Hanung Toys and Textiles Limited
Your Directors have pleasure in presenting the 27th Annual Report together with theAudited Statements of Accounts of the Company for the year ended March 31st 2017 in termsof the Companies Act 2013 and rules & regulation made there under & Regulation 33of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and asamended from time to time including Circular Ref.CIR/CFD/FAC/62/2016 dated 05.07.2016 asmay be applicable during the period under review.
The following table gives the financial highlights of your Company on a standalonebasis according to the Indian Generally Accepted Accounting Principles (GAAP)
| || ||(Rs. in Lacs) |
|Particulars ||Year ended 31.03.2017 ||Year ended 31.03.2016 |
|Net Sale & other Income ||1411.53 ||9511.18 |
|Profit/(Loss) Before Interest Depreciation & Tax ||(3452.16) ||(62718.07) |
|Financial Cost ||6.76 ||27819.71 |
|Depreciation ||5160.96 ||5282.63 |
|Net Profit/(Loss) Before Tax ||(8619.88) ||(95820.41) |
|Provision for Tax ||2404.00 ||13528.00 |
|Profit/(Loss) after Tax ||(11023.88) ||(109348.41) |
|Appropriations ||- ||- |
|Proposed Dividends ||- ||- |
|Provision for Tax for Dividends ||- ||- |
|Surplus carried forwards to B alance Sheet ||(11023.88) ||(109348.41) |
|Transfer to General Reserve ||- ||- |
|Net Surplus carried forwards to Balance Sheet ||- ||- |
EROSION OF NET WORTH AND REFERENCE TO THE BOARD FOR INDUSTRIAL AND FINANCIALRECONSTRUCTION (BIFR)
The operating results have been adversely affected due to adverse market conditionsnon receipt of Tuff's subsidy and blockage of substantial funds in slow/ non moving stocksand debtors. The Company faced severe liquidity crunch and huge scarcity in the workingcapital funds. On account of the operational losses and consequent negative net worth theCompany made a Reference with the Board for Industrial and Financial Reconstruction interms of the provisions of section 15(1) of Sick Industrial Companies (Special Provisions)Act 1985 which has since been registered by the Hon'ble BIFR as Case No. 54/2015.Thereference of the Company has been abated on the ground that more than 75% of the securedcreditors have taken action under section 13(4) of SARFAESI Act and the order of the samehas been passed by the Hon'ble BIFR on dated May 30 2016. The Company had filed an appealagainst the order of Hon'ble BIFR with Appellate Authority for Industrial & FinancialReconstruction (AAIFR) and challenged the legal validity of the action taken by thesecured creditors under section 13(4) of the SARFAESI Act. The Hon'ble AAIFR observed inhis order passed on dated on October 21 2016 that AAIFR have no jurisdiction to decidethe legal validity of the action taken by the secured creditors under section 13(4) of theSARFAESI Act.
The Company had filed a petition before the Hon'ble High Court of Delhi and challengedthe order passed by Hon'ble AaIFR on dated October 21 2016. The Hon'ble High Court ofDelhi in its order dated March 23 2017 observed that a Gazette Notification No. 2792dated 28.11.2016 was issued enforcing the Sick Industrial Companies (Special Provisions)Repeal Act 2003 w.e.f. 1st December 2016. With the enforcement of the said Repeal Actthe AAIFR and BIFR stand dissolved and all the proceedings of whatever nature pendingbefore AAIFR and BIFR under SICA stand abated. The Hon'ble High Court of Delhi furtherobserved that any company in respect of which an appeal or enquiry stand abated mightmake reference to the National Company Law Tribunal under the Insolvency and BankruptcyCode. The Company is seeking legal advice on the observation made by the Hon'ble HighCourt of Delhi with regard to making reference before the jurisdictional National CompanyLaw Tribunal.
OVERVIEW AND REVIEW OF OPERATIONS
The Indian Toys and Textiles Industry witnessed challenging times as results of lowgrowth led by issues such as high fiscal deficit high inflation and worsening currentaccount balance. The slowdown in the global growth aggravated the sluggishness in theeconomy. Apart from the un-favorable demand supply scenario the industry has also beenreeling under the pressure of rising manufacturing cost shortage of working capital etc.
