TO THE SHAREHOLDERS
Your Directors take pride in congratulating all the stakeholders on completion of sevendecades in the Building Material Industry since its incorporation. These seven decadeshave enabled your Company to become market leader in the Building Material Segment. Charminarand Aerocon are among the most trusted brands in the industry.
Your Directors take pleasure in presenting their Report and the Audited FinancialStatements of your Company for the year ended 31st March 2017.
| || ||(Rs. In lacs) |
| ||2016-17 ||2015-16 |
|Net Revenue from operations ||105359 ||109628 |
|Earnings Before Interest Depreciation & Tax ||12644 ||11172 |
|Less : Interest ||518 ||917 |
|Depreciation ||4095 ||3974 |
|Profit Before Tax and Exceptional items ||8031 ||6281 |
|Less: Exceptional items ||688 ||276 |
|Profit before Tax ||7343 ||6005 |
|Less : Taxes ||1886 ||2039 |
|Profit for the year ||5456 ||3966 |
|Surplus in P&L account as per previous year ||7018 ||5624 |
|Available for Appropriation ||12474 ||9590 |
|Transfer to General Reserve ||1000 ||1000 |
|Interim Dividend on Equity Shares ||746 ||560 |
|Proposed Final Dividend on Equity Shares* ||- ||746 |
|Corporate Dividend Tax* ||152 ||266 |
|Balance Carried to Balance Sheet ||10577 ||7018 |
*Refer to note 2(a)(ii) in notes to financial statement with regard to treatment offinal dividend for the year 2016-17.
The net worth as at 31st March 2017 improved to H501 cr [without considering finaldividend and tax thereon aggregating to H 9 cr if considered the net worth of the Companywould be H492 cr] as against H460 cr [after considering final dividend and tax thereonaggregating to H9 cr] reported in previous year. There is no long term interest bearingdebt as on 31st March 2017. ICRA rated the Company's long term bank loan facilities at"ICRA A+/Stable" and the short term bank facilities at "ICRA A1+".
During the year under review the gross fixed assets including capital work in progressincreased by H33.92 cr (net of deletions of H3.04 cr). The entire additions were fundedthrough internal accruals. The earnings per share for the financial year 2016-17 grew by38% at H 73.12 as against H 53.15 for the previous financial year while the book valueper share as at 31st March 2017 was at H672 as against H 617 as on 31st March 2016.
During the year under review the Board of Directors declared an interim dividend ofH10.00 per equity share (100% of the paid-up value). Your Directors are pleased torecommend a final dividend of H10.00 per equity share (100% of the paid-up value) for yourconsideration and approval at the ensuing Annual General Meeting of the Company.
With the proposed final dividend the total dividend for the year 2016-17 would beH20.00 per equity share (200% of the paid-up value) as against the total dividend ofH17.50 per equity share (175% of the paid-up value) declared in the previous year.
The total dividend outgo would amount to H 17.96 cr (Including Corporate dividend tax)a payout of 33% of the profit after tax of the Company for the financial year 2016-17 andthe Company has transferred H10.00 cr to General Reserves out of the profits for the year.
The paid up Equity Share Capital as on 31st March 2017 was H7.49 cr. During the yearunder review the Company has neither issued any shares with differential voting rightsnor sweat equity. As on 31st March 2017 Mr. CK Birla Chairman holds 51376 equityshares of the Company. None of the Directors of the Company except as specified abovehold shares or convertible instruments in the Company.
Listing with Stock Exchanges
The Equity Shares of the Company are listed on National Stock Exchange of India Limitedand BSE Limited. The annual listing fees for the financial year 2017-2018 have been paidto these exchanges.
Particulars of Loans Guarantees or Investments
Particulars of Loans Guarantees and Investments as required under the provisions ofSection 186 of the Companies Act 2013 are provided in note no. 11A to the FinancialStatements.
The Company has not accepted any deposits covered under chapter V of the Companies Act2013 and as such no amount of principal or interest was outstanding as on 31st March2017.
State of Company's Affair
In the year 2016-17 the Company has reported net revenue of H1054 cr as compared to H1096 cr in the previous year and profit before tax for the year under review stood atH73.43 cr as compared to H 60.05 cr in the previous year registering a growth of 22%. Theoperating profit (earnings before depreciation interest tax and amortisation-EBITDA) forthe year stood at H126 cr as against H 112 cr in the previous year representing 12% ofnet revenue.
