Your Directors present the 59th Annual Report together with the Audited FinancialStatements for the year ended 31st March 2017.
| || || |
(Rs. in Lacs)
|FINANCIAL RESULTS: ||Year ended 31.03.2017 ||Year ended 31.03.2016 |
|Gross Revenue from Operation ||12048.28 ||9947.53 |
|Less: Excise Duty / Service Tax ||914.32 ||553.94 |
|Net Operational Income ||11133.96 ||9393.59 |
|Profit Before Interest Tax Depreciation and Amortization (PBITDA) ||543.95 ||266.63 |
|Less: Finance Cost ||503.91 ||327.47 |
|Profit / (Loss) before Depreciation & Tax ||40.04 ||(60.84) |
|Less : Depreciation ||199.75 ||157.53 |
|Profit / (Loss) before Exceptional item ||(159.71) ||(218.37) |
|Exceptional item ||779.33 ||- |
|Profit / (Loss) before Tax ||(939.04) ||(218.37) |
|Less : Provision for Taxation - Deferred ||(257.08) ||(63.60) |
|- For Earlier Years ||(0.15) ||(3.79) |
| ||(257.23) ||(67.39) |
|Profit / (Loss) after taxes ||(681.81) ||(150.98) |
|Add: Balance brought forward ||(485.84) ||(334.86) |
|Surplus Carried to Balance Sheet ||(1167.65) ||(485.84) |
Turnover of the Company during the year 2016-17 was Rs. 11133.96 lacs as compared toRs. 9393.59 lacs in the year
2015-16. Profit before interest depreciation and tax wasRs. 543.95 lacs compared toRs. 266.63 lacs in the previous year however due to substantial increase in the financialcost overall Company is focusing on development of new products for Railways and also forother applications. For improving the performance Company has taken an expansionplan of Nashik for manufacturing of Power Supply unit for Electrostatic Precipitator(ESP) Roof Mounted A/C Package Unit (RMPU) Switch Board Cabinet (SBC) etc. and thecommercial production in regard to the said expansion is likely to start before end ofSeptember 2017. Considering the expected increase in the turnover Company isplanning Right Issue to take care of the increased Working Capital requirements.
Demand from Railways is improving and Company has healthy order bookings for the year2017-18.
In January 2017 the Board of Directors approved raising of funds upto Rs. 1200 lacsby way of offer and issue of Equity Shares on a rights basis to the eligible shareholders.The draft Letter of offer for the Rights Issue will be filed with the Securities ExchangeBoard of India ("SEBI") BSE Limited (the "BSE") and National StockExchange of India Limited (the "NSE") shortly.
The paid up Equity Share Capital as on 31st March 2017 was Rs. 30115860/-. Duringthe year under review the Company has not issued any shares with or withoutdifferential voting rights nor has granted any stock options or sweat equity.
During the year under consideration the Company has not accepted any deposits. Therewere no unpaid or unclaimed deposits as on 31st March 2017. Company has borrowedby way of intererest free loan from its Director which is exempt under Deposit Rules. Outstandingloan as on 31st March 2017 was Rs. 120 Lacs.
BOARD OF DIRECTORS
As per the provisions of the Companies Act 2013 and in terms of the Articles ofAssociation of the Company Shri Pawan Golyan Director of the Company retires byrotation and being eligible offers himself for re-appointment. Smt. Uma NevatiaExecutive Vice Chairperson of the Company passed away on 3rd November 2016. The Boardwhile condoling the death of Late Uma Nevatia records its appreciation of the valuableservices rendered by her. Upon the recommendation of the Nomination and RemunerationCommittee the Board of Directors had appointed Shri Vandan Shah as an AdditionalDirector (Non-Executive and Non-Independent) with effect from 15th January 2017. Hisappointment requires the approval of members at the ensuing Annual General Meeting.
Upon the recommendation of the Nomination and Remuneration Committee the Board ofDirectors had appointed Smt. Akshada five years with effect Nevatia as anAdditional Director (Executive Category) for from 15th January 2017. Her appointmentrequires the approval of members at the ensuing Annual General Meeting.
