for inspection during normal business hours on all working days excludingSaturdays upto the date of the Meeting.
In terms of Section 129(3) of the Companies Act 2013 statement containing salientfeatures of the financial statement of Subsidiaries / Associate companies / Joint Venturesis given in this Annual Report.
BRANCH OFFICE IN POLAND
The Company's branch office in Poland i.e. Crompton Greaves Ltd SA is under the processof liquidation.
ADOPTION OF IND AS
The Central Government in consultation with the National Advisory Committee onAccounting Standards (NACAS) under Section 133 read with Section 469 of the Companies Act2013 has notified the Indian Accounting Standards (Ind AS') vide G.S.R. 111(E) dated16 February 2015. The Company has decided for adoption of the aforesaid standardsvoluntarily as stated in the Companies (Indian Accounting Standards) Rules 2015 witheffect from 1 April 2015 and thereafter. The aforesaid Rules have been further amended bythe Companies (Indian Accounting Standards) (Amendment) Rules 2016 on 30 March 2016. Inview of this notification / amendment and also as per the Regulation 33 of ListingRegulations the Company has prepared the Financial Statements (both stand-alone andconsolidated) for the year ended 31 March 2016 as per Ind AS as amended.
RISK AND AUDIT COMMITTEE
As on the date of this Report the Risk and Audit Committee is comprised of threeNon-Executive Directors of whom two are Independent. The composition is as under:
Mr Shirish Apte (Chairman Independent Director)
Dr Omkar Goswami (Non-Executive Director)
Mr Sanjay Labroo (Independent Director)
All recommendations made by the Risk and Audit Committee during the year were acceptedby the Board of Directors.
RELATED PARTY TRANSACTIONS
The Company's Related Party Policy governs the norms for inter-company transactionpricing between the Company and its subsidiaries. Since the Company has a network ofwholly-owned subsidiaries manufacturing as well as engaged in sales of various productscomprising the different businesses of CG a substantial quantum of related partytransactions comprise transactions with subsidiaries for purchase and sale of goods andservices in the ordinary course of business.
An omnibus approval has been granted by the Risk and Audit Committee of the Board fortransactions which are of a foreseen and repetitive nature with other related parties.
Such omnibus approvals are subjected to review by the Risk and Audit Committee everyyear and are monitored by the Risk and Audit Committee on a quarterly basis. All RelatedParty Transactions are presented to the Risk and Audit Committee every quarter.
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materialrelated party contracts arrangements or transactions undertaken by the Company during theyear in terms of its India Related Party T ransaction Policy of the Company and hence thedisclosure of particulars of contracts / arrangements entered into by the Company withrelated parties referred to in sub-section (1) of Section 188 of the Companies Act 2013in Form AOC-2 (Annexure 1 to this Report) is nil.
The Company's India Related Party Transactions Policy is uploaded on the website of theCompany and the weblink is as under: h ttp://www. cgglobal. com/pdfs/policies/lndia%20Related%20Party%20 Transactions%20Policy.pdf
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of loans guarantees given and investments made by the Company during FY2016pursuant to the provisions of Section 186 of the Companies Act 2013 and Schedule V of theListing Regulations are given in the notes to the Financial Statements.
BUSINESS RISK MANAGEMENT
A risk management policy has been developed and implemented by the Company foridentification of elements of risk if any which in the opinion of the Board may threatenthe existence of the Company. In order to bring in more clarity on the objective processand spell out the roles and responsibilities for an effective implementation of the RiskManagement Process the Board of Directors have adopted revised Risk Management Framework.The revised framework enables risk identification and its escalation and consolidation atunit level to business unit level identification of risk mitigation process.
In terms of the framework the Risk and Audit Committee shall review the adequacy ofthe risk management framework of the Company the key risks associated with the businessesof the Company and the measures and steps in place to mitigate the same from time totime.
The assessment of the risks covers Strategy Technology Financial Operations &Systems Legal & Regulatory and Human Resources Risks. There is appropriate assuranceand monitoring mechanism in place to monitor the effectiveness of the risk managementframework including the mitigation plans identified by the Management for key risksidentified through the risk management exercise.
INTERNAL FINANCIAL CONTROLS
CG has in place adequate systems and procedures for implementation of internalfinancial control across the organization which enables the Company to ensure that thesecontrols are operating effectively.
RESEARCH AND DEVELOPMENT
During the year the Company's R&D activities continued to focus on development ofimproved energy efficient and reliable products. Power transformers focused on research incost competitiveness oil tightness and validation of hot spot calculation. Research wasalso carried out in GAI3S 245 kV GIS with spring drive 170 kV mobile GIS 420 kV CT withCasting Tank Composite Insulator CVTS digital interface (digital surge counter) to thelightning arrester for condition monitoring of products which is a vital communicationlink for smart substations and study of external withstand and flashover characteristicsof air insulations for development of new and niche products. Other areas of research inpower products included Inverter Duty 12 Pulse Transformer 3.2 MVA with foil winding
Four Inverter Feed 4.25 MVA Transformer with foil winding and 2X12 Pulse Four WindingTransformers for solar application.