As a result of various external factors like weak monsoon in certain parts of theCountry followed by demonetisation in third quarter the industry as a whole declined.Your Company's focused approach with unique strategy adopted for each business divisionhelped to improve the profitability despite a minor decline in revenue by 4%.
Your Company continue to enjoy its leadership position and trust in the roofingindustry which helped the business to sustain its market share despite tough marketconditions. Your Company's customer centric approach focus on high potential geographiesmarketing initiatives cost optimisation and superior quality than its peers helped toovercome most of the challenges faced by the industry. Some parts of the Country witnessedpoor demand due to migration to alternate products which affected the demand for FibreCement Sheets. The new product "Coloured Steel Sheets" introduced by theCompany in 2015-16 stabilised during the year under review. In order to capture thegrowing demand for Coloured Steel Sheets in the eastern part of the Country your Companyexpanded its manufacturing footprint by setting-up a manufacturing unit in Odisha tocarter to the region.
Overall the Roofing business ended the year with a decline of 10% in quantity terms ascompared to industry de-growth of 8%.
Your Company positioned itself as a complete solution provider in Building materialscategory. Building Solution business broadly classifies into Wet-Walling and Dry-WallingSolutions.
Under Wet-Walling category Fly-Ash Bricks (AAC) an eco-friendly building materialused in construction activities commands the confidence of the builders with its superiorstrength over the traditional bricks.
Other products in this category includes "Smart fix" "Smartputty" and "Smart plaster". All Products together offers acomplete range of solutions to the stakeholders in the Building Material industry.
Fly-Ash Bricks (AAC) with its superior quality and latest technology drivenmanufacturing processes has achieved a growth of 13% in quantity terms and as a solutionmodel the revenue from this category grew by 20% over previous year on a higher basemaking us the market leader in this category.
Dry-Walling category consists of "Aerocon Panels" "AeroconBoards" and "Smart bond". Panels & Boards continue to be thepreferred choice of the Architects and designers. With detailed market study plannedapproach well-planned marketing activities and focus on quality the Company hasincreased its sales volume and revenue by 10% during the year under review as compared toprevious year. Your Company continues to remain market leader in this category.
Your Company will continue to focus on Tier 2 & Tier 3 cities which are promisingdue to increase in infrastructure projects and real estate activity. Unique conceptselling approach differentiates AEROCON from other players in the industrysupported by the brand promotion activities.
Pipes and Fittings
During the year under review Pipes and Fittings division de-grew by 16% in revenueterms due to tough market conditions volatile resin prices and absence of complete rangeof product categories with the Company. With a sustained brand building exercise andstrong marketing initiatives Aerocon Pipes & Fittings is one of the preferredchoices of the customers in NCR Telangana and Andhra Pradesh.
The demand for these products looks promising and your company believes that thisdivision will drive the future growth by expanding its market reach increase in SKU's andproduct range coupled with strong brand building initiatives.
Thermal Insulation HYSIL
The Thermal Insulation division has reported a decline of 2% in revenue terms and thekey driver for volume growth in this vertical will come from capacity building in the formof brown field or new green field projects.
Coloured Steel Sheets: In order to cater to the demands of urban customers yourCompany has set up its second plant for manufacture of Coloured Steel Sheets at Odishawith a capacity of 1500 MT per month. The said plant started its commercial operations on30th March 2017. This plant shall cater to the requirements of Odisha Jharkhand and WestBengal markets. These sheets are being sold under the brand name "Charminar"which will help the Company to expand its customer base in developing towns / cities.
Your Company was bestowed with the title of "Asia's Most Trusted BuildingMaterial Company" for 2016 by IBC INFOMEDIA (A Division of International BrandConsulting Corporation New Jersey USA). This award is distinctive recognition for abrand renowned as "MOST TRUSTED" in building industry category based on currentyear market standing.
The Company's Pipes and Fittings plant at Faridabad won the "The MachinerySuper Shop floor 2016" award in the Technology Adoption category for Innovationsponsored by the Times of India Group to recognise and celebrate excellence achieved byindian shop floors in the Manufacturing Sector.
