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Duncan Engineering Ltd.

BSE: 504908 Sector: Auto
NSE: N.A. ISIN Code: INE340F01011
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VOLUME 1129
52-Week high 140.80
52-Week low 67.00
P/E
Mkt Cap.(Rs cr) 46
Buy Price 0.00
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Sell Price 0.00
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OPEN 126.00
CLOSE 117.00
VOLUME 1129
52-Week high 140.80
52-Week low 67.00
P/E
Mkt Cap.(Rs cr) 46
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Duncan Engineering Ltd. (DUNCANENGG) - Director Report

Company director report

1. Your Directors presents the Fifty Sixth Annual Report to the shareholders togetherwith the audited statement of accounts for the year ended March 31 2017. The operatingresults as disclosed in the audited accounts are summarised below:

(Rs. in Lacs)

Particulars 2016-17 2015-16
Total Revenue 3518.84 3696.36
Total Expenses (3879.95) (4211.83)
Profit/(Loss) before Tax (361.11) (515.46)
Profit/(Loss) from continuing operations before Tax (361.11) (515.46)
Tax Expenses (Current Tax) (0.18) 85.51
Profit/(Loss) from continuing operations after Tax (360.93) (600.97)
Profit/(Loss) from discontinuing operations before Tax (227.87) (91.95)
Tax Expenses (Current Tax) 0 0
Profit/(Loss) from discontinuing operations after Tax (227.87) (91.95)
Profit/(loss) for the year (588.80) (692.92)

2. Dividend

Your Directors do not consider it prudent to recommend a dividend this year owing tothe absence of profit.

3. Performance

Your company has registered a total revenue of Rs. 3518.84 Lac with a loss for the yearRs. 588.80 Lacs. The total turnover of the Company for the year under review has come downsignificantly because Company has discontinued its tube valve product line during the yearwhich contributed almost 50% to the total turnover of 2015-16.

The overall market continued to be subdued and various restructuring and costreduction initiatives have been undertaken by your Board of Directors. With majority ofthe restructuring initiatives completed your company is now on a stronger platform toleverage market opportunities in engineering item for growth and performance in the comingyears.

4. Operations

The turnover of Fluid Power Automation business for the current year is Rs. 3063.38Lacs. This was achieved in a very difficult market and slowing demand in the industrialand capital goods sector.

5. Change in the Nature of Business

The tube valve business was discontinued during the year. Other than that there was nochange in the nature of business of the Company during the year.

There is impairment of assets with the closure of the tube valve product line. Theestimated loss in the books on written down the value of asset in books.

The Company had made application on 30.6.2016 seeking permission of the Labour Ministryto permanently and irrevocably close down manufacturing activities of the Tube ValveProduct line in the ABU division in its factory situated at F-33 Ranjangaon MIDC Pune 412209.

The Labour Ministry after hearing the Management & the Recognised Union passed anOrder dated 26-08-2016 passed under Section 25-O (2) of the Industrial Dispute Act 1947granting permission sought for by the Company to close down its manufacturing activitiesof the tube valves product line in ABU division in its factory situated at F-33 RanjangaonMIDC Pune 412 209. The said Order has become operative w.e.f. 28.09.2016. AccordinglyTyre Tube Valves (ABU) manufacturing activities of the Company stand closed permanently& irrevocably w.e.f. 28.09.2016.

The name of the Company was changed from Schrader Duncan Limited to Duncan EngineeringLimited w.e.f 1st December 2016 with due approval from Registrar of CompaniesPune and Bombay Stock Exchange.

6. Research and Development

Research & Development is fundamental to the Company's efforts to maintain thetechnical and quality edge. New products are also being developed to meet customers variedrequirements. Research in the areas of reducing utilities cost and process parametersimprovement is also being done.

7. Pollution Control

Your Company's Plant has all the requisite Pollution Control Equipments and meets allthe desired and statutory norms in this regard.

