Your Directors take pleasure in presenting the 41st Annual Report together with theAudited Financial Statements for the financial year ended March 31 2016.
The financial performance of the Company for the year ended March 31 2016 issummarised below:
( in million)
|Particulars ||For the year ended March 31 2016 ||For the year ended March 31 2015 |
|Net Sales ||2053.82 ||3483.02 |
|Other Income ||39.21 ||156.82 |
|Total Income ||2093.03 ||3639.84 |
|Profit/(Loss) from Ordinary Activities ||(1618.99) ||(4618.79) |
|Exceptional Item ||- ||2011.16 |
|Profit/(Loss) after Exceptional Items ||(1618.99) ||(6629.95) |
|Provision for taxation ||13.63 ||1101.60 |
|Profit/ (Loss) after taxation ||(1632.62) ||(7731.55) |
|Balance brought forward from previous year ||(9410.61) ||(1678.17) |
|Depreciation adjustment ||- ||(0.89) |
|Balance available for appropriation ||(11043.23) ||(9410.61) |
|Retained Profits carried forward to Balance Sheet ||(11043.23) ||(9410.61) |
In view of the loss incurred by the Company your Directors regret and express theirinability to recommend dividend for the financial year ended March 31 2016.
Your Company achieved a gross turnover of 2053.82 million for the year ended March31 2016 as against 3483.02 million for the previous year ended March 31 2015. On anannualised basis turnover for the current year ended March 31 2016 decreased by 41.03percent as compared to the previous period.
The Government of India has started taking several remedial measures for theinfrastructure and engineering sector which are facing acute finance and business relatedproblems. Your Directors are hopeful that they will be able to get new investments intothe company and revive the business.
The paid up Equity Share Capital as on March 31 2016 was 144.01 million. During theyear under review the Company has not issued any shares or any convertible instruments.
The Consolidated Financial Statements prepared by the Company include the financialinformation of subsidiary companies namely HDO Technologies Limited and DavyMarkham IndiaPrivate Limited.
Pursuant to Section 136(1) of the Companies Act 2013 the Balance Sheet Statement ofProfit and Loss and other documents of the said subsidiary companies are required to beannexed to the accounts of the holding Company. The Companies Act 2013 had grantedgeneral exemption for listed companies from complying with the provisions of section 136of the Companies Act 2013 subject to certain conditions being fulfilled by the Company.Accordingly the Balance Sheet Profit and loss account and other documents of thesubsidiary companies are not being attached with the Balance Sheet of the Company. Astatement containing the brief details of financials of subsidiary companies for the yearended March 31 2016 is enclosed in the Annual Report. The annual accounts of the saidsubsidiary companies and relevant information shall be made available to the shareholderswho seek such information and are also available for inspection by any shareholder at the
Registered Office of the Company on any working day during business hours. Copy of thesaid details will be provided upon receipt of written request from the shareholders.
CONSOLIDATED FINANCIAL STATEMENTS
In terms of Section 129(3) of the Companies Act 2013 and Regulation 34 of the SEBI(Listing Obligations and Disclosures Requirements) Regulations 2015 ConsolidatedFinancial Statements of the Company prepared in accordance with Accounting Standardsissued by Institute of Chartered Accountants of India are attached and forms part of theAnnual Report.
The Company did not accept any deposits from public during the year. There are nounclaimed deposits as on March 31 2016.
Your Company is committed to adhere to the standards of Corporate Governance as set outby the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 (SEBI LODRRegulations). Detailed Report on Corporate Governance as stipulated under Schedule V ofSEBI LODR Regulations is provided under separate section and forms part of this Report.
The requisite certificate from Practicing Company Secretaries confirming thecompliance of the conditions stipulated under SEBI LODR Regulations is attached to theReport on Corporate Governance.
TRANSFER OF UNCLAIMED / UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND(IEPF)
In terms of Section 125 of the Companies Act 2013 any unclaimed or unpaid Dividendrelating to the financial year 2008-2009 is due for remittance to the Investor Educationand Protection Fund established by the Central Government in the month of October 2016.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As stipulated under SEBI (Listing Obligations and Disclosures Requirements) Regulations2015 the Report on Management Discussion and Analysis is annexed to this report and formspart of the Annual Report.