The Roofing Plant at Faridabad has also been awarded the NAMC Silver Awardfollowing the footsteps of Sathariya Plant which won the Gold previous year and BalasorePlant that won the Silver the year before last. The National Awards for ManufacturingCompetitiveness (NAMC) was instituted by International Research Institute forManufacturing (IRIM) with the aim of acknowledging and applauding manufacturingcompetitiveness of Indian Organisations.
With the Faridabad Plant wining NAMC silver award three out of seven sheeting plantsof your Company have won this prestigious award.
Management Discussion & Analysis Report
A report on Management Discussion & Analysis is appended as Annexure (I) tothis report as per the requirements of SEBI (Listing Obligations & DisclosuresRequirements) Regulations 2015.
Directors & Key Managerial Personnel
Pursuant to the provisions of Section 149 & 184 of the Companies Act 2013 andunder Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 Mr. P Vaman Rao (DIN: 00069771) Mr. Yash Paul (DIN: 00580681) and Mrs. GauriRasgotra (DIN: 06862334) Independent Directors of the Company have submitted adeclaration that each of them meet the criteria of independence as prescribed in Section149(6) of the Act and there has been no change in the circumstances which may affect theirstatus as an Independent Director during the year.
In accordance to provisions of Section 152 of the Companies Act 2013 and pursuant toArticles of Association of the Company Mr. Desh Deepak Khetrapal (DIN 02362633) Directorof the Company is liable to retire by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment.
Mr. Prashant Vishnu Vatkar (DIN 07139685) resigned as Managing Director & Directorfrom the Board w.e.f 20th September 2016 and the Board wishes to place on record itssincere appreciation for the valuable services rendered by Mr. Prashant Vishnu Vatkarduring his tenure as Managing Director of the Company. In accordance with the provisionsof Section 152 196 197 198 and other applicable provisions Mr. Dhirup RoyChoudhary (DIN07707322) has been appointed as Additional Director Managing Director andKey Managerial Personnel on the Board w.e.f 16th January 2017 who hold office upto thedate of the ensuing Annual General Meeting. Directors at their meeting held on 27th April2017 has redesignated Mr. Dhirup Roy Choudhary Managing Director as Managing Director andChief Executive Officer ("CEO") keeping the long term goals and vision of theCompany.
The Company has received a notice in writing under Section 160 of the Act proposing theappointment of Mr. Dhirup Roy Choudhary as Director and Managing Director & CEO. Theresolutions seeking your approval for the appointment of Mr. Dhirup Roy Choudharyas Director and Managing Director & CEO and Mr. Desh Deepak Khetrapal as Director areincluded in the notice of the ensuing Annual General Meeting.
For Directors seeking appointment/re-appointment in the ensuing Annual General Meetingof the Company the particulars as required to be disclosed in accordance with Regulation36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is providedin the notice of ensuing Annual General Meeting.
Pursuant to the provisions of Section 203 of the Act Mr. Dhirup Roy ChoudharyManaging Director & CEO Mr. KR Veerappan Chief Financial Officer and Mr.G Manikandan Company Secretary & Financial Controller are the Key ManagerialPersonnel of the Company.
Board & Committees
During the year five meetings of Board of Directors of the Company were convened andheld in accordance with the provisions of the Companies Act 2013. The date(s) of theBoard Meeting attendance by the Directors are given in the Corporate Governance Reportforming part of this annual report. The maximum time gap between any two consecutivemeetings was within the period prescribed under the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
Committees of the Board
Corporate Social Responsibility Committee (CSR)
Corporate Social Responsibility Committee of the Company meets the requirements ofSection 135 of the Companies Act 2013. The details of the composition of the CorporateSocial Responsibility Committee as required under the provisions of Section 135 ofthe Companies Act 2013 are given in the Corporate Governance Report which forms part ofthis annual report.
Pursuant to the provisions of Section 135 of the Companies Act 2013 and the Rules madethereunder the brief outline of the Corporate Social Responsibility (CSR') policyof the Company and the initiatives undertaken by the Company on the CSR activities duringthe year are given in Annexure (II) to this report in the format prescribed in theCompanies (Corporate Social Responsibility) Rules 2014. The said policy is available onthe Company's website "http://hil.in/ investors/codes-policies/CSR Policy".
The average net profits of the Company for the immediately preceding three financialyears calculated as per Section 198 of the Companies Act 2013 works out to H 1.08 cr andthe Company has spent H 1.59 cr on CSR activities in the areas of healthcare educationand others.
