Ess Dee Aluminium Ltd.
|BSE: 532787||Sector: Metals & Mining|
|NSE: ESSDEE||ISIN Code: INE825H01017|
|BSE 15:29 | 23 Feb||63.80||
|NSE 15:31 | 23 Feb||64.70||
|Mkt Cap.(Rs cr)||204|
|Mkt Cap.(Rs cr)||204.48|
Ess Dee Aluminium Ltd. (ESSDEE) - Director Report
Company director report
Your Directors are pleased to present the Twelfth Annual Report of the Company togetherwith the Audited Statement of Accounts for the financial year ended 31st March 2016.
1. FINANCIAL RESULTS:
The financial highlights of the year are:
(Rs. in Lacs)
2. PERFORMANCE REVIEW:
Total income for the year under review decreased by 39.6% to Rs. 469 crore. Thecconsolidated top-line dropped 42% to Rs. 502 crore. Company's manufacturing units haveseen very restricted production since the 3rd quarter of the year due to severe financialstress driven by liquidity constraints.
We were able to maintain our gross margins at around 30%. But EBITDA margin droppedsharply due to lower production and as we had to make significant new provisions fordelayed collection of receivables and default in ICDs. We are pursuing these cases legallyand hope to recover most of the money back. Our interest costs increased further despitelower level of operations as working capital cycles stayed stretched and banks keptpenalizing us for delayed repayments. As a result we ended up with consolidated net lossof Rs.87cr.
Since the Company has suffered losses in the current financial year your directors donot recommend any dividend for the financial year 2015-2016. During the year theunclaimed dividend pertaining to the dividend for the year ended 31st March 2009 wastransferred to the Investor Education and Protection Fund.
4. SHARE CAPITAL:
The Authorised and Paid Up Share capital of the Company as on 31 st March 2016 was Rs.3714000000/- and Rs. 320478110/- respectively and there is no change in capitalstructure of the Company during the year.
5. NON CONVERTIBLE DEBENTURES:
The Company has borrowed Rs. 80 Crore from Life Insurance Corporation of India throughissue of Non- Convertible Debenture (NCDs) in two tranches of Rs. 40 Crore each on July302010 with maturity of three years and seven years respectively. The Company has dulyrepaid the first tranche of NCD of Rs. 40 Crore on its maturity. Out of the second trancheof NCDs of Rs. 40 Crore NCDs worth Rs. 30 Crore remain outstanding including theinstalment of Rs. 10 Crore the due date whereof is July 302017.
During the year under review the Company has not transferred any amount to DebentureRedemption Reserve as the Company has suffered huge losses (Previous year an amount ofRs. 593 lacs have been transferred to Debenture Redemption Reserve).
6. PUBLIC DEPOSIT:
During the year under review your Company has not accepted any deposits in terms ofthe provisions of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014 as amended during the year under review.
7. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes no 29.14 of to the FinancialStatements.
8. TRANSFER TO RESERVE:
During the year 2015-16 the Company has suffered losses and thus has not transferredany amount to reserves
9. CORPORATE SOCIAL RESPONSIBILITY:
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyare set out in "Annexure A" of this report in the format prescribed in theCompanies (Corporate Social Responsibility Policy) Rules 2014. The policy is available onthe website (www.essdee.in 1 of the Company.
10. RISK MANAGEMENT:
Pursuant to the requirement of Regulation 27 of SEBI Listing Regulations the Companyhas a structured Risk Management Policy. The risk management process is designed tosafeguard the organization from various risks through timely and adequate actions. It isdesigned to anticipate evaluate and mitigate risks in order to minimize its impact on thebusiness. The potential risks are inventoried and integrated with the management processsuch that they receive the necessary consideration during decision making. It is dealtwith in greater details in the Management Discussion and Analysis Section. As required byClause 49 of the Listing Agreement the Company has framed the Risk Management Policy. TheMain objective of this policy is to ensure sustainable business growth with stability andto promote proactive approach and to identifying evaluating and resolving risksassociated with the business. In order to achieve the key objective the policyestablishes structured and disciplined approach to risk management in order to guidedecisions on risk related issues. Under the current challenging and competitiveenvironment the strategy for mitigating inherent risk in accomplishing the growth plan ofthe Company is imperative. The Common risk interalia are regulatory risk competitionfinancial risk technology obsolescence human resources risk political risksinvestments retention of talents expansion of facilities and product price risk. It isdealt with in greater details in the Management Discussion and Analysis Section.
11. MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report forms a part of the Directors' Report andcontains all matters pertaining to the industry (Annexure-B).
