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Hindusthan National Glass & Industries Ltd.

BSE: 515145 Sector: Industrials
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OPEN 84.85
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52-Week low 75.20
Mkt Cap.(Rs cr) 741
Buy Price 80.00
Buy Qty 150.00
Sell Price 84.85
Sell Qty 12.00
OPEN 84.85
CLOSE 81.80
52-Week high 154.80
52-Week low 75.20
Mkt Cap.(Rs cr) 741
Buy Price 80.00
Buy Qty 150.00
Sell Price 84.85
Sell Qty 12.00

Hindusthan National Glass & Industries Ltd. (HINDNATGLS) - Director Report

Company director report

Board's Report

Dear Members

We hereby present the Annual Report together with the Audited Accounts of our businessand operations for the financial year ended March 31 2016.


Particulars Standalone Consolidated
For the year ended March 31 2016 For the year ended March 31 2015 For the year ended March 31 2016 For the year ended March 31 2015
Gross sales (including excise duty) 216207 217261 250028 250496
Profit before interest depreciation and tax 26642 27675 35868 34445
Interest and finance charges 25251 25905 27167 28569
Profit/(Loss) before depreciation and tax 1391 1770 8701 5877
Depreciation 19951 25382 23900 29592
Profit/(Loss) before tax (18560) (23612) (15199) (23716)
Provision for tax 773 92 1143 92
Profit/(Loss) for the year (19333) (23704) (16342) (23808)
Balance brought forward from previous year (45350) (21801) (53790) (30215)
Adjustment Pursuant to Merger 155
Amount available for appropriation (64683) (45350) (70133) (53790)
Balance carried forward to the next year (64683) (45350) (70133) (53790)


During the financial year at standalone level your Company reported total income ofRs. 198475 Lakhs in 2015-16 compared to Rs. 206022 Lakhs in 2014-15. Your Companyrecorded an EBITDA of Rs. 26642 Lakhs and a net loss of Rs. 19333 Lakhs during the yearunder review. During the year direct export turnover was Rs. 10964 Lakhs compared to Rs.11020 Lakhs during the preceeding year. At consolidated level your Company reportedtotal income of Rs. 232856 Lakhs in 2015-16 compared to Rs. 239707 Lakhs in 2014-15.Your Company recorded an EBITDA of Rs. 35868 Lakhs and a net loss of Rs. 16342 Lakhsduring the year under review. Lower capacity utilization continues to impact theperformance of the Company. Your Directors are pleased to report that consistent effortsand policy to cut down the cost has resulted in reduction in per unit cost andconsequently enable the company to achieve better margin.

During the current financial year your Company has once again given major thrust onimplementation of various cost saving measures and your Directors are confident that theaforesaid initiatives will result in substantial improvement in the performance of theCompany some of the efforts are visible in power & fuel cost.


Your Directors do not recommend any dividend for the year ended 2015-16. Furtherduring the year under review no amount was transferred to General Reserve.


In terms of the provisions of the Act the Company’s accumulated losses stood atRs. 646.75 Crores against the peak net worth of Rs. 839.40 Crores in the immediatelypreceding 4 (four) financial years. As the accumulated losses is more than 50% of its peaknet worth the Company will be qualified as a Potential Sick Company under the Act andprovisions of Section 23 of SICA will be attracted. The Board in its meeting held on May27 2016 has reviewed the causes for such erosion and the reasons amongst others whichadversely affected the performance of the company were:

1. Over Supply in Market and Consequent Decrease in Capacity Utilisation

The Company has added capacity of 1300 MT per day in financial year 2012- 13. Theassition of capacity of 650 MT per day each was added in Nashik and Naidupeta respectivelyto cater to the west and the south. During the same period other players in the Industryalso commissioned their capacity. The addition was done mainly due to good demandenvisaged in financial year 2010. All this addition has increased the supply in the marketand resulted in lower capacity utilisation.