Audit Committee of the Company meets the requirements of section 177 of the CompaniesAct 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The details of the composition of the Audit Committee as required underthe provisions of Section 177(8) of the Companies Act 2013 are given in the CorporateGovernance Report which forms part of this annual report. During the year under reviewthe Board has accepted all the recommendations of the Audit Committee.
Nomination and Remuneration Cum Compensation Committee
Nomination and Remuneration cum Compensation Committee meets the requirements ofSection 178 of the
Companies Act 2013 and Regulation 19 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The details of the composition of the Nomination andRemuneration cum Compensation Committee as required under the provisions of Section 178 ofthe Companies Act 2013 are given in the Corporate Governance Report which forms part ofthis annual report. During the year under review the Board has accepted all therecommendations of the Nomination and Remuneration cum Compensation Committee.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the Directors individually and theCommittees of the Board.
A structured questionnaire was prepared after taking into consideration inputs receivedfrom Directors covering 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.
A separate exercise was carried out to evaluate the performance of theIndividual Directors including the Chairman of the Board. The Directors' performance wasevaluated on parameters such as level of engagement and contribution in safeguarding theinterest of the Company etc.
The performance evaluation of the Independent Directors was carried out by the entireBoard. Further the performance evaluation of the Chairman and Non Independent Directorswas carried out by the Independent Directors.
Familiarisation Programme for Directors
In addition to giving a formal appointment letter to the newly appointed Director onthe Board a detailed induction plan covering the role function duties responsibilitiesand the details of compliance requirements expected from the Director under the CompaniesAct 2013 and relevant Regulations of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 were given and explained to the new Director.
The newly appointed Director was also given induction orientation with respect toCompany's Vision Core purpose Core value and business operations. In addition detailedpresentations were made by the Senior Management Personnel on business environment andperformance of the Company.
Extract of Annual Return
Pursuant to the provisions of Section 92 of the Companies Act 2013 and rules framedthere under the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure(III) and forms part of this Report.
Directors' Responsibility Statement
Pursuant to the requirement of Section 134(3)(c) of the Companies Act 2013 and on thebasis of compliance certificate received from the executives of the Company and subject todisclosures in the Annual Accounts as also on the basis of the discussion with theStatutory Auditors of the Company from time to time and to the best of their knowledgeand information furnished the Board of Directors state that:
i) In preparation of the Annual Accounts for the year ended 31st March 2017 all theapplicable Accounting Standards prescribed by the Institute of Chartered Accountants ofIndia have been followed.
ii) We have adopted such accounting policies as selected in consultation with theStatutory Auditors and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit of the Company for thefinancial year ended 31st March 2017.
iii) We 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.
iv) The Annual Accounts for the year ended 31st March 2017 has been prepared on agoing concern basis.
v) Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.
vi) The systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
Your Company is committed to good Corporate Governance coupled with good corporatepractices. The report on corporate governance for the year ended 31st March 2017 pursuantto Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is annexed herewith as Annexure (IV). The Certificate from the Auditors of theCompany M/s. S.R. Batliboi & Associates LLP. Chartered Accountants [ICAI FirmRegistration Number: 101049W/ E300004] regarding compliance of conditions of CorporateGovernance is attached to the report of Corporate Governance.
The Corporate Governance Report inter-alia contains the following disclosures:
1. Number of Board Meetings
2. Composition of Audit Committee
3. Composition of Corporate Social Responsibility Committee
4. Appointment & Remuneration Policy (for Directors Key Managerial Personnel &Senior Management Personnel of the Company)
5. Performance Evaluation criteria of the Board its Committees & individualDirectors
6. Details as required by SEBI (Listing Obligations and Disclosure Requirements)
Pursuant to the requirement laid down in the Companies Act 2013 and the SEBI (ListingObligations & Disclosures Requirements) Regulations 2015 the Company has establishedVigil Mechanism by framing Whistle Blower Policy to deal with the instance of fraud andmismanagement if any. The Vigil Mechanism framework ensures that strict confidentialityis maintained whilst dealing with concerns and also that no discrimination shall be metedout to any person for a genuinely raised concern. The designated officer/ Audit CommitteeChairman can be directly contacted to report any suspected or confirmed incident of fraud/misconduct at email@example.com. A High Level Committee has been constituted which looksinto the complaints raised. The Committee reports to the Audit Committee and the Board.