12. REPORT ON CORPORATE GOVERNANCE:
A separate section on Corporate Governance forming part of the Directors' Report andthe certificate from the Auditors of the Company confirming compliance of CorporateGovernance norms as stipulated
under Regulation 27 of SEBI (Listing Obligation and Disclosure Requirement) Regulation2015 (SEBI Listing Regulations) is included in the Annual Report. (Annexure-C)
13. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 (12) read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/ employees of your Company is set out in "Annexure D".
Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice and corporate office of the Company during working hours and any member interestedin obtaining such information may write to the Company Secretary and the same will befurnished on request. The Annual Report including the aforesaid information is being sentelectronically to all those members who have registered their email addresses and isavailable on the Company's website (www.essdee.in )
As per the provisions of Section 164(2) of the Companies Act 2013 any person who isor has been a director of the Company which have failed to file the financial statementsor annual returns for any continuous period of three financial years or has failed torepay the deposits accepted by it or pay interest thereon or to redeem any debentures onthe due date or pay interest due thereon or pay any dividend declared and such failure topay or redeem continues for one year or more shall not be eligible to be reappointed as adirector of that company or appointed in other company for a period of five years from thedate on which the said company fails to do so.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both underSection 149(6) of the Companies Act 2013 and SEBI Listing Regulations 2015.
Brief resume of the Directors proposed to be appointed/re-appointed and otherinformation as stipulated under the said Regulations are part of Corporate GovernanceReport.
None of the Directors of your Company are disqualified under Section 164 (2) of theCompanies Act 2013. As required by law this position is also reflected in the Auditors'Report.
14.1 Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations theBoard has carried out an annual performance evaluation of its own performance theDirector's individually as well as the evaluation of its Audit and other committees. ThePerformance evaluation was carried out as under:
In accordance with the criteria suggested by the Nomination and Remuneration CommitteeThe Board of Directors evaluated the performance of Board having regard to variouscriteria such as Board Composition Board Process and Board Dynamics etc.
Committee of the Board
The Performance of the Audit Committee CSR Committee Nomination and RemunerationCommittee and Stakeholders Relationship Committee was evaluated by the Board havingregards to various criteria such as committee composition Committee process and Committeedynamics etc. The Board has unanimous view that all the committees were performing theirfunctions satisfactorily and according to the mandate prescribed by the Board under theregulatory requirements including provisions of the act and Listing Agreement.
a) Independent Directors:- in accordance with the criteria suggested by the Nominationand Remuneration Committee the performance of the each Independent Director was evaluatedby the entire board of Directors on various parameter like engagement leadershipcommunication governance and interest of stakeholders. The Board was of the unanimousview that each Independent Director was a reputed professional and brought his richexperience to the deliberation of the Board. The Board also appreciated the contributionmade by all the Independent Directors in guiding the management in achieving growth andconcluded that continuance of each independent director in the Board will be in theInterest of the Company
b) Non Independent Director: The performance of each of the non-independent Director(including Chairman) was evaluated by the Independent Directors in their separate meeting.The various criteria considered for the purpose of evaluation included leadershipengagement transparency analysis decision making functional knowledge. The IndependentDirectors and Board were of the unanimous view that each of the non-independent directorswas providing good business and people leadership
14.2 Policy on Director Appointment and Remuneration
The Board has on the recommendation of Nomination and Remuneration Committee framed apolicy for selection and appointment of Directors and senior management and theirremuneration. The requisite details as required by section 134(3) (e) of the CompaniesAct 2013 Section 178 (3) and (4) and Regulation 27 of SEBI (Listing Obligation andDisclosure Requirement) Regulation 2015 are annexed as Annexure -E of this Report.
14.3 Board Meeting
During the year Four Board Meetings and Audit Committee Meetings were held. Thedetails of which are given under Corporate Governance Report. The intervening gap betweenthe meetings was within the period prescribed underthe CompaniesActand Listing Agreement.
15. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained your Directors make the following statements in terms of Section134(3) (c) of the Companies Act 2013:
a) In the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards have been followed and there are no material departuresfrom 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 the end of the Financial yearending on March 312016 and of the profit and Loss of the Company for the year ended onthat 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 causes to prepare the annual accounts on a going concern'basis;
e) The Directors had 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 had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and are operating effectively.
16. CONTRACTS AND ARRANGEMENT WITH RELATED PARTIES:
In line with the requirements of the Companies Act 2013 and Uniform Listing AgreementThe Company has formulated a Policy on Related Party Transactions which is also availableon Company's website at www.essdee.in . The Policy intends to ensure that properreporting; approval and disclosure processes are in place for all transactions between theCompany and Related Parties.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a quarterlybasis for the transactions which are of a foreseen and repetitive nature.