Automation business R&D activities led by the R&D Centre of Excellencetogether with the R&D teams at different locations are mainly focused on new productsand features to maintain its technological leadership in Protections and Control as wellas in metering and communications.
Industrial systems business focused on control platform new DSP technology for highperformance DTC SVPWN and FOC for AM PMSM and SynRM and new UC technology for integratedconnectivity and communication. CSA certified single phase motors upto 5HP 4P and 6P weredeveloped. In Railways Signaling Division R&D activity was carried out to design anddevelop two key products for railway and one customized product for Honda Motors such as110Volts AC Fan with specially designed SS guard having better aesthetics to suit advancedinterior of EMUs. 230 Volts AC BLDC Fan with special feature of speed regulation havingcustomized design for Honda Motors and 380 Volts AC 3 Phase Point Machine for Metro rail.
The above R&D efforts would result in extended product range increase in operatingincome and expansion in new markets.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required by the Companies Act 2013 read with the Companies (Accounts) Rules 2014the relevant data pertaining to conservation of energy technology absorption and foreignexchange earnings and outgo is given in the prescribed format as Annexure 2 to thisReport.
ENVIRONMENT HEALTH & SAFETY (EHS)
By and large EHS Management system programs and policies were enhanced and overhauledduring the year. All CG manufacturing units in Asia EMEA and Americas have maintainedtheir ISO14001 and OSHAS18001 certifications.
CG's EHS policy and guidelines are a reflection of CG's strong EHS commitment.
The EHS Guidelines prescribe responsibilities and accountabilities of individualfunctions and the standards for adherence with the Guidelines. Behaviour BasedChampionship Model was introduced resulting in increased overall EHS awareness.Additionally bimonthly regional EHS network conference calls were conducted for crossbusiness and cross regional EHS knowledge sharing.
Smart EHS goals now form a part of KPI's of individual leaders. Monthly online EHSBalanced Score Card concept was introduced under which all units set their annual targetstowards EHS KPI's and individual unit's EHS performance against the set targets wereevaluated. Corporate EHS audit process was revamped with the inclusion of skip levelmeeting and interview process. These audits were more focused on EHS implementation andperformance rather than EHS documentation as a journey towards continuous improvement inEHS excellence. Corrective actions generated from these audits and various EHS events arecaptured and tracked for closure in Online Event Reporting System portal (ERS) as EHS onestop shop.
With the objective of rewarding individual and collective efforts towards EHS EHSRECOGNIZE policy was introduced and aligned with organisational RECOGNIZE drive. Two unitswere awarded as Best EHS unit CEO annual award.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company's undeterred commitment towards CSR initiatives endeavor to embraceresponsibility for its corporate actions and achieve fruitful impact of its businessactions not only on its stakeholders but also the society at large. As part of its CSRinitiatives CG has undertaken projects in the areas of education employability andhealth. CG supports Avantha Foundation on programs such as reduction of Malnutrition andHunger and building capacities of stakeholders in small towns to ensure better delivery ofservices to citizens. The Annual Report on CSR activities of CG for FY2016 is stated atAnnexure 3 to this Report.
Electronic copies of the Annual Report and Notice of the 79th Annual General Meetingare sent to all members whose email addresses are registered with the Company / DepositoryParticipant(s) for communication purposes.
For members who have not registered their email addresses physical copies of theNotice and Annual Report are sent in the permitted mode. Members requiring physical copiescan send a request to the Company. The physical copies of the aforesaid documents willalso be available at the Company's Registered Office for inspection during normal businesshours on all working days excluding Saturdays upto the date of the Meeting.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e. 31March 2016 and the date of this Directors' report.
MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors would like to assure the Members that the financial statements for theyear under review conform in their entirety to the requirements of the Companies Act2013. The Directors confirm that:
the Annual Accounts have been prepared in conformity with the applicableAccounting Standards;
the Accounting Policies selected and applied on a consistent basis give a trueand fair view of the affairs of the Company and of the profit for the financial year;
sufficient care has been taken that adequate accounting records have beenmaintained for safeguarding the assets of the Company; and for prevention and detection offraud and other irregularities;
the Annual Accounts have been prepared on a going concern basis;
the internal financial controls laid down in the Company were adequate andoperating effectively;
the systems devised to ensure compliance with the provisions of all applicablelaws were adequate and operating effectively.
SHARE REGISTRAR & TRANSFER AGENT
The Company's Registrar & Transfer Agents for shares is Datamatics FinancialServices Ltd (DFSL). DFSL is a SEBI- registered Registrar & Transfer Agent. Thecontact details of DFSL are mentioned in the Corporate Governance Report.