The details of the same are provided in the Report on Corporate Governance forming partof this Report. The Whistle Blower Policy is also posted in the Investors section of theCompany's website www.hil.in on the following link http://hil.in/investors/codes-policies/.
The Board has on the recommendation of the Nomination
& Remuneration cum Compensation Committee framed a policy for selection andappointment of Directors Key Managerial Personnel Senior Management and fixing theirremuneration. The Remuneration Policy is provided in the Corporate Governance Report. TheNomination & Remuneration Policy is also posted in the Investors section of theCompany's website www.hil.in on the following link http://hil.in/investors/codes-policies/.
Sexual Harassment Policy
Your Company is an equal opportunity provider and at the same time it has been anendeavour of the Company to support women professionals through a safe healthy andconducive working environment by creating and implementing proper policies to tackleissues relating to safe and proper working conditions for them and as per the provisionsof "The Sexual Harassment of Women at Workplace (Prohibition Prevention andRedressal) Act 2013" has framed a Policy on Prohibition Prevention and Redressal ofSexual Harassment of Women at Workplace and matters connected therewith orincidental thereto.
In the year under review the Company has not received any complaint under the saidPolicy.
Related Party Transactions
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have apotential conflict with the interest of the Company at large.
In line with the provisions of Section 177 of the Companies Act 2013 read with theCompanies (Meetings of the Board and its Power) Rules 2014 omnibus approval for theestimated value of transactions with the related parties for the financial yearahead has been obtained from the Audit Committee. The transactions with related partiesare routine and repetitive in nature.
A summary statement of the transactions entered into with the related parties pursuantto the omnibus approval so granted are reviewed and approved by the Audit Committee andthe Board of Directors on quarterly basis. The requisite details of the related partytransactions entered into during the financial year are provided as Annexure (V) tothis report. Suitable disclosure as required by the Accounting Standards (AS18) has beenmade in the notes to the Financial Statements.
None of the Directors other than to the extent of their shareholding receipt ofremuneration/ commission has any pecuniary relationships or transactions vis--vis theCompany.
The Company has laid down the procedure for risk assessment and its mitigation throughan internal Risk Committee. Key risks and their mitigation arising out of reviews by theCommittee are assessed and reported to the Audit Committee on a periodic basis. The RiskManagement Policy details the Company's objectives and principles of Risk Management alongwith an overview of the Risk Management process procedures and related roles andresponsibilities.
During the year the Board reviewed the elements of risk and the steps taken tomitigate the risks and in the opinion of the Board there are no major elements of riskwhich has the potential of threatening the existence of the Company.
Internal Financial Controls with Reference to Financial Statements
The Company has adequate internal financial control procedures commensurate with itssize and nature of business. These controls include:
1. All transactions are recorded in the ERP system SAP.
2. Well defined policies guidelines and Standard Operating Procedures (SOPs')authorisation and approval procedures.
3. The internal financial controls of the Company are adequate to ensure accuracy andcompleteness of the accounting records timely preparation of reliable financialinformation prevention and detection of frauds and errors safeguarding of the assets andthat the business is conducted in an orderly and efficient manner.
4. The Company has appointed Internal Auditors to check the Internal Controls and toensure whether the workflow of the organisation is in accordance with the approvedpolicies of the Company; and
5. The Board of Directors of the Company have adopted various policies like RelatedParty Transactions Policy Whistle Blower Policy Corporate Social Responsibility PolicyRisk Management Policy Dissemination of Material Events Policy Documents PreservationPolicy
Monitoring and Reporting of Trading by Insiders Code of Internal Procedures andConduct for Regulating Code of Practices and Procedures for Fair Disclosures and suchother procedures for ensuring orderly and efficient conduct of its business forsafeguarding of its assets accuracy and completeness of the accounting records and timelypreparation of reliable financial information.
6. Systems to ensure compliances with prevalent statue and statutory compliances are inplace.
As per Section 139 of the Companies Act 2013 M/s. S R Batliboi & Associates LLPwas appointed as Statutory Auditors for a period of Three (03) years i.e from conclusionof 67th Annual General Meeting (held on 18th July 2014) till the conclusion of the 70thAnnual General Meeting and the said term of M/s. S R Batliboi & Associates LLPwill expire with the conclusion of the ensuing Annual General Meeting.