Capacity Addition in past two years In MT per day
HNGIL (Added one furnace each in Nashik Plant Maharashtra and Naidupeta Plant Andhra Pradesh) 1300
HSIL (Added capacity at its Bhongir Plant Andhra Pradesh) 475
Piramal Glass (Added Capacity at its Jambusar Plant Gujarat) 165
Canpack (Entered the container glass market in India by adding capacity at Aurangabad Maharashtra) 800
Total 2740

2. Sluggish Growth in Demand

The Indian economy which was poised to grow at double digit from financial year 2011-12have grown at lower single digit. The slowdown has resulted in lower disposable income andhave decreased the growth of end users. This all has resulted in lower demand forcontainer glass.

The Board after considering the various steps implemented and/or to be undertaken forimprovement of performance of the Company is confident/optimistic that the Company wouldbe able to implement effective measures in normal course of business to revive theoperations of the Company.

The Board in its meeting held on May 27 2016 has also approved the Report of even dateto such erosion and causes for such erosion for consideration of the shareholders in theExtra-Ordinary General Meeting to be convened on Wednesday the September 28 2016. Thesaid Report is enclosed as an Annexure to the Notice of the Extra-Ordinary GeneralMeeting. In terms of the requirement of SICA the Company shall also report to Board forIndustrial and Financial Reconstruction (BIFR) the fact of erosion after consideration ofthe Report by the shareholders in the ensuing Extra-Ordinary General Meeting.


As on March 31 2016 your Company has only one wholly owned subsidiary namely HNGGlobal GmbH.

Inspite of the tough competition and challenging environment HNG Global GmbH hasregistered sales of Rs. 28413 Lakhs in the financial year 2015-16 compared to Rs. 26190Lakhs in the financial year 2014-15. EBITDA was Rs. 7666 Lakhs in the financial year2015-16 compared to Rs. 5451 Lakhs in the financial year 2014-15.

During the year under review the Company had obtained the shareholders approval fordivestment in HNG Global GmbH Germany a wholly owned subsidiary of the company. YourDirectors are confident the divestment process will be completed during the currentfinancial year.

The Company has joint venture agreement with Trakya Cam Sanayi II AS in HNG Float GlassLtd.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated audited Financial Statements and the relatedinformation of the Company and the audited accounts of its subsidiaries are available onour website i.e. These documents are also available for inspection duringbusiness hours by the shareholders of the Company at the Registered Office.

Consolidated Financial Statements of the Company and its subsidiary duly audited forthe financial year ended March 31 2016 forms part of the Annual Report of the Company.

The Company has also determined the policy for determing the material subsidiaries. Thepolicy is also hosted in the website of the Company as per the following link:


Pursuant to amalgamation of Ace Glass Containers Limited with the Company 2141448*shares and 1368872* shares having face value of Rs. 10 each (corresponding to10707240 shares and 6844360 shares having face value of Rs. 2 each) were issued toHNG Trust and Ace Trust respectively. At present HNG Trust & Ace Trust are holding7797240 & 6844360 shares respectively. In terms of an undertaking given to the BSELimited the Company is required to make disclosures pertaining to utilisation of proceedsof shares allotted to the said Trusts until they are extinguished. Entire Shareholding ofAce Trust and 7662490 Shares of HNG Trust has been pledged in favour of various banks incompliance of Corrective Action Plan (CAP) approved by the Joint Lender Forum (JLF). * eCompany’s shares were sub-divided from Rs. 10 per share to Rs. 2 per share w.e.f.November 13 2009.


In accordance with the provisions of Section 152 of the Companies Act 2013 ShriSanjay Somany (DIN: 00124538) Director of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible have offered himself for reappointment.

Shri Ratna Kumar Daga (DIN: 00227746) Shri Dipankar Chatterji (DIN: 00031256) ShriSujit Bhattacharya (DIN: 00059282) & Smt. Rita Bhimani (DIN: 07106069) are theIndependent Directors of the Company.

e Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence as prescribed under Section 149(6)of the Companies Act 2013. Role responsibilities and duties of Independent Director arebeing uploaded in the Company's website at the link Director.pdf.

