To the Members
The Directors have pleasure in presenting the 29th Annual Report and Audited Accountsfor the financial year ended 31st March 2016.
(Rs in Crore)
|Particulars ||2015-2016 ||2014-2015 1 |
|Gross Sales and Services ||2631.14 ||2611.26 |
|Other Income ||21.94 ||20.05 |
|Profit/(Loss) before depreciation finance charges and taxation ||298.80 ||266.56 |
|Less: Depreciation & Amortisation ||24.91 ||33.93 |
|Finance charges ||44.92 ||42.70 |
|Profit before Exceptional items and Tax ||228.97 ||189.93 |
|Exceptional Items ||109.95 ||- |
|Profit/(Loss) before taxes ||119.02 ||189.93 |
|Provision for taxation ||26.90 ||26.74 |
|MAT credit entitlement ||(26.90) ||(26.72) |
|Profit/(Loss) for the year ||119.02 ||189.91 |
|Add: Balance brought forward from previous years ||408.32 ||234.04 |
|Sub Total |
|527.34 ||423.95 |
|First Interim Dividend paid on Preference Shares ||2.62 ||2.62 |
|Tax paid on First Interim Dividend on Preference Shares ||0.60 ||0.44 |
|Second Interim Dividend paid on Preference Shares ||2.62 ||- |
|Tax paid on Second Interim Dividend on Preference Shares ||0.54 ||- |
|Proposed Second Interim Dividend on Preference Shares ||- ||2.62 |
|Tax on proposed Second Interim Dividend on Preference Shares ||- ||0.44 |
|Adjustment relating to fixed assets ||- ||9.51 |
|Closing Balance ||521.96 ||408.32 |
During the year under review the Board of Directors at its meeting held on 26thOctober 2015 has declared and paid first Interim Dividend of ' 3.25 per share on8050000 6.5% Cumulative Redeemable Preference Shares (CRPS) of ' 100/- each. TheBoard of Directors at its meeting held on 10th May 2016 also declared Second InterimDividend of ' 3.25 per share on above CRPS for financial year ended 31st March2016. The Company has made the payment of ' 6.38 Crore towards Interim Dividend(including tax) on CRPS for financial year 2015-16 exit from corporate debt restructuringmechanism
Debts of the Company were earlier restructured under Corporate Debt Restructuring (CDR)mechanism and as stipulated therein the Lenders had the right to claim recompense fromthe Company at the time of its exit from CDR on account of various sacrifices &waivers made by them in the CDR Package. With the improved financial performance theCompany submitted its proposal for exit from CDR mechanism to Monitoring Institution (MI)i.e. IDBI Bank Limited. The MI has recommended recompense amount of ' 148.47 Croreon term and working capital loans. The same has been approved by CDR - Empowered Groupvide their order dated 22nd March 2016 subject to the approval from Company's Lenders.Subsequent to CDR-EG's approval the recompense amount has been approved by some of thelenders and approval from remaining lenders is expected soon. Accordingly the Board ofDirectors of the Company at their meeting held on 10th May 2016 has approved therecompense amount of ' 148.47 Crore to exit from CDR mechanism.
MANAGEMENT DISCUSSioNS & ANALYSIS (MDA)
Management Discussions and Analysis (MDA) Report for the year under review asstipulated under Regulation 34(2)(e) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") is presented in a separate section forming part of the Annual Report.
consolidated financial statements
The Consolidated Financial Statements of your Company for the financial year 2015-16are prepared in accordance with the Companies Act 2013 read with the Rules issuedthereunder Accounting Standard AS-21 on Consolidated Financial Statements read with AS-23on Accounting for Investments in Associates AS -27 on Financial Reporting of Interests inJoint Ventures and the provisions of Listing Regulations. The Audited ConsolidatedFinancial Statements are provided in the Annual Report. As per the provisions of Section2(6) of the Companies Act 2013 one of entity qualifies to be an Associate and hencerequires its financials to be consolidated with the Company's Financials. However theCompany does not have any control over the business decisions or affairs of the saidAssociate. Moreover the said Associate has not yet furnished its Financial Statements forconsolidations even after reminders. In view of the above financials of said Associatehave not been consolidated with the Company's Financials.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE
M/s HTL Limited M/s Moneta Finance Private Limited and M/s HFCL Advance SystemsPrivate Limited continue to be the subsidiaries of your Company. M/s Polixel SecuritySystems Private Limited has become the subsidiary of the Company w.e.f. 9thAugust 2016.