Based on the recommendation of the Audit Committee the Board of Directors hasrecommended the appointment of M/s. BSR & Associates LLP CharteredAccountants (ICAI Firm Registration Number : 116231W/W-100024) as the Statutory Auditorsof the Company to hold office from the conclusion of the ensuing Annual General Meetinguntil the conclusion of the 75th Annual General Meeting to be held in year 2022 subjectto ratification by the members at every AGM thereafter.
Resolution proposing the appointment of M/s. BSR
& Associates LLP Chartered Accountants (ICAI Firm Registration Number :116231W/W-100024) as the Statutory Auditors is included in the notice of the ensuingAnnual General Meeting.
M/s. BSR & Associates LLP Chartered Accountants (ICAI Firm Registration Number :116231W/W-100024) has provided the certificate of eligibility as per the provisions ofCompanies Act 2013 and the same is available for inspection by the members duringbusiness hours.
The Audit Report issued by M/s. S R Batliboi & Associates LLP Statutory Auditorsfor the financial year ended 31st March 2017 forms part of this Report. There are no qualificationsreservations or adverse remarks made by the Statutory Auditors which requires explanationor comments from the Board.
The Company has an in-house internal audit team which monitors the effectiveness ofthe internal control systems. It reports to the Managing Director about the adequacy andeffectiveness of the internal control system of your Company. Your Company also retainedthe services of M/s. KPMG Chartered Accountants and other reputed CharteredAccountants to audit specific locations and processes for the year 2016-17.
The recommendations of the internal audit team on improvements in the operatingprocedures and control systems were also presented to the Audit Committee forstrengthening the operating procedures.
Pursuant to Section 148 of the Companies Act 2013 read with the rules framedthereunder the cost audit records maintained by the Company in respect of its specifiedproducts are required to be audited by a Cost Auditor. The Board of Directors onrecommendation of the Audit Committee appointed M/s. S.S. Zanwar & Associatesas Cost Auditors of the Company to conduct the audit of the cost records of the Companyfor the financial year ending 31st March 2018 at a remuneration of H6.0 lacs. Members arerequested to ratify the remuneration payable to the Cost Auditors for the year 2017-18 atthe ensuing Annual General Meeting of the Company in accordance with Section 148 of theCompanies Act 2013.
The Cost Audit report for the financial year ended 31st March 2016 was duly filed withthe Central Government within the due date.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules framedthereunder the Board of Directors on recommendation of the Audit Committee appointedM/s. P.S. Rao and Associates Company Secretaries to undertake the secretarial auditof the Company. The secretarial audit report issued by M/s. P.S. Rao and AssociatesCompany Secretaries for the financial year ended 31st March 2017 is given in the Annexure(VI) attached hereto and forms part of this Report. The report does not contain anyqualifications reservations or adverse remarks.
Joint Ventures and Consolidated Financial Statements
As on 31st March 2017 your Company holds 33% of the share capital in SupercorIndustries Limited ("Supercor") a company incorporated under the laws ofNigeria. The State Government of Bauchi Nigeria and other shareholders hold remaining 67%of the share capital in Supercor. Information required pursuant to Section 129(3) of theCompanies Act 2013 a statement containing salient features of the Subsidiaries/ JointVentures of the Company is provided in Form AOC-1 attached as Annexure (VII) tothis Report.
With change in market conditions and expecting non-asbestos products would attractbetter demand as compared to asbestos product Supercor had changed its product mix andconverted its product range from asbestos to non-asbestos based products in the year 2014post which the revenue of Supercor fell drastically due to their inability to recover theincreased cost of the non-asbestos product from the market and thereby reported cashlosses for the year 2014. The situation further deteriorated in the year 2015 causingsevere cash crisis and could not meet their routine obligation of paying salaries /wages to their employees / workers which hampered the operation and forced them to suspendthe operations since November 2015. In view of the same none of the employees/ workersresumed their offices and all the basic facilities such as power internet and otherconnections were discontinued due to non-payment of the dues.
In view of the above Supercor expressed its inability to prepare the financialstatements for the year ended 31st December 2016 and hence Company considers that thefinancial statements would not be available for consolidation and is presenting itsfinancials on standalone basis for the financial year ended 31st March 2017.
