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EPC Industrie Ltd.

BSE: 523754 Sector: Industrials
NSE: N.A. ISIN Code: INE215D01010
BSE LIVE 12:03 | 22 Sep 176.00 -0.15
(-0.09%)
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176.50

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177.00

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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 176.50
PREVIOUS CLOSE 176.15
VOLUME 7787
52-Week high 215.00
52-Week low 122.00
P/E 47.44
Mkt Cap.(Rs cr) 487
Buy Price 174.15
Buy Qty 71.00
Sell Price 176.50
Sell Qty 101.00
OPEN 176.50
CLOSE 176.15
VOLUME 7787
52-Week high 215.00
52-Week low 122.00
P/E 47.44
Mkt Cap.(Rs cr) 487
Buy Price 174.15
Buy Qty 71.00
Sell Price 176.50
Sell Qty 101.00

EPC Industrie Ltd. (EPCINDS) - Director Report

Company director report

Your Directors are pleased to present the 35th Annual Report on business andoperations of your Company alongwith the audited financial statements and accounts for theyear ended 31st March 2017.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

For the Year ended 31st March 2017 For the Year ended 31st March 2016*
Revenue from Operations 20141.83 20295.73
Other Income 186.63 224.49
Total Income 20328.46 20520.22
Profit Before Interest
Depreciation & Tax 1425.57 1338.21
Finance cost 152.89 45.95
Depreciation 304.78 265.54
Profit Before Tax 967.90 1026.72
Tax expense (22.57) 152.25
Profit After Tax 990.47 874.47
Other comprehensive income/ (loss) for the year (2.21) 39.43
Profit for the year attributable to owners of the Company 988.26 913.90
Add : Balance Brought
Forward (84.82) (998.72)
Surplus/(Deficit) Carried to the Balance Sheet 903.43 (84.82)

* Figures have been regrouped as per Indian Accounting Standards (IND AS).

Operations and Financial Overview

During the year under review your Company's turnover was at Rs. 201.42 crore ascompared to Rs. 202.96 crore for the previous year.

The Company made a Profit Before Tax of Rs. 9.68 Crore for the year 2016-17 as comparedto Rs. 10.27 Crore in the previous year. The Profit After Tax was at Rs. 9.90 crore vs.Rs. 8.74 crore in the previous year reflecting growth of 13.3% over the previous year.

The performance of the year 2016-17 was benefitted due to implementation of corestrategies acceleration of business in project markets coupled with improved operationalefficiencies.

Dividend

Your Directors feel that it is prudent to plough back the profits for future growth ofthe Company and do not recommend any dividend for the year ended 31st March2017.

Corporate Governance & Management Discussion and Analysis Report

Your Company believes in sound practices of good Corporate Governance. TransparencyAccountability and Responsibility are the fundamental guiding principles for alldecisions transactions and policy matters of the Company. A Report on CorporateGovernance along with a certificate from the Statutory Auditors of the Company regardingcompliance of conditions of Corporate Governance as stipulated under Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 forms part of this Annual Report. Further the Management Discussion and AnalysisReport for the year under review as stipulated under Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 is given inAnnexure I to this Report.

Stock Options

The Nomination and Remuneration Committee of the Board of Directors of the Company interalia administers and monitors the Employees Stock Option Scheme of the Company. TheStock Option Scheme 2014 is in compliance with Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 and there have been no material changesin the said scheme during the year under review.

During the year under review 14089 nos. Stock Options got vested under the EmployeesStock Option Scheme -2014 and were exercised immediately after vesting. Accordingly theCompany made the allotment of 14089 Equity Shares. The Nomination and RemunerationCommittee of the Board of Directors further granted 133432 Stock Options during the yearunder review comprising about 0.04% of the current paid up capital.

The applicable disclosures as stipulated under the SEBI Guidelines as on 31stMarch 2017 (cumulative position) with regard to the Employees' Stock Option Scheme (ESOS)are provided in Annexure II to this Report.

Voting rights on the shares issued to employees under the ESOS are either exercised bythem directly or through their appointed proxy.

Share Capital

During the year with the allotment of 14089 equity shares on exercising of StockOptions by employees the total paid up equity share capital of the Company increased from27658472 equity shares of Rs 10/- each to 27672561 equity shares of Rs 10/- each.The said equity shares have been listed on the Bombay Stock Exchange Limited and they rankpari passu with the existing equity shares in all respects.

Accordingly the Paid-up Share Capital of the Company stood at Rs. 276725610 dividedinto 27672561 equity shares of Rs. 10 each as on 31st March 2017.