A separate statement containing the salient features of financial statements of allsubsidiaries of your Company as on 31st March 2016 forms part of consolidated financialstatements in compliance with Section 129 and other applicable provisions if any of theCompanies Act 2013. The financial statements of the subsidiary companies and relatedinformation are available for inspection by the members at the Registered Office of yourCompany during business hours on all days except Saturdays Sundays and public holidays upto the date of the Annual General Meeting (AGM) as required under Section 136 of theCompanies Act 2013. Any shareholder desirous of obtaining the Annual Accounts and relatedinformation of the above subsidiary companies may write to the Company Secretary at M/sHimachal Futuristic Communications Ltd. 8 Commercial Complex Masjid Moth GreaterKailash - II New Delhi - 110048 and the same shall be sent by post. The financialstatements including the consolidated financial statements financial statements ofsubsidiaries and all other documents required to be attached to this report have beenuploaded on the website of the Company www.hfcl.com.
A report on the performance and financial position of each of subsidiaries associatesand joint venture companies as per the Companies Act 2013 is provided as "Annexure-A"to the consolidated financial statements and hence not repeated here for sake of brevity.The policy for determining material subsidiaries as approved by the Board of Directors maybe accessed on the Company's website at the link: http://www.hfcl.com/wp-content/uploads/2016/02/Policy-for-determining-material-subsidiaries.pdf.
During the financial year 2015-16 your Company has not accepted any deposit within themeaning of Section 73 and 74 of the Companies Act 2013 read together with the Companies(Acceptance of Deposits) Rules 2014.
disclosure relating to remuneration of directors key managerial personnel and
PARTICULARS OF EMPLOYEES
The remuneration paid to the Directors is in accordance with the Remuneration Policyformulated in accordance with Section 178 of the Companies Act 2013 and Regulation 19 ofthe Listing Regulations (including any statutory modification(s) or re-enactment(s)thereof for the time being in force). The salient aspects covered in the RemunerationPolicy have been outlined in the Corporate Governance Report which forms part of thisreport.
The Managing Director of your Company does not receive remuneration from any of thesubsidiaries of the Company.
The information required under Section 197 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 (includingany statutory modification(s) or re-enactment(s) thereof for the time being in force) inrespect of Directors/employees of the Company is set out in "Annexure - A"to this Report and is available on the website of the Company.
DIRECTORS & KEY MANAGERIAL PERSONNEL APPOINTMENTS/RE-APPOINTMENTS
Dr. R. M. Kastia Non-Executive Director is liable to retire by rotation at ensuingAnnual General Meeting pursuant to Section
152 of the Companies Act 2013 read with the Companies (Appointment and Qualificationof Directors) Rules 2014 and the Articles of Association of your Company and beingeligible offers himself for re-appointment. Appropriate resolution for his re-appointmentis being placed for your approval at the ensuing AGM. The Brief resume of him and otherrelated information have been detailed in the Notice convening the 29th AGM of yourCompany. Your Directors recommend his re-appointment as Non-Executive Director of yourCompany.
In compliance with the provisions of Section 149 152 Schedule IV and other applicableprovisions if any of the Companies Act 2013 read with the Companies (Appointment andQualification of Directors) Rules 2014 Shri M P Shukla & Smt. Bela Banerjee wereappointed as Independent Directors of your Company at 27th and 28th Annual General Meetingheld on 30th September 2014 and 30th September 2015 respectively.
Shri M P Shukla was appointed as an independent director to hold the office up to 2(two) consecutive years for a term up to the conclusion of this Annual General Meeting.Smt. Bela Banerjee was appointed as an independent director to hold office up to 1 (one)year for a term up to the conclusion of this Annual General Meeting. Accordingly the termof above Independent Directors will come to an end with the conclusion of this AnnualGeneral Meeting.