Further your Company has been demanding its receivables from Supercor for the last fewyears and Supercor could not pay these dues due to the severe cash crisis. Hence yourCompany initiated winding up proceedings against Supercor as per the laws of Nigeria andalso made an application for seeking exemption from consolidation of accounts on theaforesaid grounds with the Registrar of Companies Andhra Pradesh and Telangana vide Eform GNL -1 and the same has been approved by the Registrar of Companies.
Employee Stock Options
The Company has an operative Employees Stock Option Scheme 2015 (ESOS-2015) whichprovides for grant of Stock Options to eligible employees of the Company.
Nomination & Remuneration cum Compensation Committee of the Board of Directors ofthe Company inter alia administers and monitors the Employees' Stock Option Scheme ofthe Company in accordance with the Securities and Exchanges
Board of India (Share Based Employee Benefits) Regulations 2014 ("SEBIRegulations"). There is no change in the ESOS scheme of the Company during the year
The details of Employee Stock Options pursuant to Section 62 of the Companies Act 2013read with Rules made thereunder and SEBI (Share Based Employee Benefits) Regulations 2014and erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines 1999 are provided in Annexure (VIII) to this Report and there were nonew grants of options during the year (Outstanding options as on 31st March 2017 are84200).
Certificate from M/s. S R Batliboi & Co. LLP Chartered Accountants StatutoryAuditors of the Company confirming that the scheme has been implemented in accordance withthe SEBI Regulations will be placed at the forthcoming Annual General Meeting of theCompany for inspection by the members.
Particulars of Employees
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel)Rules 2014 including the amendments thereto a statement showing the names and otherparticulars of the employees drawing remuneration in excess of the limits set out in thesaid rules are provided in annexure to this report.
Disclosure pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 isprovided in Annexure (IX) of this Report.
Human Capital and Industrial Relations
People management at HIL go beyond the set boundaries of compensation performanceappraisal and development. Your Company places Employee engagement development andretention as its highest priority to enable achievement of organisational goal. TheCompany has automated few of the HR processes to make them more robust. The recruitmentprocess is totally aligned to attract best quality & diversified talent. The Company'smanagement firmly believes that a strong and stable industrial relation is essential forsuccess of any organisation. Over the years the management has made sincere and continuedefforts for the development of an atmosphere of mutual co-operation confidence andrespect duly recognising the rights of the workers. A very rigorous labour law compliancemechanism is in place to help us to run our businesses in the most ethical manner. As on31st March 2017 the Company had 1501 employees.
The Directors wish to place on record their sincere appreciation for the co-operationreceived from employees/workers at all levels.
Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
Particulars with respect to Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo as required under Section 134 of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 are given in the Annexure (X) attachedhereto and forms part of this Report.
Significant and Material Orders Passed by the Regulators/Court
During the year under review no significant and material orders have been passed bythe Regulators or Courts or Tribunals impacting the going concern status and operations ofthe Company.
Material Changes and Commitments
There are no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year 31st March 2017 to which thefinancial statements relates and the date of signing of this report.
Investor Education and Protection Fund (IEPF)
In terms of Section 123 124 and 125 of the Companies Act 2013 the unclaimeddividends i. e Final Dividend for the year 2008-09 Interim Dividend for the year 2009-10had been transferred to the IEPF Fund.
Further as per the provisions of Section 125 the share(s) wherein the dividend isunclaimed for a period of consecutive seven (07) years will be transferred to the suspenseaccount as prescribed by the IEPF Rules therefore the shareholders whose dividends areunclaimed for consecutive seven years from 2010-11 (list of the shareholders along withthe unclaimed dividend details are available on the website of the Company www.hil.in/investorsare requested to claim their unclaimed dividend at the earliest.
The Board of Directors take this opportunity to place on record their appreciation toall the Stakeholders of the Company viz. customers investors banks regulatorssuppliers and other business associates for the support received from them during the yearunder review. The Directors also wish to place on record their deep sense of gratitude andappreciation to all the employees for their commitment and contribution towards achievingthe goals of the Company.
| ||On behalf of the Board of Directors |
|Place: New Delhi ||Dhirup Roy Choudhary ||Desh Deepak Khetrapal |
|Date : 27th April 2017 ||Managing Director & CEO ||Director |
| ||DIN-07707322 ||DIN-02362633 |