BOARD OF DIRECTORS
Pursuant to provisions of Section 152 of the Companies Act 2013 Mr. S C Sekaran (DIN:00334115) Executive Director retires by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment.
During the year under review Mr. Vivek Wahi was appointed as Nominee Director onbehalf of Bank of India w.e.f. April 28 2016.
All the Independent Directors of the company have given declarations to the Companythat they meet the criteria of independence as specified under Section 149(6) of the Actand Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015.
During the year under review the Non-Executive Directors of the Company had nopecuniary relationship or transaction with the Company other than sitting fee forattending the Board and Committee meetings.
KEY MANAGERIAL PERSONNEL
The Key Managerial Personnel of your Company are Mr. S C Sekaran Executive DirectorMr. S C Mundhekar Chief Financial Officer and Mr. G Ramakrishna Company Secretary.
During the financial year under review four Board Meetings and one independentdirectors meeting was held. The details of which are given in Corporate GovernanceReport.The provisions ofCompanies Act 2013 and listing agreement were adhered to whileconsidering the time gap between two meetings.
The Board has constituted various committees viz Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee and Executive Committee etc.to enable better management of the affairs of the Company with terms of reference in linewith provisions of Companies Act 2013 and SEBI LODR Regulations. The details ofcomposition of the committees are disclosed in Corporate Governance Report which formspart of this report.
Pursuant to provisions of Companies Act 2013 and SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 the Nomination and Remuneration Committee laiddown the criteria for performance evaluation of the Individual Directors the Board andits Committees. Accordingly the Board of Directors has carried out an annual evaluationof its own performance its committees and individual directors.
The performance of the Board was evaluated through a structured questionnaire whichprovides a powerful and valuable feedback for improving the board effectivenessmaximizing strengths and highlighting areas for further development.
The performance of the Committees was evaluated by the Board through a structuredquestionnaire by considering the effective recommendations made by the Committees fromtime to time to the Board of the Directors of the Company and effectiveness of Committeemeetings etc.
The Board evaluated the performance of the individual directors by considering thecontribution of the individual directors to the Board and Committee meetings preparednesson the issues to be discussed meaningful and constructive contribution and inputs inmeetings relationship with fellow board members willing to devote time and effort tounderstand the Company and its business etc through a structured questionnaire.
As per Schedule IV of the Act Independent Directors of the Company at a separatemeeting evaluated the performance of non-independent directors the Board as a whole andthe Chairman of the company taking into account the views of executive and non-executivedirectors. Independent Directors also reviewed the quality quantity and timeliness offlow of information between management of the Company and the Board for the effectiveperformance of the board. Evaluation of performance of Independent Directors was done bythe entire board excluding the independent director being evaluated.
Your Company has established a Vigil Mechanism policy for your Directors and employeesto safeguard against victimization of persons who use vigil mechanism and report genuineconcerns. The Audit Committee shall oversee the vigil mechanism.
M/s Chaturvedi & Partners Chartered Accountants New Delhi were appointed asStatutory Auditors of the Company to hold office until the conclusion of the ensuingAnnual General Meeting for the financial year 2016-2017 pursuant to the approval of themembers at the 41st Annual General Meeting.
It is proposed to ratify their appointment as Statutory Auditors for the financial year2016-2017 at the ensuing Annual General Meeting.
During the year under review M/s Dipan Patel & Associates Chartered Accountantswere appointed as Internal Auditors of the Company in place of M/s. VCG & Co.Chartered Accountants and they monitor the internal control system of the Company at itsworks and at the Mumbai office. Theinternal auditor of thecompany checks and verifies theinternal control and monitors them in accordance with policy adopted by the company. Eventhroughthis non-production period the Company continues to ensure proper and adequatesystems and procedures commensurate with its size and nature of its business.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hadappointed Mr. K Narasimhulu Company Secretary in Practice to undertake the SecretarialAudit of your Company. The Secretarial Audit Report for the financial year 2015-2016 formspart of the Annual Report as Annexure "A" to the Boards Report.
The Secretarial Audit Report does not contain any adverse remarks or qualifications.