8. Statement in respect of adequacy of internal financial controls with reference tothe Financial Statements:

The Company has an internal control system commensurate with the size scale andcomplexity of its operations. The Scope and authority of the Internal Audit (IA) is as perthe works assigned to them by the management. To maintain its objectivity andindependence Internal Audit function reports to the chairman of the Audit Committee ofthe Board. M/s Pipalia Singhal & Associates are the Internal Auditor of the Company.

The Internal Audit monitors and evaluates the efficacy and adequacy of internal controlsystem in the Company its compliance with operating systems accounting proceduresprocurement sales Stores and Statutory Compliances. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and corrective actionsthereon are presented to the Audit Committee of the Board.

9. Particulars of loans/advances/investments outstanding during the financial year.

The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013.

The details of the investments made and loan taken by company is given in the notes tothe financial statements.

10. Public Deposits

The Company has not accepted any fixed deposits from the public or shareholders fallingwithin the ambit of Section 73 of the Companies Act 2013 and The Companies (Acceptance ofDeposits) Rules 2014.

11. Statutory Auditors

As recommended by Audit Committee your Directors propose appointment of M/s.Singhi& Co. Chartered Accountants (Firm Registration No. 302049E) as Auditors of theCompany to hold office from the conclusion of this Annual General Meeting till theconclusion of 59th Annual General Meeting of the Company to be held in the year2020 (subject to ratification of their appointment at every Annual General Meeting) atsuch remuneration as may be fixed by the Board of Directors of the Company. Theappointment is accordingly proposed in the Notice of the Current AGM vide item No. 3 forapproval of Members.

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 Company hasappointed M/s Shaswati Vaishnav & Associates Company Secretary in Practice toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith as "Annexure A". There are no qualifications reservation or adverseremark or disclaimer made by the auditor in the report save and except disclaimer made bythem in discharge for their professional obligation.

13. Auditor's Report

The Observation made in the Auditors Report read together with the relevant notesthereon are self explanatory and hence does not call for any comments under.

14. Extract of the Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as "Annexure B" 15. No. of Meetings of the Board

There were five Board Meetings held in FY 2016-17 on 16th April 2016 25thMay 2016 29th July 2016 10th November 2016 and 9thFebruary 2017.

16. Particular of Employees and Key Managerial Personnel (KMP)

The following three persons were formally appointed as Key Managerial Personnel of theCompany as per the provisions of Sec 203 of the Companies Act 2013.

a) Mr. Akshat Goenka Managing Director (w.e.f 9th February 2017)

b) Mr. Chandresh Taunk Chief Financial Officer (w.e.f 17th May 2017) c)Mr. Rajib Kumar Gope Company Secretary The information required pursuant to Section134(3)(q) and 197 read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 the Remuneration and other details of Key ManagerialPersonnel and other Employees for the year ended 31st March 2017 are given inextract of the Annual Return. Mr. Shantanu Parvati resigned as Whole-time Director w.e.f31st January 2017. Mr. Vinayak Patil retired from the post of Chief FinancialOfficer on 30th September 2016.

Mr. Anurag Jain was appointed as Chief Financial Officer (CFO) on 9thFebruary 2017 and resigned as CFO w.e.f. 17th May 2017.

17. Directors

Mr. Akshat Goenka was appointed as Managing Director of the Company on 9thFebruary 2017 by the Board of Directors on the recommendation of the Nomination &Remuneration Committee. The remuneration detail of Mr. Goenka is disclosed in CorporateGovernance Report. Mr. Akshat Goenka is also Managing Director in Oriental CarbonChemicals Limited Holding Company. He receives a remuneration of Rs.15581833/- p.a.from Oriental Carbon & Chemicals Limited.

The details Salary of Mr. Akshat Goenka as follows:

Name Salary Performance Bonus Contribution to PF & SAF Perq. and other allowances Total
Mr. Akshat Goenka 5100000/- 4080000/- 1377000/- 5024833/- 15581833/-

Mr. Shantanu Parvati has resigned as the Whole-time Director of the Company w.e.f.31stJanuary 2017.

In accordance with the provisions of the Companies Act 2013 and in terms of theMemorandum and Articles of Association of the Company Mr J P Goenka (holding DIN 0136782)is liable to retire by rotation and being eligible for re-appointment offer himself forre-appointment. Your Directors propose his re-appointment as set out in the notice.

All Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015.

18. Annual Performance Evaluation

As per Section 134(3)(p) of the Companies Act 2013 read with sub-rule (4) of Rule 8 ofthe Companies (Accounts) Rules 2014 and SEBI(LODR) Regulation 2015 (w.e.f.1st December2015) the Board has carried out an annual performance evaluation of its own performancethe directors individually as well as the evaluation of the working of the otherCommittees. The performance of the Board was evaluated by the Board of Directors afterseeking inputs from all the Directors. The performance of the Committees was evaluated bythe Board after seeking inputs from the Committee members. The Board focused on criterialike strategy effectiveness Board Structure and Committees Board Meetings and Procedureswhile evaluating its own performance and that its committees. For the purpose ofevaluation the Directors have been classified into three categories: IndependentDirectors Non-Executive Directors and Executive Directors. Independent & Non-Executive Directors were evaluated on the basis of Engagement Adherence to Code ofConduct Strategic Planning Team Spirit Consensus Building leadership and domainknowledge. Whereas Executive Director is evaluated on Management qualities Team workabilities Result/Achievements Domain Knowledge Understanding & Awareness etc.

19. Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The approved remuneration policy of the Company is also available on thewebsite of the Company which is www.duncanengg.com.

20. Meetings

The Company holds Meetings as per the Listing Agreement signed with the Stock Exchangeand as per the Companies Act 2013. During the year five Board Meetings and four AuditCommittee meetings were convened and held. The details of which are given in the CorporateGovernance Report the intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013 and SEBI (Listing Obligations DisclosureRequirements) Regulations 2015.

21. Corporate Governance

As per Schedule V of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (clause 49 of the erstwhile Listing Agreement) a section on CorporateGovernance and Management Discussion and Analysis is annexed to this report.

A certificate from M/s Vaishnav Associates Pune confirming compliance of CorporateGovernance is also annexed.

22. Conservation of Energy Technology Absorption Exports and Foreign ExchangeEarnings and Outgo.

A statement giving details of conservation of energy technology absorption exportsand foreign exchange earnings and outgo pursuant to Section 134(3) (m) read with Companies(Accounts) Rules 2014.

23. Risk Management Policy

The Board of Directors of the Company look into the element of risk associated with theCompany. At present the company has not identified any element of risk which may threatenthe existence of the Company.

24. Related Party Transactions

All related party transactions that were entered into during the financial year were onarms' length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the

Company with promoters Directors Key Managerial Personnel or other designated personswhich may have a potential conflict with the interest of Company at large. All relatedparty transactions are placed before the Audit Committee. Prior omnibus approval of theAudit Committee is obtained for the transactions which are of foreseen and repetitivenature. The approved policy on related party transactions is also available on the websiteof the company www.duncanengg.com under investor dropdown.

25. Subsidiaries

Your Company does not have any subsidiary / subsidiaries within the meaning of theCompanies Act 2013.

26. Vigil Mechanism/Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance offraud and mismanagement if any. The details of the Whistle Blower Policy is explained inthe Corporate Governance Report and also posted on the Company's website.

27. Director's Responsibility Statement

To the best of your Director's knowledge and belief and according to the informationand explanations obtained your Directors make the following statements in terms of Section134 (3) (c) of the Companies act 2013: i) that in the preparation of the annual FinancialStatements for the year ended March 31 2017 the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures if any; ii)the Directors had selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end of the financial year and theprofit and loss of the Company for that period. iii) that proper and sufficient care hasbeen taken for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing the detecting fraud and other irregularities; iv) that the annual FinancialStatements have been prepared on a going concern basis; v) that proper financial controlswere in place and that the financial controls were adequate and were operatingeffectively. vi) that systems to ensure compliance with the provisions of all applicablelaws were in place and were adequate and operating effectively.