On the recommendations of the Nomination & Remuneration Committee of the CompanyShri M. P. Shukla and Smt. Bela Banerjee are proposed to be re-appointed as IndependentDirectors pursuant to the provisions of Section 149 of the Companies Act 2013 and therules made thereunder and Listing Regulations at the ensuing Annual General Meeting forthe second term of two years each.
The present terms of Shri Arvind Kharabanda Whole-time Director designated as Director(Finance) has expired on 31st May 2016 and he has shown his unwillingness to continue asWhole-time Director. However he will continue to hold the position of a Non-ExecutiveDirector of the Company.
familiarisation programme for independent directors
The details of programmes for familiarisation of Independent Directors with theCompany their roles rights responsibilities in the Company and related matters are putup on the website of the Company at the link: http://www.hfcl.com/wp-content/uploads/2016/04/HFCL-Familiarisation-Prog.pdf.
ANNUAL EVALUATION OF BOARD PERFORMANCE
Pursuant to the provisions of the Companies Act 2013 read with the rules issuedthereunder (including any statutory modification(s) or re-enactment(s) thereof for thetime being in force) and Listing Regulations the Nomination and Remuneration Committee /Committee of Independent Directors have evaluated effectiveness of the Board/Committees /Directors for the financial year 2015-16. Further the Board of Directors also evaluatedthe performance of Independent Directors as required under Regulation 17 of ListingRegulations. The criteria applied in the evaluation process are detailed in the CorporateGovernance Report which forms part of this report.
KEY MANAGERIAL PERSONNEL
During the year under review Shri Mahendra Nahata Managing Director Shri ArvindKharabanda Director (Finance) Shri V R Jain CFO and Shri Manoj Baid AssociateVice-President (Corporate) & Company Secretary remained the Key Managerial Personnelin accordance with the provisions of the Companies Act 2013 and Rules made thereunder.
PARTICULARS OF EMPLOYEES' AND RELATED DISCLOSURES
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 (including any statutory modification(s) or re-enactment(s) thereoffor the time being in force) a statement showing the names of top ten employees of theCompany in terms of remuneration drawn and other particulars of the employees drawingremuneration in excess of the limits set out in said rules are given in "Annexure-A"annexed herewith.
NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE
The details of the number of Board and Audit Committee meetings of the Company are setout in the Corporate Governance Report which forms part of this Report.
The details pertaining to Composition of Audit Committee are included in the CorporateGovernance Report which forms part of this report.
DECLARATION OF INDEPENDENCE
The Company has received declaration from all the Independent Directors confirming thatthey meet the criteria of independence as prescribed under the provisions of CompaniesAct 2013 read with the Schedule and Rules issued thereunder as well as Regulation16(1)(b) of Listing Regulations.
directors' responsibility statement
Pursuant to the requirements under Section 134(3)(c) of the Companies Act 2013 theDirectors confirm that:
(a) in the preparation of the annual accounts for the financial year ended 31st March2016 the applicable accounting standards and Schedule III of the Companies Act 2013have been followed and there are no material departures from the same;
(b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and of the profitof the Company for the financial year ended 31st March 2016;
(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) the Directors have prepared the annual accounts on a 'going concern' basis;
(e) the Directors have laid down proper internal financial controls to be followed bythe Company and that such
internal financial controls are adequate and are operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
auditors and auditors' report
At the 28th Annual General Meeting (AGM) of the Company Khandelwal Jain & CompanyChartered Accountants (Firm Registration No. 105049W) was appointed as the StatutoryAuditors to hold office till the conclusion of the 29th AGM of the Company. KhandelwalJain & Co. Chartered Accountants Auditors of the Company retire at the conclusion ofthe ensuing Annual General Meeting and having confirmed their eligibility offerthemselves for re-appointment. The Company has received necessary letter from them to theeffect that their re-appointment if made would be within the prescribed limits underSection 141(3)(g) of the Companies Act 2013 and that they are not disqualified forre-appointment. The Audit Committee and the Board of Directors therefore recommendedre-appointment of Khandelwal Jain & Co. Chartered Accountants as Auditors of theCompany for the financial year 2016-17 till the conclusion of next AGM for the approvalof the Shareholders.