SIGNIFICANT AND MATERIAL ORDERS
Certain Creditors have filed winding up petitions against the Company under Section 433and Section 439 of the Companies Act 1956 before the Honble High Court of Mumbai.The Company is taking necessary steps including signing of Memorandum of Understandingsand or filing the consent terms in the High Court with the creditors for withdrawal ofsuch petitions. The matter is sub judice and outcome of which is subject to the companyfulfilling the payment conditions of Memorandum of Understandings/consent terms.
EXPLANATION TO STATUTORY AUDITORS QUALIFICATIONS IN INDEPENDENT AUDITORS REPORTFOR 2015-2016:
With reference to observations made in Auditors report the notes of account isself-explanatory and therefore do not call for any further comments. The results for theyear ended March 31 2016 have been subjected to an audit by the Statutory Auditors of theCompany and a qualified report has been issued by them thereon.
1. With respect to Companys ability to continue as going concern.
The group is confident of implementing the business plan and meeting its obligations indue course of time. Accordingly financial statements have been prepared as a GoingConcern.
2. With respect to material uncertainties over the realisability of bank guaranteesencashed by the customers unbilled revenue trade receivables etc.
The management of the Company is confident of positive outcome of the negotiations andrecovering the aforesaid dues.
3. With respect of invocation of corporate guarantee executed for one of our subsidiaryand initiation of recovery actions against the company.
The management is in engagement with the lender to resolve the matter and therespective liability is appearing in the books of subsidiary Company.
4. With respect to provision for diminution/bad debts in the value ofinvestment/advances inour Indian subsidiary.
Considering the long term investment no provision for diminution/bad debts in value ofinvestment/advances is considered necessary by the management.
5. With respect to trade receivables and unbilled revenue of certain projects
The management of the Company is in continuous engagement with respectivecontractee/clients including initiation of legal proceedings confident of positive outcomeof the negotiations and recovering the aforesaid dues.
6. With respect to one lender initiated recovery proceedings against the company. Thecompany is in process of reconciling the difference.
7. With respect to the non-availability of confirmation of balances from tradereceivables/trade payables and one of the lender.
The management is of the opinion that these accounts will not require any materialadjustment upon receipt of balance confirmation.
RELATED PARTY TRANSACTIONS
As per the requirement of provisions of the Act and SEBI (Listing Obligations andDisclosures Requirements) Regulations 2015 the Company has formulated a policy on Relatedparty transactions to ensure the transparency in transactions between the company andrelated parties. The said RTP Policy is also available at Companyswebsite/www.hdo.in.
All Related Party Transactions entered by the Company during the year under review werein ordinary course of business and on Arms length basis. There were no materiallysignificant related party transactions entered by the company during year under review.
Since all the related party transactions entered into by the Company were in ordinarycourse of business and were on Arms length basis disclosure in form AOC-2 asrequired under Section 134(3)(h) of the Act is not applicable.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans investments made and guarantees issued under Section 186 ofthe Act during year under review are provided in notes to financial statements whichforms part of this report.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION ETC.
Due to the de-merger of the Manufacturing Division with effect from April 01 2011already approved by the Honble Bombay High Court vide their orders date July 182012 the Company has nothing to report under this head specifically. However the Companyis conscious of its responsibility in respect of energy conservation and technologyabsorption and adopts suitable measures towards this end from time to time.
The foreign exchange earnings for the year ended March 31 2016 stands at Nilmillion. The amount spent on account of expenditure in foreign currency stands at 42.60million.
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:
a) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
|S. No. Non-Executive Directors ||Ratio to median remuneration |
|1 Mr. P R Tripathi (Sitting Fees) ||0.49 |
|2. Mr. Ramendra Gupta (Sitting Fees) ||0.30 |
|3. Mrs. Hima Bindu Myneni (Sitting Fees) ||0.15 |
|S. No. Executive Director ||Ratio to median remuneration |
|1 Mr. S C Sekaran ||3.35 |
b) The percentage increase in remuneration of each director chief executive officerchief financial officer company secretary in the financial year:
|Director Chief Executive Officer Chief Financial Officer ||% increase in remuneration in the financial year |
|Company Secretary in the financial year || |
|NIL ||NIL |
c) The percentage increase in the median remuneration of employees in the financialyear: NIL d) The number of permanent employees on the rolls of the Company: 305 e) Theexplanation on the relationship between average increase in remuneration and Companyperformance.