28. Disclosures a) Materially Significant Related Party Transactions

All related party transactions form part to the notes to the Balance Sheet. Savingthose there were no materially significant related party transactions with Company'spromoters directors or its management their relatives etc. that had a potentialconflict with the interest of the Company.

b) Accounting Treatment

No treatment different from that prescribed in an Accounting Standards has beenfollowed by the Company.

c) Statutory Compliance Strictures and Penalties

The Company has complied with rules and regulations prescribed by the Stock ExchangeSecurities Exchange Board of India and any other statutory authority relating to capitalmarket.

No penalties and/or strictures have been imposed on the Company by Stock Exchange orSEBI or any statutory authority during the last three years.

d) Disclosure with respect to Demat/Unclaimed Suspense Account

There were no shares lying in the Demat Suspence account.

e) Sexual Harassment at workplace

The Company has in place an Anti Sexual Harassment Policy line with the requirements ofThe Sexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal)Act 2013. An internal Committee has been set up to redress complaints received regardingsexual harassment. No complaint received during the year under review.

29. Audit Committee

The Audit Committee comprises Non-executive Director and Independent Directors namelyMr. O P Dubey (Chairman) Mr. B B Tandon (Member) Mr. Nitin Kaul (Member) and Mrs. ArtiKant (Member). All the recommendations made by the Audit Committee accepted by the Board.Chief Financial Officer and Auditors are permanent invitees to the committee meetings. Thedetail of terms of reference of Audit Committee number and dates of meetings heldattendance of the directors and remunerations paid to them are given separately in theattached Corporate Governance Report.

30. The Stakeholder's Relationship Committee:

The Company has a Stakeholder's Relationship Committee for reviewingshareholder/investors complaints. The present members of the committee are Mr. J P Goenka(Chairman) Mr. O P Dubey (Member) and Mrs. Arti Kant (Member). The detail terms ofreference of the committee has been given in the Corporate Governance Report.

31. Nomination and Remuneration Committee

The Nomination and Remuneration Committee has Mr. O P Dubey as Chairman Mr. B BTandon Mr. Arvind Goenka and Mr. Nitin Kaul as Members. The Company has a policy onDirectors appointment & remuneration which is posted on the website of the Company.The detail terms of reference of the committee has been given in the Corporate GovernanceReport.

32. Acknowledgements

Your Directors would like to thank to the Bankers Central and State Government StockExchange other Regulatory Agencies Investors Shareholders and Employees of the Companyand wish to acknowledge and place on record their sincere appreciation for the continuousexcellent support given by them to the Company and their confidence in its management.

On behalf of the Board of Directors
Place: Pune Akshat Goenka Arvind Goenka
Date: May 17 2017 Managing Director Director

ANNEXURE I TO THE BOARD'S REPORT FOR THE YEAR 2016-17

A Conservation of Energy i. Steps taken on conservation of energy and utilisingalternate source of energy

• Balanced load distribution for electric power thereby improving power factor andreducing power consumption.

• Energy consumption optimization in vulcanization cells.

• Reduced consumption of treated water through process improvements.

• Your company is in the monitoring stage in utilising alternate source of energy.

ii. Your company is finding better scope for the capital investment on energyconservation equipments.

B Technology Absorption

• Research and Development (R & D)

i) Specific areas in which R & D was carried out by the Company and the effortsmade thereon.

• Improvement in mould cavity design.

• Value engineering of Products - Conversion from extrusion to GDC conversionfrom Gravity Die Casting (GDC) to Pressure Die Casting (PDC).

• Development effort on Pneumatic Panels.

ii) Benefits derived as a result of above R & D

• Improved product aesthetics reliability and productivity.

• Stabilization and ramp up of pneumatic penal and systems.

• Reduction in in-house rejection.

iii) Future Plan of Action

• New product development to expand product offering

• Continue Value Engineering efforts on all important products to reduce costsimprove performance aesthetics & through-put time.

iv) Expenditure of R & D

a) Capital Rs. 51.80 Lacs
b) Recurring Rs. 18.30 Lacs
c) Total Rs. 70.10 Lacs

C Foreign Exchange Earnings and outgo

During the year the Company has spent foreign exchange of INR 359.41 Lacs and earnedforeign exchange of INR 61.42 Lacs through exports and services rendered.