All Related Party Transactions entered into during the yearwere in Ordinary Course ofthe Business and on Arm's Length basis. No Material Related Party Transactions i.e.transactions exceeding ten percent of the annual consolidated turnover as per the lastaudited financial statements were entered into during the year by your Company.Accordingly the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act 2013 in Form AOC 2 is not applicable. The Details of the relatedparty transactions are given under notes no 29.07 on accounts of the financial Statements.
17. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THECOMPANY:
There are no material changes or commitments affecting the financial position of thecompany which have occurred between 31 st March 2016 and the date of this report.
a. Most of the production facilities of the company had to sharply curtail productiondue to severe financial stress triggered by liquidity constraints. The financial stresswas further exacerbated by plant closures.
b. The financial stress also resulted in credit rating downgrade in January and alsosome loan accounts with a few banks becoming N PA by the end of March 2016.
c. Most of the senior leadership team which was directly responsible for company'scurrent situation have left the company during the year.
d. The situation as detailed above also resulted in non-payment of some statutory dues.
18. VIGIL MECHANISM:
In accordance with the requirement of the Companies Act 2013 read along withRegulation 27 of SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015the Company has formulated a vigil mechanism (Whistle Blower Policy) for its Directors andEmployees of the Company for reporting about unethical practice. The object of the policyis:
a. To provide a mechanism to the employees and Director of the Company and otherpersons dealing with the Company to report to the audit committee any incidence ofunethical behaviour actual or suspected fraud or violation of the Company's ethic policy;
b. To safeguard the confidentiality and interest of such employees/Directors/ Personsdealing with the Company
19. ORDER BY REGULATOR COURT OR TRIBUNAL
No significant and/or material order were passed by any regulator or court or tribunalimpacting the going concern status and Company's operations in future.
20. STATUTORY AUDITORS
At the 10th Annual General Meeting held on 27th September 2014 the members approvedthe appointment of M/s. M.P. Chitale & Co Chartered Accountants the StatutoryAuditors of the Company to hold office from the conclusion of 10th Annual General Meetinguntil conclusion of 13th Annual General Meeting (subject to ratification of appointment bymembers at every AGM held after 10th AGM) on such remuneration as may be mutually agreedby the Board and the Auditor.
In accordance with the section 139 of the Companies Act 2013 Members are requested toratify the appointment of the Auditors from the conclusion of the 12th AGM till theconclusion of 13th AGM.
The Auditors confirmed their eligibility to the effect that their re-appointment ifmade would be within the prescribed limits under the Act and that they are notdisqualified for re-appointment.
The specific notes forming part of accounts referred to in the Auditors' Report areself-explanatory and give complete information.
21. COST AUDITORS
As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time the Company has been carrying out audit of cost recordsrelating to Product of the Company every year.
The Board of Directors on the recommendation of Audit Committee had appointed Mr.Prasad Sawant Cost Accountants as Cost Auditor to audit the cost accounts of the Companyfor the financial year 2016- 17 at a remuneration of Rs. 135000/- per annum andreimbursement of out of pocket expenses if any. As required under the Companies Act 2013a resolution seeking members approval for ratification of the remuneration payable to theCost Auditors forms part of the Notice convening the Annual General Meeting. The costaudit report for the financial year 2015-16 was filed with the Ministry of CorporateAffairs.
22. SECRETARIAL AUDIT REPORT
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. Amit R. Dadheech & Associates a firm of Company Secretaries inPractice (CP No. 8952) to undertake the Secretarial Audit of the Company for the year2015-16. The Secretarial Audit Report is annexed herewith as "AnnexureF".
The Secretarial Audit Report is self explanatory and requires no clarification /information
23. EXTRACT OF ANNUAL RETURN
Pursuant to section 134 (3)(a) of the Companies Act 2013 the extract of the AnnualReturn in form MGT 9 is annexed herewith as "Annexure G".
24. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as "AnnexureH".
25. SUBSIDIARY COMPANIES
Particulars of subsidiary Companies are as follows:
Flex Art Foil Limited (FAFL)
Flex Art Foil Limited is the material wholly owned Indian Subsidiary of the Companywhich provides facilities for printing of Aluminium poly blister to pharmaceuticalcompanies for their packaging solutions at various locations across the country. Thepolicy on material subsidiary is available on the company's website www.essdee.in EssDee Aluminium Pte. Limited
Ess Dee Aluminium Pte. Limited is a wholly owned subsidiary Company incorporated in theRepublic of Singapore on 15th December 2011 (hereinafter referred as "ForeignSubsidiary").
Information regarding the subsidiary Companies for the financial year 2015-16 areannexed as "Annexure-I".