During the year under review there is no change in the Board of Directors of theCompany.

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 a structured questionnaire was preparedafter taking into consideration the various aspects of the Board’s functioningcomposition of the Board its Committees culture execution and performance Th ofspecific duties obligations and governance. e Company has devised a Policy forperformance evaluation of Independent Directors and Board which include criteria forperformance evaluation of the non-executive directors and executive directors.

The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and the Non-Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.

The following policies of the Company are attached herewith and marked as "AnnexureI" : A. Nomination & Remuneration Policy B. Board Evaluation Policy.

The details of Key Managerial Personnel of the Company are as follows:-

Sl. No Name of Key Managerial Personnel
1 Shri Sanjay Somany Vice Chairman & Managing Director
2 Shri Mukul Somany Vice Chairman & Managing Director
3 Shri Rakesh Kumar Sharma Executive Director
4 Shri Bimal Kumar Garodia Chief Financial Officer
5 Shri Ajay Kumar Rai Company Secretary


Pursuant to Section 134(5) of the Act the Directors hereby confirm that -

a) In the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards had been followed along with proper explanation relatingto material departures.

b) The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give true andfair view of the state of affairs of the Company as at March 31 2016 and of the loss ofthe Company for the year ended on that date.

c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

d) The Directors have prepared the annual accounts on a ‘going concernbasis’.

e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.


The Company has been practising the principles of good corporate governance with a viewto achieve transparent accountable and fair management. The report on CorporateGovernance along with the Certificate of the Auditors M/s Lodha & Co. CharteredAccountants confirming the compliance of Corporate Governance as stipulated in Regulation34(3) read with Schedule V of the SEBI (Listing Obligations & Disclosures Requirement)Regulations 2015 forms an integral part of the Annual Report.


The contracts/arrangements/transactions entered by the Company during the financialyear with the related parties were in the ordinary course of business and on an arm’slength basis. All the related party transactions are with the approval of the AuditCommittee and are periodically placed before the Board for review. During the year underreview the Company had not entered into any contract/arrangement/transactions with relatedparties which could be considered material in accordance with the policy of the Company onmateriality of related party transactions.

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:


The Corporate Social Responsibility Committee has been formulated and comprises of ShriSanjay Somany Shri Mukul Somany and Smt. Rita Bhimani as members. Since the Company hassuffered losses in the previous financial years as well as in the current financial yearno expenditure was incurred on CSR activities.

The CSR Policy may be accessed on the Company’s website at the link social responsibility policy.pdf.


The repayment of long term loans of the Company is realigned as per the CorrectiveAction Plan (CAP) formulated by Joint Lender Forum (JLF) as per the RBI Guidelines. TheCAP was agreed Th by all the lenders except for one lender. e Company is complying withthe repayment schedule and honouring all its obligation on time.


Management’s Discussion and Analysis Report as stipulated under Schedule V readalong with the Regulation 34(3) of the SEBI (Listing Obligations & DisclosuresRequirement) Regulations entered with the Stock Exchanges in India is presented in aseparate section forming part of the Annual Report.


The Rs. 50000 Cr. container glass industry in India is passing through difficult timessince last 2-3 years. Lack of demand from the end user segments and surplus capacity inthe market have forced all companies to operate at 60% - 70% of their installedcapacities. This underutilization of capacities with no price hike has caused companiesincurring loss throughout the year. The Indian economy is presently fastest growingeconomy in the world. IMF has projected that Indian economy is expected to grow at 7.5% infinancial year 2017. The revival of sentiment and picking up of industrial activity isexpected to help broaden the recovery. Higher public infra investment and governmentinitiatives to tackle supply-side bottlenecks and repair corporate and public bank balancesheets should also help increase in private investment.