During the period under review your company has achieve gross sales and other income ofRs. 1411.53 Lacs in comparison to Rs. 9511.18 Lacs in previous year and could not maintainthe EBITDA which comes to Rs. (3452.16) Lakh in comparison to Rs. (62718.07) Lakh inprevious year due to shortage of working capital and operational challenges in theproduction etc. Due to this the financial performance of the company has been affectedadversely. The impact of measures for improvement in the performance taken place duringthe year will be reflected in the current year's financial parameters.
Due to operational loss suffered by the Company your directors do not propose anydividend for the current financial year.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms ofthe provisions of Section 197(12) ofthe Companies Act 2013 read with Rules5(2) and 5(3) ofthe Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 a statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in the said Rules are stated in Annexure F tothis report.
A report as per the requirements of Regulation 27 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 on the Corporate Governance practices followedby the Company and the Statutory Auditors' Certificate on Compliance of mandatoryrequirements along with Management Discussion and Analysis is given as an Annexure A tothis report.
The mandatory information under corporate governance is annexed as Annexure-C. It hasalways been the endeavor of your company to practice transparency in its management anddisclose all requisite information to keep the public well informed of all materialdevelopments.
CONSOLIDATED FINANCIAL STATEMENTS
There are no subsidiaries and therefore there was no such requirement for preparationand presentation of consolidated financial statements of the subsidiaries in accordancewith Accounting Standard (AS) 21 on Consolidated Financial Statements.
The Company has 2 (two) Associate Companies- M/s Hanung Infra & Power Ltd. and M/sHanung Retail Ltd. Pursuant to first proviso to sub-section (3) of section 129 read withrule 5 of Companies (Accounts) Rules 2014 Statement containing salient features of thefinancial statement of said associate companies is annexed in the prescribed Form AOC-1.
DIRECTORS AND KEY MANAGERIAL PERSONNELS
Mrs. Anju Bansal Non Executive Director (DIN N0.00028508) has resigned from the Boardof the Company and Board accepted her resignation in the meeting of Board of Directors ofthe Company held on 14th November 2016.
Mr. Lalit Chawla company secretary has resigned and board has accepted his resignationin their meeting held on 3rd June 2017 and Ms. Sunita Thakur was appointed as a companysecretary of the company in the meeting of Board of Director of the Company held on 19thJune 2017.
It is reported that other than the above there have been no changes in the Directors orKey Managerial Personnel during the year.
M/s Ravindra Sharma & Associates New Delhi were appointed as Statutory Auditor ofthe Company for a period of 5 Years subject to ratification by the Shareholders in theAnnual General Meeting of the Company. The Board of Directors of the Company have herebyproposed the ratification of the appointment of Statutory Auditors of the Company for thefinancial Year 2017-18.
M/s Ravindra Sharma & Associates New Delhi the Statutory Auditor have confirmedtheir eligibility to the effect that their reappointment would be within the prescribedlimits under the Companies Act 2013 and that they are not disqualified forre-appointment.
The Report of the Statutory Auditors for the year ended 31st March 2017 does notcontain any qualification reservation or adverse remark except the emphasis of mattersgiven as below;
a) During the Financial Year company has not provided depreciation on the assetssituated at unit 126 127129E NSEZ Noida and B-8910 Hosiery complex Phase-IINoida the above units exclusively mortgage to ICICI Bank and said bank has taken physicalpossession of the properties under Securitization of and Recovery of Financial Assets andEnforcement of Security Interest Act 2002 (SARFAESI).
b) During the Quarter ended March 2017 the company has not provided for Interest onborrowings from Bank and Financial Institutions and also reversed the interest provided onadhoc basis on borrowings from last three quarters for the financial year 2016-17 as thelender of the company had taken possession of assets of the company under section 13(4) ofthe Securitizations and Reconstructions of Financial Assets and Enforcement of SecurityInterest Act 2002 (SARFAESI) the above has the effect of understatement of loss of thecompany for the year ended March 31st 2017 to the extent of interest borrowing notprovided for.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed M/s N.G.& Associates Company Secretaries New Delhi toundertake the Secretarial Audit ofthe Company. The report of the Secretarial Auditor isattached as Annexure E to this Report.