Holding Company

The promoters of the Company i.e. Mahindra and Mahindra Limited (M & M) hold15144433 equity shares which represents 54.73 percent of the total paid up capital ofthe Company. Your Company continues to be a subsidiary company of M & M. The Companydoes not have any subsidiary company.

Contracts and arrangements with Related Parties

During the financial year all contracts/arrangements/ transactions entered by theCompany with related parties were in the ordinary course of business and on an arm'slength basis. During the year the Company had not entered into anycontract/arrangement/transaction with related parties which could be considered materialin accordance with the policy of the Company on materiality of related party transactions.All related party transactions are placed before the Audit Committee for approvalwherever applicable. Prior omnibus approval is also obtained from the Audit Committee forthe related party transactions which are of repetitive nature as well as the transactionswhich cannot be foreseen and accordingly the required disclosures are made to theCommittee on quarterly basis in terms of approval of the Committee.

The Company's major related party transactions are generally with its holding andassociate companies. The related party transactions are entered into based onconsiderations of various business exigencies such as synergy in operations salestransactions through tenders or otherwise. All related party transactions are negotiatedon an arms-length basis and are intended to promote the Company's interests. The Policyon materiality of related party transactions and dealing with related party transactionsas approved by the Board may be accessed on the Company's website at the link:http://www.epcmahindra.com/pdf/EPC_Policy_on_Related Party_Transactions.pdf. The relatedparty transactions have been set out in the Note No. 29 to the financial statement.

Risk Management

The Company has constituted a Risk Management Committee comprising Mr. NikhileshPanchal Mr. Ashok Sharma and Mr.3Anand Daga. Mr. Nikhilesh Panchal is the Chairman ofthis Committee. The Company has adopted the Risk Management Policy. The Committee isentrusted with the responsibility to assist the Board in (a) overseeing and approving theCompany's enterprise wide risk management framework; and (b) overseeing that all the risksthat the organization faces such as strategic financial credit market liquiditysecurity property IT legal regulatory reputational and other risks have beenidentified and assessed.

There is an adequate mechanism in place about risks and uncertainties that can impactits ability to achieve its strategic objectives risk assessment risk mitigation andminimization procedures and its periodical review.

Industrial relations

Employees at all levels have contributed to the performance of your Company. Yourdirectors place on record the cooperation of employees during the year under report. TheDirectors also place on record the unstinted cooperation extended by the staff membersduring the period under review.

The Management Discussion and Analysis Report gives an overview of the developments inHuman Resources/Industrial Relations during the year.

Safety Health and Environmental Performance

Your Company's commitment towards safety health and environment is being continuouslyenhanced and your Company encourages involvement of all its employees in activitiesrelated to safety including promotion of safety standards. This has demonstrated with nosingle incidence of accident for last 924 days.

The Safety Committee constituted for the same regularly reviews the adherence ofsafety norms. Some of the programs undertaken by the Company include behaviour basedsafety training Knowledge based fire extinguisher training fire fighting training andsafety awareness etc.

Various health checkup programs for employees were regularly undertaken by the Companyduring the year.

Requirements relating to various environmental legislations and environment protectionhave been duly complied by your Company.

Directors and Key Managerial Personnel a) Key Managerial Personnel (KMP)

In accordance with the provisions of Section 203 of the Act the following persons havebeen designated as KMP of the Company as at 31st March 2017:

Name of the KMP Designation
Mr. Ashok Sharma Managing Director
Mr. Sanjeev Mohoni Chief Executive Officer (CEO)
Ms. Sunetra Ganesan Chief Financial Officer (CFO)
Mr. Ratnakar Nawghare Company Secretary (CS)

Ms. Sunetra Ganesan was appointed as CFO in place of Mr. Mayur Bumb who separated fromthe Company on 9th3December 2016.

b) Directors

Pursuant to the provisions of Section 149 of the Companies Act 2013 the Nonindependent Director Mr. S Durgashankar would retire and being eligible has offeredhimself for reappointment.

The three years' term of Mr. Ashok Sharma as Managing Director would be expiring on 30thSeptember 2017 and would require to be renewed for a further period of 33 years witheffect from 1st October 2017. The approval from shareholders for renewal ofhis term is being sought at the ensuing Annual General Meeting.

The Company has received Notice in writing from a Member proposing Mr. Ashok Sharma forre-appointment as Managing Director at the ensuing Annual General Meeting. The Company hasreceived declarations from all the Independent Directors of the Company under Section149(7) of the Act confirming that they meet the criteria of independence laid down inSection3 149(6) of the Companies Act 2013.