The Glass Industry seems to have bottom out and expect good demand from its end users.It is expected that usage of glass will increase significantly. It’s note-worthy thatconsumption of glass in India is among the lowest in the world and with the growth inbroader economy will improve the demand of Glass.

Going forward the demand from various end user segments are expected to rise owing togood economic growth & rising disposable income per capita in India. Multinationalcompanies are increasingly taking keen interest in India & this will lead to morepremieumization of glass bottles. Absorption of world class technology & supplying atconsistent quality will be the key issues for Indian container glass industry not only tocater to the domestic demands but also to increase export to other countries. Th ough theglass industry is facing competition from alternative medium the use of glass is ofcritical importance in the present day. With the increase in public awareness towardsenvironment the use of glass is expected to increase in the near future.


Consolidated Financial Statements have been prepared in accordance with the provisionsof the Companies Act 2013 and with Accounting Standard 21 read with Accounting Standard28 issued by the Institute of Chartered Accountants of India and forms part of this AnnualReport.

Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 a statement containing salient features of the FinancialStatements of Subsidiaries/ Associate Companies/Joint Ventures is given in Form AOC-1.


Risk management is embedded in your Company’s operating framework. The Companymanages and monitors various risks and uncertainties that can have some adverse impact onthe Company’s business. Your company believes that managing risks helps in maximisingreturns. Your Company is giving major thrust in developing and strengthening its internalaudit so that risk threat can be mitigated.The Company’s approach to addressingbusiness risks is comprehensive and includes periodic review of such risks and a frameworkfor mitigating controls and reporting mechanism of such risks.

The Company has a formal Risk Management Policy. The Board of Directors from time totime review the same.


Your Company has a comprehensive and effective internal control andrisk–mitigation system including internal financial control for all the majorprocesses to ensure reliability of financial reporting timely feedback on operational andstrategic goals compliance with policies procedures law and regulations safeguardingof assets and economical and efficient use of resources. The Company’s internalcontrol system is commensurate with its size scale and complexities of its operations.The main thrust of internal audit is to test and review controls appraisal of risks andbusiness processes besides benchmarking controls with best practices in the industry. TheAudit Committee of the Board of Directors of the Company actively reviews the adequacy andeffectiveness of the Internal Control Systems and suggests improvements to them. TheCompany has a robust Management Information System (MIS) which is an integral part of thecontrol mechanism.


The Shareholders of the Company at the Annual General Meeting (AGM) held on September5 2014 appointed M/s Lodha & Co. Chartered Accountants as Statutory Auditor of theCompany from the conclusion of 68th AGM till the conclusion of 71stAGM of the Company subject to ratification by members at every AGM & M/s Singhi &Co. Chartered Accountants as Branch Auditor of the

Company from the conclusion of 68th AGM till the conclusion of 72ndAGM of the Company subject to ratification by members at every AGM.

Accordingly appointment of M/s Lodha & Co. as Statutory Auditor & M/s Singhi& Co. as Branch Auditor is placed for ratification by shareholders at the ensuingAGM.

Auditors Report e Auditors Report contains the following observations:

As stated in Note No 2.34.1 of the financial statements due to inadequacy of profitmanagerial remuneration to the extent of Rs. 641.99 Lakhs has become in excess of thelimits laid down in the Companies Act 2013 awaiting Central Government approval. Pendingsuch approvals impact thereof on the financial statement is not ascertainable.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rules madethereunder the Company has appointed Mr. Babu Lal Patni Practising Company Secretary toconduct the Secretarial Audit for the financial year 2015-16. The Secretarial Audit forthe financial year ended March 31 2016 is annexed herewith and marked as "AnnexureII" as to this report.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark.

DISCLOSURES: Audit Committee

The Audit Committee comprises of all Independent Directors namely Shri Ratna Kumar Daga(Chairman) Shri Dipankar Chatterji and Shri Sujit Bhattacharya as members. All therecommendations made by the Audit Committee were accepted by the Board during thefinancial year 2015-16.