In terms of the provisions of the Companies Act 2013 and Rule 4 (2) of the Companies(Cost Records and Audit) Rules 2014 the applicability of cost audit required whenturnover of the company in preceding financial year exceeds Rs.100 crores or more. Sincethe Sales turnover of the company in preceding financial year 2016-17 was Rs.2.71 Croresthe appointment of cost auditors are not required for the financial year 2017-18
MANAGEMENT DISCUSSION AND ANALYSIS
A Management Discussion and Analysis Report highlighting the performance and prospectsof the Company's energy and environment segments including details if subsidiariescatering to the respective business is attached as Annexure H.
LISTING OF STOCK EXCHANGES
The Company's equity shares are listed on two stock exchanges- National Stock Exchangeof India Ltd (NSE- Scrip Code - "HANUNG") and Bombay Stock Exchange Ltd (BSE-Scrip Code"532770") and has paid the listing fees for financial year 2017-18.
The Company had no unpaid/unclaimed deposit(s) as on 31st March 2017. During the yearunder review your Company did not accept any deposits within the meaning of provisions ofChapter V - Acceptance of Deposits by Companies of the Companies Act 2013 read with theCompanies (Acceptance of Deposits) Rules 2014. It has not accepted any fixed depositsduring the year.
CODE OF CONDUCT COMPLIANCE
Pursuant to Schedule V D of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the declaration signed by the Chairman and Managing Director affirmingcompliance with the code of conduct by the Director's and senior management personnel forthe financial year 2016-2017 is annexed as Annexure B.
REGISTRAR AND SHARE TRANSFER AGENT
M/s Karvy Computershare Private Limited is the Registrar and Share Transfer Agent ofthe Company. Details of the depository system and listing shares are given in a part ofthe "Additional Shareholders Information" which forms a part of the CorporateGovernance Report and is attached herein with.
TRANSFERRED TO THE INVESTOR EDUCATION AND PROTECTION FUND
Under provisions of Section 124 of the Companies Act 2013 read with rules made thereunder the amount of dividend declared for the financial year 2008-09 amounting to Rs. Rs101435/- due for refund being unclaimed and unpaid for 7 years has been transferred tothe Investor Education and Protection established by the Central Government.
In compliance with the provisions of the Regulation 46 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulation 2015 the Company has been maintaining an activewebsite with adequate disclosures and information on the Company its financials itspolicies and other disclosures. Any member desiring to obtain any information on theCompany can visit the website www.hanung.com or write the Company Secretary firstname.lastname@example.org.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with the provisions of the Section 135 of the Companies Act 2013 readwith rules the Company has constituted a CSR Committee. The details of the composition ofthe Committee and meetings conducted thereby along with CSR Policy and the CSR spending bythe Company are stated in the Corporate Governance Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Internal Audit plays a key role in providing an assurance to the Board of Directorswith respect to the Company having adequate Internal Control Systems. Such systemprovides among other things gives reasonable assurance of recording the transactions ofits operations in all material respects and of providing protection against significantmisuse or loss of Company's assets. The details about the adequacy of internal financialcontrols are provided in the Management Discussion and Analysis Report.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY
The Company has in place a Prevention of Sexual Harassment policy in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013. An Internal Complaints Committee has been set up to redress thecomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. During the year 2016 - 2017 nocomplaints were received by the Company related to sexual harassment.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
As per Sec. 177(9) of the Companies Act 2013 applicable Rules and the ListingAgreement the Company has established a vigil mechanism (whistle blower policy) for theirDirectors and employees to report their genuine concerns. The vigil mechanism provide foradequate safeguards against victimization of persons who avail of the vigil mechanism andalso provide for direct access to the Chairperson of the Audit Committee in accordancewith the Companies Act 2013 applicable rules and Listing Agreement and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The code requires preclearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the trading window is closed. The Board of Directors of the Companyare responsible for implementation of the code. All Directors and the designated employeeshave confirmed compliance with the code.