The increase in remuneration is in line with the market trends. In order to ensure thatremuneration reflects Company performance the performance pay is also linked toorganization performance apart from an individuals performance.
f) Comparison of the remuneration of the key managerial personnel against theperformance of the Company:
g) There are no employees of the Company drawing remuneration in excess of 60 lakhsp.a. or 5 lakhs per month during the financial year 2015-2016.
|Aggregate remuneration of key managerial personnel (KMP) in FY 2016 ( million) ||1.39 |
|Revenue ( million) ||2093.03 |
|Remuneration of KMPs (as % of revenue) ||0.066 percent |
|Profit before Tax (PBT) ( million) || |
|Remuneration of KMP (as % of PBT) || |
EXTRACT OF ANNUAL RETURN
As provided under Section 92(3) of the Act the extract of annual return is given inAnnexure "B" in the prescribed Form MGT-9 which forms part of this report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Directors confirm in respectof the audited annual accounts for the year ended March 31 2016:
a) In the preparation of the annual accounts for the financial year ended March 312016 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
b) Selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company as at March 31 2016 and of the profit /loss of theCompany for that period;
c) Taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe company and for preventing and detecting fraud and other irregularities; d) Preparedthe annual accounts on a going concern basis;
e) Devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
f) Laid down internal financial controls to be followed by the company and that suchinternal financial controls are adequate and were operating effectively.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
There were no cases of sexual harassment of women reported in the company during thefinancial year 2015-2016.
Industrial relations have been cordial and your Directors appreciate the sincere andefficient services rendered by the Company continued to have cordial and harmoniousrelations with its employees.
HEALTH SAFETY AND ENVIRONMENT
In line with our Corporate vision to improve the safety and quality of life ofemployees and to mitigate the risks of Health Safety and Environment (HSE) the Companyis actively involved in design and engineering of its projects through the non-pollutingmanufacturing processes scrupulous compliance with environment norms and development ofenvironmental products.
Reinforcing our commitment to high levels of Quality and best-in class servicesto customers the company has Integrated Management System (IMS) consisting of ISO 9001:2008 ISO 14001: 2004 and OSHAS 18001: 2007 systems across the organisation inclusive ofproject sites accredited by M/s International Standards Body Australia.
The Company is committed to progressively maintaining the best in class standards ofHSE care for its people practices processes and services. The Company also promotesactive participation of its employees and contractors to mange HSE risks with a goal topreventing accidents injuries and occupational illness. The Company conducts on-goingsafety awareness programmes which together with safety audits and continual safetytraining strengthens the processes and systems in this area. The Company also conductscontinuous training of the staff at all levels regarding HSE issues with experts beinginvited to train the senior management.
Upgradation of safety procedures at project sites and training has been of primeimportance as a part of workplace safety.
As a part of its commitment to environment which has always been in the forefrontyour Company has taken up several environmental management initiatives and remainscommitted to clean environment.
As a leader in environment and waste management technology market HDO providescomplete solutions for waste reduction and water conservation for broad spectrum ofindustries like refineries minerals pulp and paper sugar etc.
CORPORATE SOCIAL RESPONSIBILITY
As per the Companies Act 2013 all companies having net worth of 500 Crore or moreor turnover of 1000 Crore or more or a net profit of 5 Crore or more during anyfinancial year will be required to constitute a corporate social responsibility (CSR)committee of the Board of Directors comprising three or more directors at least one ofwhom will be an Independent Director.
CSR activities as per the provisions of the Companies Act 2013 could not beundertaken by the Company in view of the losses incurred by the Company during the currentfinancial year.
The Directors would like to express their appreciation for support and cooperationreceived from the holding company bankers financial institutions suppliers associatesub-contractors and members during the year under review. Your Directors also wish toplace on record their deep sense of appreciation for the committed services provided bythe executives staff and workers of the Company. The Board of Directors also thank allthe employees for their contribution and continued cooperation throughout the year and isconfident of improving the stakeholder value in the Company.
| ||For and on Behalf of the Board of Directors |
| ||For Hindustan Dorr-Oliver Limited |
| ||S.C. Sekaran ||R.Balarami Reddy |
|Hyderabad ||Executive Director ||Director |
|May 30 2016 ||(DIN:00334115) ||(DIN: 00022176) |