The Auditor's observations in the Standalone Auditors' Report are self-explanatory anddo not call for any further comments. The Statutory Auditors in the Annexure to theAuditors' Report has mentioned about a slight delay in deposit of statutory dues in fewcases. In future the management will make all efforts to deposit the same within time.
Information and explanations on qualifications/observations in the ConsolidatedAuditors' Report are as under:
Auditor's observations in the main Auditors' Report :
In the case of the subsidiary HTL Ltd. as mentioned in Note 38
(v) in the notes forming part of CFS the Subsidiary has not made the provision ofinterest on short term borrowings amounting to ' 6000000 (Cumulatively ' 12000000) onaccount of pending settlement with the lenders. Accordingly finance cost would have beenincreased by ' 6000000 and profit for the year reduced by ' 6000000 and shareholders'fund would have been reduced by ' 12000000.
The provision for interest on short term borrowings has not been made by the subsidiarysince the term of interest payable on them are yet to be finalised and the discussions arein progress. Once the terms are finalized the same will be accounted for in the books ofaccounts of subsidiary company.
Though the auditor has mentioned the maximum impact of ' 60 Lakhs however themanagement of the HTL Limited is discussing the matter with the concerned party for thepayment of interest hence the management's estimation on impact of Audit Qualification isnot ascertainable at present.
In respect of investment in one of the associate of the Holding Company as mentionedin Note 47 in the notes forming part of CFS where the Holding Company has significantinfluence in terms of section 2(6) of the Companies Act 2013 no adjustment has been madein respect of Group's share of net profit/loss as the financial statements/information ofthe associate has not yet been received by the holding company and not furnished to us.
As per the provisions of the Section 2(6) of the Companies Act 2013 one of theentities qualifies to be an Associate and hence requires its financials to be consolidatedwith the Company's financials.
However the Group does not have any control over the business decisions or affairs ofthe said Associate.
Moreover the said Associate has not yet furnished its financial statements forconsolidation even after reminders.
In view of the above the impact of Audit Qualification is not assessable.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed Shri Baldev Singh Kashtwal Practicing Company Secretary having MembershipNo. F3616 and C.P. No. 3169 to conduct the Secretarial Audit of your Company. TheSecretarial Audit Report is annexed herewith as "Annexure -B" to this Report.The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
EXTRACT OF ANNUAL RETURN
The details forming part of the extracts of the Annual Return in Form MGT - 9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as "Annexure-C"to this Report.
RELATED PARTY TRANSACTIONS
During the financial year 2015-16 Company has entered into transactions with relatedparties as defined under Section 2(76) of the Companies Act 2013 read with Companies(Specification of Definitions Details) Rules 2014 which were in the ordinary course ofbusiness and on arms' length basis and in accordance with the provisions of the CompaniesAct 2013 Rules issued thereunder and Regulation 23 of the Listing Regulations. Duringthe year the Company has also entered into transactions with related parties which wereat arms' length basis but not in ordinary course of business as per details given below:
|Names of the Related Party & nature of relationship ||Nature of transactions ||Written down value ||Amount of consideration |
|HTL Limited (Subsidiary under Section 2(87) of the Companies Act2013) ||Sale of Old Plant & Machineries ||31387/- ||1543000/- |
|-do- ||-do- ||1429000/- ||15376000/- |
Above related party transactions were entered into after obtaining approval of AuditCommittee as well as Board of Directors of the Company.
During the financial year 2015-16 there were no transactions with related partieswhich qualify as material transactions under the Listing Agreement / Listing Regulations.
The details of the related party transactions as required under Accounting Standard -18 are set out in Note - 42 to the standalone financial statements forming part of thisAnnual Report.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website at thelink: http://www.hfcl. com/HFCL-Related%20party%20transactions%20policy.pdf.