COMPLIANCE UNDER COMPANIES ACT 2013
Pursuant to Section 134 ofthe Companies Act 2013 read with the Companies (Accounts)Rules 2014 your Company complied with the compliance requirements under Companies Act2013. The specific compliance are enumerated below:
(a) Extract Of Annual Return
In Accordance with Section 92(3) of the Companies Act 2013 read with rules 12(1) ofCompanies (Management and Administration) Rules 2014 an extract of the Annual Return inForm MGT-9 is attached herewith as Annexure-G.
(b) Board Meeting Held During The Year
During the year 8 meetings of the Board of Directors were held. The details of themeetings are furnished in the Corporate Governance Report which is attached as Annexure-Ato this Report.
c) Directors' Responsibility Statement
To the best of our knowledge and belief and according to the information andexplanation obtained by us your Directors make the following statements in the terms ofSection 134(3) (c) of the Companies Act2013 :
1. that in the preparation of the annual financial statements for the year ended March31st 2017 the applicable Accounting Standards had been followed along with properexplanation relating to material departures.
2. that for the financial year ended March 31st 2017 such accounting policies asmentioned in the notes to the financial statements have been applied consistently and madejudgments and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs of the Company and of the Profit and Loss ofthe Company for the year ended March 31st 2017.
3. that proper and sufficient care has been taken 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.
4. that the annual financial statements have been prepared on a going concern basis.
5. that the proper internal financial controls were followed by the Company and thatsuch internal financial controls are adequate and were operating effectively.
6. that the proper systems to ensure compliance with the provisions of all applicablelaws were in place and that such systems were adequate and operating effectively.
d) Reporting of Frauds
There have been no instances of fraud reported by the statutory auditors under Section143(12) of the Companies Act 2013 and rules framed there under either to the Company orto the Central Government.
e) Declaration by Independent Directors
All the Independent directors have submitted their disclosure to the Board that theyfulfill all the requirements as to qualify for their continuity of appointment as anIndependent Director under the provisions of the Companies Act 2013 as well as Regulation17 of the SEBI (Listing Obligations and Disclosure Requirement ) Regulations 2015
f) Nomination and Remuneration Policy
The details of the Nomination and Remuneration Policy are stated in the CorporateGovernance Report.
g) Auditors Qualification System On Accounts
Notes to the accounts as referred in the Auditor's report are self-explanatory andconsistently followed and therefore do not call to any further comments and explanations.
h) Particulars Of Loans Guarantees Or Investments
The Company has not given any loans or made any investments covered under theprovisions of Section 186 of the Companies Act 2013 read with rules.
i) Particulars of Contracts or arrangements with Related Parties
During the year under review all the related party transactions were entered into bythe Company in ordinary course ofbusiness and on arm's length basis.
j) State of Company's Affairs
The State ofthe Company Affairs have been explained in the in the Directors Report.
k) Amounts to be Transferred to General Reserve
Due to heavy losses no amounts are proposed to be transferred to General Reserves.
l) Material Changes and Commitments between the date of Balance Sheet and the date ofreport
There were no Material Changes and commitments affecting the financial position of theCompany which have occurred between the end of financial year of the Company to which thefinancial statements relates and the date of report except disclosed elsewhere in thereport.
m) Conservation Of Energy And Technology Absorption
The particulars prescribed under Section 134 of the Companies Act 2013 read with rule8 (3) of the Companies (Accounts) Rules 2014 relating to Conservation of EnergyTechnology Absorption Foreign Exchange Earnings and Outgo are furnished as follows:-
A. INFORMATION AS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT 2013 READ WITH RULE 8(3) OF THE COMPANIES ACCOUNT RULES 2014
Foreign Exchange Earnings and Outgo: -
The foreign exchange earning/outgo during the year are as under:
| || ||(Rs. In Lacs) |
|Particulars ||2016-17 ||2015-16 |
|Foreign Exchange Earnings: ||26.69 ||918.15 |
|Foreign Exchange Outgo: ||9.22 ||138.59 |
(See rule 2)
Disclosure of Particulars with respect to Conservation of Energy Power and FuelConsumption:
|Particulars ||Year ended on 31.03.2017 ||Year ended on 31.03.2016 |
|1. Electricity || || |
|a. Purchase (Units in lacs) ||68.06 ||113.55 |
|b. Total Amount (Rs. In lacs) ||416.81 ||676.39 |
|c. Rate/Unit (Rs.) (Avg) ||6.12 ||5.96 |
|2. Own Generatio n(Diesel) || || |
|a. Purchase- (Units in lacs) ||1.18 ||10.01 |
|b. Total Amount (Rs. In lacs) ||17.12 ||146.30 |
|c. Rate/Unit (Rs.) ||14.50 ||14.61 |
B. TECHNOLOGY ABSORPTION
Efforts made in Technology Absorption as per Form 'B' below.