Vigil Mechanism/Whistle Blower Policy

The Company has a Vigil Mechanism which also incorporates a Whistle Blower Policy forDirectors and Employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company’s Code of conduct. Disclosures can bemade by a Whistle Blower through an email to the Chairman of the Audit Committee. e Policymay be accessed on the Company’s website at the link

Meetings of the Board

During the year under review 6(six) meetings of the Board of Directors were held. Themaximum interval between any two meetings did not exceed 120 days as prescribed in theCompanies Act 2013. Details of compositions and other information are provided in theCorporate Governance Report.

Extract of Annual Return

Extract of Annual Report in Form MGT-9 is provided separately as "AnnexureIII" and forms the part of Board's Report.

Particulars of Loans Guarantees or Investment made guarantee given and securitiesprovided

Particulars of Loans given Investments made Guarantee given and securities providedalong with the purpose for which the Loan or Guarantee or Security is proposed to beutilized by the recipient are provided in the Standalone Financial Statements.

GENERAL Fixed Deposits

Your Company did not accept any deposits from the public within the ambit of Section 73covered under Chapter V of the Companies Act 2013 and Companies (Acceptance of Deposit)Rules 2014 during the financial year 2015-16.

Issue of Shares

During the year under review your Company did not issue any equity shares withdifferential rights as to dividend voting or otherwise or issue any sweat equity sharesto employees of the Company under any scheme.

Change in nature of business

During the year under review there has been no change in the nature of business of theCompany.

Remuneration from subsidiary

Neither of the Vice Chairmen and Managing Directors nor the Executive Director of theCompany receive any remuneration or commission from its subsidiary.

Significant or Material order

No significant or material order was passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company’s operations in future.

Material changes and commitments

There have been no material changes and commitments affecting the financial positionbetween the end of the financial year and the date of the report.

Sexual Harassment

During the year under review no case was reported pursuant to the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013.

Business Responsibility Reporting

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI(Listing Obligations & Disclosure Requirement) Regulations 2015 is not applicable toyour company for the financial year ending March 31 2016.


The Company’s shares continue to be listed at the National Stock Exchange of IndiaLimited BSE Limited and The Calcutta Stock Exchange Limited.

The annual listing fee for the year 2016-17 has been paid to all these Exchanges.


In terms of Section 197(12) of the Act read with Rule 5(1) (2) & (3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rule 2014 a Statementshowing the names and other particulars of the employees drawing remuneration in excess ofthe limits set-out and other details as required in the said rule are provided as "AnnexureIV".


Pursuant to Rule 3 of the Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012 theCompany has uploaded the details of unpaid and unclaimed amounts lying with the Company onthe Ministry of Corporate Affairs website.


The statements containing the required particulars under the Act are provided as "AnnexureV" and forms a part of this report.


Your Company takes pride in the commitment competence and dedication shown by itsemployees in all the areas of business. Your Company is consolidating the human resourceoperations and the internal systems to enhance the operations of the Company. The HumanResource team is very active as it recruits and retains the existing talent pool of theCompany. Recruiting nurturing enhancing and retaining top talents is a part of theCorporate HR function and is a critical pillar to support the organization’s growthand its sustainability in the long run. It has a structured induction process at alllocations and management development programs to upgrade skills of managers. Cordialindustrial relations resulted in efficient production at all the plants of your Company.


Your Directors wish to place on record their appreciation for the contribution made bythe employees at all levels but for whose hard work and support your Company’sachievements would not have been possible. Your Directors also wish to thank itscustomers dealers agents suppliers investors and bankers for their continued supportand faith reposed in the Company.

For and on behalf of the Board
Mukul Somany Rakesh Kumar Sharma
Place : Kolkata Vice Chairman & Managing Director Executive Director
Date : May 27 2016 (DIN: 00124625) (DIN: 02166966)