Disclosures required with respect to Section 197(12) of the Companies Act 2013:

The ratio of the remuneration of each Director to the median employee's remunerationand such other details in terms of Section 197(12) of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014.

(i) The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year:

Mr. Shantanu Parvati (Whole-time Director till 31.01.2017) 35.089:1
Mr. Akshat Goenka (Managing Director from 9.02.2017) 0.007901:1

All other Directors being Non-Executive & Independent do not receive anyremuneration.

(ii) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:

The remuneration of Mr. Shantanu Parvati (whole-time Director till 31.01.2017) wasincreased by 19.84%. The remuneration of Mr. Vinayak Patil Chief Financial Officer (ChiefFinancial Officer till 30.09.2016) was increased by 17.76% Mr. Akshat Goenka ManagingDirector and Mr. Anurag Jain Chief Financial Officer were appointed during the year.

(iii) The percentage increase in the median remuneration of employees in the financialyear:

The percentage increase in the median remuneration of employees in the financial yearis around 8.62%.

(iv) The number of permanent employees on the rolls of company

There are total 177 permanent employees in the Company.

(v) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average percentage increase made in the salaries of total employees other than theKey Managerial Personnel for FY 2016-17 is around 5%. The remuneration of Mr. VinayakPatil Chief Financial Officer (Chief Financial Officer till 30.09.2016) was increased by17.76% Mr. Akshat Goenka Managing Director and Mr. Anurag Jain Chief Financial Officerwere appointed during the year.

(vi) Remuneration particulars of Top 10 employees- Refer Appendix-I

(vii) Affirmation that the remuneration is as per the remuneration policy of thecompany: yes

On behalf of the Board of Directors
Place: Pune Akshat Goenka Arvind Goenka
Date: May 17 2017 Managing Director Director

APPENDIX-I

Remuneration particulars of Top 10 employees

Sl No. Name Designation Remuneration received Nature of employment Qualification & Experience Date of Commencement of employment Age Previous Employer % of equity shares held Whether relative of Director or manager Last working day
01 Mr. Shantanu Anant Parvati Whole Time Director 5298066 Permanent BE Mech MBA 10.05.2011 43 Mahindra & Mahindra Ltd. Nil No 31-01-2017
02 Mr. Sanjay Vasantrao Kalaskar DGM-Operations 1423253 Permanent BE-Prodn 12.04.2010 46 Electronica Machine Tools Ltd. Nil No
03 Mr. Sudeesh Ramachandran Palakoute Sr. Manager - Quality HSE & MR 1288492 Permanent BE MS 28.08.2014 41 Mask Polymers P Ltd. Nil No
04 Mr. Venkataraman K. A. Sr. manager - Engineering 1205883 Permanent B E Mech 12.06.2015 41 Janatics (I) Pvt. Ltd. Nil No 23.02.2017
05 Mr. Sudhir Passi Manager - Sales & Marketing 1179609 Permanent DME 01.04.2015 43 Electronica Mechatronic Sys P Ltd Nil No
06 Mr Shrikant V.S. Narsimha Rao Manager - Sales & Marketing 1149045 Permanent BE 10.08.2015 34 Delval Flow Controls P Ltd Nil No
07 Mr. Sanjiv Narayan Pathak Sr. Manager - Sales & Marketing 1001622 Permanent BE 23.07.2014 58 Rotex Automation Ltd. Nil No 31.08.2016
08 Mr. Jivan Namdeorao Chintkuntlawar Manager - BD & Customer Support 994414 Permanent B E Mech MBA 19.09.2009 38 PMA Automotive P Ltd. Nil No
09 Mr. Dhiraj Keshav Purusha Manager - ERP & Business Analysis 950802 Permanent BCS 15.04.2009 35 DNS e-Business Consultancy Nil No
10 Mr. Ajay Dhanvijay Desai Manager- Purchase 871693 Permanent DME DIP Mat mgmt ADB 01.04.2015 47 Midco Ltd. Nil No 15.02.2017