The properties and Insurable assets and interest of the Company like Building Plantand Machinery and Stocks among others are adequately insured.
27. ANTI SEXUAL HARASSMENT POLICY
The Company has in place an Anti Sexual harassment policy inline with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 & the Rules made thereunder. Internal Complaints Committee (ICC) has beenset up to redress complaints as received regarding sexual harassment. All employeespermanent contractual temporary and trainees are covered under the policy. YourDirectors further state that during the year under review there were no cases filedpursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
28. CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the Listing Agreement with the Stock Exchanges theattached consolidated financial statements have been prepared in accordance withAccounting Standard AS-21 on Consolidated Financial Statements read with AccountingStandard AS-23 on Accounting for Investments in Associates.
29. ENVIRONMENT AND SOCIAL OBLIGATION
The Company's plants comply with all norms set up for clean and better environment bythe competent authorities. The Company undertakes regular checks / inspections includingcertification for the maintenance of the environment. The Company values environmentalprotection and safety as the major considerations in its functioning. The Company hasadequate effluent Treatment Plants to prevent pollution. The Company is continuouslyendeavouring to improve the health and quality of life in the communities surrounding itsindustrial complexes.
The Directors record their grateful thanks for the co-operation support and assistancereceived from the customers shareholders the Government other statutory bodies BanksSolicitors Distributors Suppliers and other business associates during these mostturbulent times.
The Directors also express their sincere appreciation of the employees at all levelsfor having risen to meet the several challenges encountered and look forward to theirvaluable support and commitment in the times ahead.
Forand on Behalf of the Board of Directors
Date: December 62016
"Annexure - A"
The Company is committed to doing business with integrity and respect for the worldaround us. The Company's CSR policy is aimed at forming a dynamic relationship between theCompanies on the one hand and the society and the environment on the other. The Company isdevoted towards sustainability and all business decisions takes into account its socialand environmental impact.
Further the Company is dedicated and committed towards the social welfare andresponsibility and is continuously striving to sketch down a brief route map for carryingout the CSR Activities.
Composition of CSR Committee:
Mr. Gautam Mukherjee Independent Director is the Chairman of the Committee;
Mr. Ashis Bhattacharya; and
Mrs. Vinaya Desai are the other members of the Committee.
Mr. Ashis Bhattacharya and Mrs. Vinaya Desai have ceased to be the Director of theCompany w.e.f. May 30 2016 and thus the Composition of CSR Committee is as follows:
Mr. Gautam Mukherji Independent Director is the Chairman of the Committee;
Mr. Debdeep Bhattacharya and;
Mr. Dilip Phatarphekar are the other members of the Committee.
The provisions of Section 135 of the Companies Act 2013 is applicable for anyfinancial year to such class or classes of Companies having:
Net worth rupees five hundred crore or more or;
Turnover of rupees one thousand crore or more or;
Net profit of rupees five crore or more in any financial year
Average net profit of the company for last three immediately preceding financial yearsfor the purpose of computation of CSR: Rs. 7025.33/- Lacs
Prescribed CSR Expenditure (two per cent of Rs. 7025.33/- Lacs): Rs. 140.51/- Lacs
Details of CSR spent during the financial year: NIL
a. Total amount to be spent for the financial year: Rs. 140.51/- Lacs
b. Amount unspent: f 169.43/- Lacs
c. Manner in which the amount spent during the financial year: Not Applicable
c. Manner in which the amount spent during the financial year: Not Applicable
The Company is required to spend cumulatively Rs. 309.94/- Lacs towards CSR forthe FY 2014-15 & 2015-16 In case the company has failed to spend the twoper cent of the average net profit of the last three financial years or any part thereofthe company shall provide the reasons for not spending the amount in its Board report:
The Company has not made any expenditure in relation to CSR for the past financial yearas the Company was under process of identifying and finalizing the desirable proposal forCSR expenditure. The Company hereby confirms to make the statutory expenditure in terms ofSection 134 of the Companies Act 2013 for the past financial years as well as for the FY2015-16 as and when the eligible institute and activities falling under the category ofCSR activities are finalized.
Further the Company has duly constituted and reconstituted from time to time the CSRCommittee for identifying and finalizing the projects and expenditure required to be madeby the Company. The Committee so formed is incessantly meeting various lnstitute(s)andorganizations in ordertofirm up with the CSR Policy of the Company. The Board shall meetup as and when the recommendations and proposal for CSR Initiative is available with theCommittee in order to finalize and implement the proposal
A responsibility statement of the CSR committee for implementation and monitoring ofCSR policy is in place with compliance to CSR objectives and policy of the Company.