The information required pursuant to Section 197(12) read with Rule 5 (1) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofratio of remuneration of a director to the median remuneration of the employees of theCompany for the financial year is given in the Annexure III to this Report.

The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which include criteria for performanceevaluation of the non-executive directors and executive director. The statement indicatingthe manner in which formal annual evaluation of the Directors the Board and Board levelcommittees are given in detail in the Report on Corporate Governance which forms part ofthis Annual Report.

The Company had on the basis of the Policy for performance evaluation of IndependentDirectors Board Committees and other individual Directors followed a process ofevaluation by the Board for its own performance and that of its Committees and individualDirectors.

The details of programmes for familiarisation 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. During the year the Independent Directors of the Companymet on 27th April 2016.

The following policies of the Company are attached herewith marked as Annexure IV andAnnexure V:

a) Policy on Appointment of Directors and Senior Management and Succession Planning forOrderly Succession to the Board and the Senior Management.

b) Policy for Remuneration of the Directors Key Managerial Personnel and otheremployees.

Significant and material orders passed by the Regulators or Courts or Tribunals

During the year under review the Director Horticulture – Maharashtra had issuedthe order dated 30th July 2016 deregistering the Company in the State ofMaharashtra and also restricting to participate in any subsidy related business in theState on account of failure of samples in testing.

The Company had raised many issues and flaws in respect of non adherence to sampletesting procedure preservation of samples and non-adherence to PMKSY Guidelines etc.Based on the merits the samples were subsequently retested and passed at the recognisedlaboratory. The Company is expecting the positive outcome in the matter soon.

Material changes and commitments affecting the financial position of the Company

The Company has received Order dated 1st April 2017 from the DirectorHorticulture and Farm Forestry Madhya Pradesh staying his earlier Order dated 28thMarch 2017 inter alia de-registering the Company in the State of Madhya Pradesh fromparticipating in State Sponsored Horticulture Subsidy Scheme in the country for a periodof 1 year.

Directors' Responsibility Statement

Pursuant to section 134 (5) (e) of the Companies Act 2013 your Directors based onthe representations received from the Operating Management and after due enquiry statethat:

a) in the preparation of the annual accounts for the year ended 31st March2017 the applicable accounting standards read with requirements set out under ScheduleIII to the Act have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistentlyand made judgements 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 31st March 2017 and ofthe profit 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 withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee (CSR Committee) has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities to be undertaken by the Company which has been approved by the Board.

The CSR Policy may be accessed on the Company's website at the link:http://www.epcmahindra.com/pdf/EPC_CSR_ Policy.pdf

The key philosophy of all CSR initiatives of the Company is guided by three corecommitments of Scale Impact and Sustainability.

The Company has identified few focus areas of engagement which are as under:

• Rural Transformation: Creating sustainable livelihood solutions addressingpoverty hunger and malnutrition.

• Health: Affordable solutions for healthcare through improved access awarenessand health seeking behaviour.

• Education: Access to quality education training and skill enhancement.

• Environment: Environmental sustainability ecological balance conservation ofnatural resources.

• Disaster Response: Managing and responding to disaster.

During the year under review your Company initiated few projects such as girl childeducation supply of drinking water pipe line providing solar water systems and supply ofbenches to a school in the rural area River excavation work under Jalaukt Shiwar Yojanamedical check-up camps tree plantation etc. These projects were mainly implementeddirectly through employee participation.

During the year under review the Company has spent Rs. 14.95 lacs which is over 2% ofthe average net profits of last three financial years on CSR activities.

The Annual Report on CSR activities is annexed herewith marked as Annexure VI.

Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules framed thereunder

During the year under review there were no complaints reported/resolved pursuant tothe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 and the Rules framed thereunder.

Vigil Mechanism/Whistle Blower policy

In order to ensure that the activities of the Company and its employees are conductedin a fair and transparent manner by adoption of highest standards of professionalismhonesty integrity and ethical behaviour the Company has adopted a vigil mechanismpolicy. Whistle Blower or Complainant as the case may be under the said Policy shall beentitled to direct access to the Chairperson of the Audit Committee in appropriate orexceptional cases. This policy is explained in the Report on Corporate Governance and alsoposted on the website of Company.

Auditors

The Auditors Messrs. Deloitte Haskins & Sells Chartered Accountants Baroda holdsoffice under second term of five years until the conclusion of the Annual General Meetingto be held in the year 2021 as per the Resolution passed by the Shareholders on July 292016 subject to the ratification by members in every Annual General Meeting. The Auditorsare eligible for reappointment under Section 139 (1) of the Companies Act 2013 and havefurnished a certificate to this effect. The Directors recommend for ratification of theirreappointment as Auditors of the Company.