Disclosure of Particulars with respect to Technology Absorption Research andDevelopment (R&D):
|S. No ||Particulars ||Details |
|1. ||Specific areas in which R&D carried out by the Company: ||Related to the main objects of the Company |
|2. ||Benefits derived as a result of the above R&D. ||Optimum Cost Effectiveness |
|3. ||Future plan of action ||Adoption of in house developed techniques |
|4. ||Expenditure on R&D || |
| ||a. Capital ||The R & D activity of the Company forms part of the project cost and has not been quantified separately. |
| ||b. Recurring || |
| ||c.. Total || |
| ||D Total R&D expenditure as a percentage of total sales || |
n) Risk Management Policy
In compliance of Regulation 21 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 related to corporate governance Risk Management plan ofthe company recognizes that the Enterprise Risk Management is an integral part of goodmanagement practice. Hence Risk Management is an essential element in achieving businessgoals. In terms of Policy the Company is committed for managing the risk in a mannerappropriate to achieve its strategic objectives. The Company will keep investors informedof material changes to the Company's risk profile through its periodic reportingobligations and ad hoc investor presentations. The Company reviews and reports annually onits compliance of Corporate Governance Principles and recommendations for bettermentwhich include Risk Management and the internal control framework. Accordingly the Companyhas framed procedures to inform members of Board of Directors about risk assessment andminimization procedures.
b) Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an evaluation of its own performance and all Directors (including the IndependentDirectors) individually as well as the evaluation of the working of its Audit Nomination& Remuneration and other Committees of the Board
At the meeting of the Board all the relevant factors that are material for evaluatingthe performance of individual Directors the Board and its various Committees werediscussed in detail. A structured questionnaire each in line with circular issued by SEBIfor evaluation of the Board its various Committees and individual Directors was preparedand recommended to the Board by the Nomination & Remuneration Committee for doing therequired evaluation after taking into consideration the inputs received from theDirectors covering various aspects of the Board's functioning such as adequacy of thecomposition of the Board and its Committees execution and performance of specific dutiesobligations and governance etc.
A separate exercise was carried out to evaluate the performance of individualDirectors including the Chairman of the Board who were evaluated on parameters such aslevel of engagement and contribution independence of judgment safeguarding the interestof the Company and its minority Shareholders etc.
The performance evaluation of the independent Directors was carried out by the entireBoard excludingthe Director being evaluated. The performance evaluation of the Chairmanand nonindependent Directors was also carried out by the Independent Directors at theirseparate meeting. The Directors expressed their satisfaction with the evaluation process.
DISCLOSURE PURSUANT TO COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES 2016
Details of Employees in receipt of yearly remuneration of Rs. One Crore Two Lacsor more:-
There were no employees who had received yearly remuneration of or in excess of Rs. OneCrore Two Lacs.
Details of Employees in receipt of monthly remuneration of Rs. Eight Lac FiftyThousand or more:- There were no employees who had received monthly remuneration of orin excess of Rs. Eight Lac Fifty Thousand.
Statements made in the Report including those stated under the caption"Management Discussion and Analysis" describing the Company's plans projectionsand explanations may constitute "forwards looking statement" within the meaningof applicable laws and regulations. Actual results may differ materially from those eitherexpressed or implied.
Your Directors would like to place on record their sincere thanks to the Company'sclients vendors investors and bankers for their continued support to the Company duringthe year. The Directors wish to place on record their appreciation of the contributionsmade by employees at all levels.
We thank the Government of India State Government and other Government agencies fortheir support and look forward to their continued support in future.
| ||By order of the Board |
| ||For Hanung Toys and Textiles Limited |
|Date : August10th 2017 ||Ashok Kumar Bansal |
|PIace: Noida ||Chairman-cum-Managing Director |
| ||DIN 00028488 |