LOANS GUARANTEES AND INVESTMENTS
The details of loans guarantees and investments under Section 186 of the CompaniesAct 2013 read with the Companies (Meetings of Board and its Powers) Rules 2014 are asfollows:
Amounts outstanding as at 31st March 2016
|Particulars ||Amount |
|Loans given ||13.75 |
|Guarantees given ||32.66 |
|Investments made ||176.68 |
Loans Guarantees and Investments made during the financial year 2015-16
|Name of the entity ||Relation ||Amount (Rs in Crore) ||Particulars of Loans Guarantees and Investments ||Purpose for which the Loans Guarantees and Investments are proposed to be utilized |
|HTL Limited ||Subsidiary under Section 2(87) of the Companies Act2013 ||11.00 ||Loan ||Short term loan given for working capital requirements. |
|Corning Finolex Optical Pvt. Ltd. ||Supplier ||12.50 ||Guarantee ||Corporate Guarantee given to M/s Corning Finolex Optical Pvt. Ltd. on behalf of HTL Limited a subsidiary of the Company for supply of raw material to subsidiary. |
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the financial year2015-16 are set out in "Annexure-D" of this report in the formatprescribed in the Companies (Corporate Social Responsibility) Rules 2014. For otherdetails regarding the CSR Committee please refer to the Corporate Governance Reportwhich forms part of this report. The CSR Policy is available on the website of the Companyand may be accessed at the URL http://www.hfcl.com/wp-content/uploads/2016/01/CSR-Policy.pdf.
The Company is undertaking CSR activities through its Registered Society i.e. HFCLSocial Services Society ("HSSS") established by the Company in the year 1996.
The Board of Directors of the Company have formulated a Whistle Blower Policy which isin compliance with the provisions of Section 177(10) of the Companies Act 2013 andRegulation 22 of Listing Regulations. The Company through this policy envisages toencourage the Directors and Employees of the Company to report to the appropriateauthorities any unethical behaviour improper illegal or questionable acts deeds actualor suspected frauds or violation of the Company's Code of Conduct for Directors and SeniorManagement Personnel. The Policy on Vigil Mechanism/ Whistle blower policy may be accessedon the Company's website at the link: http://www.hfcl.com/wp-content/uploads/2016/02/Whisle-Blower-Policy.pdf.
The Company's scrip has come under compulsory dematerialization w.e.f. 29th November1999 for Institutional Investors and w.e.f. 17th January 2000 for all Investors. So far99.96% of the equity shares have been dematerialized. The ISIN allotted to the equityshares of the Company is INE548A01028.
In Compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with certificate from the Auditors on its compliance forms anintegral part of this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134 of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 is set out herewith as "Annexure-E"to this Report.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant/material orders passed by the Regulators or Courts orTribunals impacting the going concern status of your Company and its operations in future.
a) Your Company has not issued equity shares with differential rights as to dividendvoting or otherwise;
b) Your Company does not have any ESOP scheme for its employees/directors.
c) Neither the Managing Director nor the Whole-time Director of the Company receivesany remuneration or commission from any of its subsidiaries.
d) No fraud has been reported by the Auditors to the Audit Committee or the Board ofthe Directors of the Company. Your Directors further state that during the year underreview there were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
Statement in the Management Discussions and Analysis describing the Company'sprojections estimates expectations or predictions may be 'forward looking statements'within the meaning of applicable securities laws and regulations. Actual results coulddiffer materially from those expressed or implied. Important factors that would make adifference to the Company's operations include demand supply conditions raw materialprices changes in government regulations tax regimes and economic developments withinthe country and abroad and such other factors.
The Directors thank the Central Government Govt. of Himachal Pradesh Govt. of GoaIDBI Bank Limited State Bank of India Oriental Bank of Commerce Punjab National BankBank of Baroda Union Bank of India and other Banks for all co-operations facilities andencouragement they have extended to the Company. Your Directors acknowledge the continuedtrust and confidence you have reposed in the Company. The Directors also place on recordtheir appreciation for the services rendered by the officers staff & workers of theCompany at all levels and for their dedication and loyalty.
| ||For and on behalf of the Board |
| ||M P Shukla |
|Place: New Delhi ||Chairman |
|Date: 22nd August 2016 ||DIN No. 00052977 |