Investors are requested to address their queries if any to DFSL; however in case ofdifficulties as always they are welcome to contact the Company's Investor ServicesDepartment the contact particulars of which are contained in the Corporate GovernanceReport.
The Company has not accepted any deposits from public or its members during FY2016under Section 73 of the Companies Act 2013 and no deposits are subsisting as on date.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said rules formspart of this Report. However regard to the provisions of the first proviso to Section136(1) of the Companies Act 2013 the Annual Report excluding the aforesaid informationis being sent to the members of the Company. The said information is available forinspection at the Registered Office of the Company during working hours and any memberinterested in obtaining such information may write to the Company Secretary and the samewill be furnished on request. Disclosures pertaining to remuneration and other details asrequired under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given atAnnexure 4 to this report.
COMPLAINTS RELATING TO SEXUAL HARASSMENT
In terms of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act and Rules 2013 it is mandatory to review status of sexual harassmentrelated complaints in the Annual Report. There were no incidents of sexual harassmentreported in the Company. For protection against sexual harassment CG has formed aninternal complaints committee to which employees can write in their complaints. TheCompany has a Prevention of Sexual Harassment Policy which has formalised a free and fairenquiry process for dealing with such issues with clear timelines. During FY2016 anumber of workshops and programs were conducted by the Company to spread awareness onsexual harassment related issues.
The Company has formulated CG Whistle Blower Policy with a view to providing amechanism for CG employees to report violations and assure them of the process that willbe followed to address the reported violation. The Policy also lays down the procedures tobe followed by Senior Management for tracking of complaints giving feedback conductinginvestigations and taking disciplinary actions. It also provides assurances and guidelineson confidentiality of the reporting process and protection from reprisal to complainants.
A Management Committee as nominated by CEO and Managing Director is formed uponcompletion of the investigation and requiring action by the Committee. Decisions taken bythe Management Committee and actions taken by the Company or exoneration cases areinformed by the Head of Internal Audit to the Risk and Audit Committee on a quarterlybasis. Actions taken by the Management Committee are implemented subject to applicablelaw(s).
AUDITORS STATUTORY AUDITORS
In view of the mandatory rotation of auditor requirement and to ensure smoothtransition it is proposed to appoint M/s Chaturvedi & Shah as Joint StatutoryAuditors alongwith M/s Sharp & Tannan the existing Statutory Auditors of the Company.Both the Auditors will be jointly and severally responsible during FY2017.
M/s Chaturvedi & Shah are proposed to be appointed for a period of 5 continuousyears i.e. from the conclusion of 79th Annual General Meeting till the conclusion of 84thAnnual General Meeting of the Company. M/s Sharp & Tannan and M/s Chaturvedi &Shah have informed the Company vide letters both dated 24 May 2016 respectively thattheir appointment if made would be within the limits prescribed under Section 141 of theCompanies Act 2013.
M/s Sharp & Tannan and M/s Chaturvedi & Shah have confirmed that they havesubjected themselves to the peer review process of the Institute of Chartered Accountantsof India (ICAI) and hold valid certificates issued by the Peer Review Board of the ICAI.M/s Sharp & Tannan and M/s Chaturvedi & Shah have also furnished a declarationconfirming their independence as well as their arm's length relationship with the Companyand declared that they have not taken up any prohibited non-audit assignments for theCompany.
The Company had appointed M/s Ashwin Solanki & Associates Cost Accountants toaudit the cost accounts related to the Company's products for 20152016. The cost auditreports were filed within the statutory deadline.
Upon recommendation of the Risk & Audit Committee the Board had appointed M/sAshwin Solanki & Associates as Cost Auditors for the financial year 2016-2017.
At the ensuing Annual General Meeting their remuneration is proposed to be approvedand ratified by the shareholders.
The Company has appointed Dr K R Chandratre Practising Company Secretary to undertakethe Secretarial Audit of the Company. The Report of the Secretarial Audit for FY2016 isannexed herewith as Annexure 5 to this Report.
There are no qualifications reservations or adverse remarks or disclaimers made by theStatutory Auditor or the Secretarial Auditor in their reports and hence do not call forany further comments.
During the year under review neither the Statutory Auditor nor the Secretarial Auditorhad reported any matter under Section 143(12) of the Companies Act 2013 therefore nodetails are required to be disclosed under Section 134(3)(d) of the Companies Act 2013.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as Annexure 6.
The Directors wish to convey their gratitude and appreciation to all of the Company'semployees at all its locations worldwide for their tremendous efforts as well as theircollective dedication and contribution to the Company's performance.
The Directors would also like to thank the employee unions shareholders customersdealers suppliers bankers government and all other business associates for theircontinued support extended to the Company and the Management.
On behalf of the Board of Directors
Mumbai 27 May 2016