Cost Auditors

The Company had filed the Cost Audit Report as per the Companies (Cost AccountingRecords) Rules 2011 prescribed under Section 148 (6) of Companies Act 2013 and Rule 6(6)of the Companies (Cost Records and Audit) Rules 2014 pertaining to the financial year2015-16 before the due date of filing.

Pursuant to section 148 of the Companies Act 2013 the Board of Directors on therecommendation of the Audit Committee appointed M/s Shilpa & Company CostAccountants as the Cost Auditors of the Company for the financial year 2017-18. M/sShilpa & Company have confirmed that their appointment is within the limits of Section139 of the Companies Act 2013 and have also certified that they are free from anydisqualification specified under Sections 141(3) and 148(5) of the Companies Act 2013.

The Audit Committee has also received a Certificate from the Cost Auditor certifyingtheir independence and arm's length relationship with the Company.

The Directors recommend the remuneration payable to the Cost Auditors of the Companyfor the year 2017-18. The approval from Shareholders for the remuneration payable to theCost Auditors is being sought at the ensuing Annual General Meeting.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theRules therein the Secretarial Audit Report for the financial year ended on 31stMarch 2017 issued by Mr. Sachin Bhagwat Practising Company Secretary is attached asAnnexure VII to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.

Public Deposits & Loans/Advances

During the year the Company did not accept any fixed deposit. There wereunclaimed/unpaid deposits and unclaimed/ unpaid interest warrants outstanding as on March31 2017 amounting to Rs. 0.91 lacs. Your Company has neither made any loans or advancesnor did any guarantees or securities which are required to be disclosed in the AnnualAccounts of the Company.

Uses & Application of Funds raised under Rights Issue

In the year 2012 the Company had allotted 10358199 equity shares at a price of Rs.40 per share (including a premium of Rs. 30/- per share) resulting in total issue size ofRs. 41.43 crores under the Rights Issue.

The uses and application of funds raised under Rights Issue are given in Note No - 35.1to the Financial Statement. The Uses and Application of funds under Rights Issue aremonitored regularly by the Audit Committee.

Energy Conservation and Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo as required to be disclosed under sub-section(3) (m) ofSection 134 of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts)Rules 2014 are provided in Annexure VIII to this Report.

DISCLOSURES:

Audit Committee

The Audit Committee comprises Independent Directors namely M/s. Vinayak Patil(Chairman) S Durgashankar and Anand Daga as other members.

All the recommendations made by the Audit Committee were accepted by the Board.

CSR Committee

The CSR Committee comprises M/s Ashok Sharma (Chairman) S Durgashankar and VinayakPatil as other members.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises Directors namely M/s. Anand Daga(Chairman) S Durgashankar and Vinayak Patil as other members.

Meetings of the Board

Five meetings of the Board of Directors were held during the year. For further detailsplease refer the Report on Corporate Governance of this Annual Report.

Extract of Annual Return

Pursuant to Sub-section 3(a) of Section 134 and Sub-section33 of Section 92 of theCompanies Act 2013 read with Rule312(1) of the Companies (Management and Administration)Rules 2014 the extracts of Annual Return of the Company as at 31st March 2017is annexed herewith as Annexure IX to this Report.

Statement of deviation (s) or variation (s)

During the year under review there were no deviations of funds reported to the AuditCommittee in respect of the funds raised in the year 2012 under Rights Issue.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Companies Act 2013.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this Report.

4. There were no frauds reported by auditors (including Secretarial and Cost auditor)to the Audit Committee or Board and also not reported to the Central Government.

Particulars of Employees

Particulars of employees as required under Section 197 of the Act read with Rule 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed to this Report and marked as Annexure III (B) and (C). In accordance withthe provisions of Section 136 of the Act the Annual Report and Accounts are being sent toall the Members of the Company excluding the aforesaid information and the saidparticulars will be made available on request and also made available for inspection atthe Registered Office of the Company. Any Member interested in obtaining such particularsmay write to the Company Secretary at the Registered Office of the Company.

Acknowledgements

Your Directors take this opportunity to place on record their sincere appreciation forthe co-operation and continued support received from customers vendors suppliersbankers business associates and shareholders.

For and on behalf of the Board
Place : Nashik Vinayak Patil Ashok Sharma
Dated: 27th April 2017 Director Managing Director