Shri Bharat Swaroop stepped down from the Board with effect from 24th April 2017. Hewas the Non-Executive Director of the Company between 1990 and 2017. The Board records itsappreciation of the contribution made by Shri Bharat Swaroop during his long associationwith the Company.
The Company has received the necessary declaration from each Independent Director inaccordance with section 149(7) of the Companies Act 2013 that he meets thecriteria of independence as laid out in sub-section (6) of section 149 of theCompanies Act 2013 and the Listing Regulations.
KEY MANAGERIAL PERSONNEL
Shri Shyam Aswani Chief Financial Officer of the Company resigned as the KeyManagerial Personnel with effect from 31st May 2016.
Shri Anil Kumar Nemani was appointed as Chief Financial Officer and Key ManagerialPersonnel of the Company with effect from 11th August 2016.
During the year under review the Board of Directors met 5 times i.e. on 27/05/201604/08/2016 14/11/2016 15/01/2017 and 09/02/2017. The details of the Board Meetings aregiven in the Corporate Governance Report which forms a part of this Annual Report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the Regulators / Courts thatwould impact the going concern status of the Company and its future operations.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to section 134(3)(C) of the Companies Act 2013 the Directors confirm:
a) that in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
b) that we have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financialyear and of the profit / (loss) of the Company for that period;
c) 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;
d) that the annual accounts have been prepared on a going concern basis;
e) that proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively; and f) thatproper internal financial controls were laid down and that such internal financialcontrolsare adequate and were operating effectively.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12)
During the year under review there were no frauds reported by the auditors to theAudit Committee or the Board under section 143(12) of the Companies Act 2013.
Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theBoard has carried out an annual performance evaluation of its own performance theDirectors individually as well as the evaluation of the working of Committees ofthe Board. The Independent Directors met separately on 14th November 2016 to discuss thefollowing:
(i) review the performance of Non-Independent Directors and the Board as a whole;
(ii) review the performance of the Chairperson of the Company taking into account theviews of Executive Directors and Non-Executive Directors;
(iii) assess the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
All Independent Directors were present at the Meeting and discussed the above andexpressed their satisfaction. The outcome of the Board evaluation was discussed byNomination and Remuneration Committee and the Board.
SUBSIDIARY JOINT VENTURE OR ASSOCIATE COMPANIES
The Company does not have any Subsidiary Joint venture or Associate Companies.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the financial year 2016-17 the Company has not given any loans guarantees ormade any investments as per the provisions of section 186 of the Companies Act 2013.
RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties for the year under review were onarms length basis and in the ordinary course of business and that theprovisions of section 188 of the Companies Act 2013 and the rules made there under arenot attracted. Thus disclosure in form AOC-2 in terms of section 134 of the CompaniesAct 2013 is not required.
All Related Party Transactions are placed before the Audit Committee. Omnibus approvalwas obtained on a quarterly basis for transactions which are of repetitive nature. Astatement giving details of all Related Party Transactions are placed before theAudit Committee for review and approval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company viz. www.hirect.com. None of the Directors has anypecuniary relationship or transactions vis-a-vis the Company.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a Vigil Mechanism / Whistle Blower Policy as per the relevantprovisions of the Listing Regulations and section 177 of the Companies Act 2013.The details are given in the Corporate Governance Report which forms a part of this AnnualReport. The Vigil Mechanism / Whistle Blower Policy is uploaded on the website of theCompany viz. www.hirect.com.
NOMINATION AND REMUNERATION POLICY
The Board of Directors had framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per the Companies Act 2013 all companies having net worth of Rs. 500 crore ormore or turnover of Rs. 1000 crore or more or a net profit of Rs. 5 crore or more duringany three preceding financial year are required to constitute a Corporate SocialResponsibility (CSR) committee of the Board of Directors comprising three or moreDirectors at least one of whom should be an independent Director and such Company shallspend at least 2% of the average net profits of the Companys three immediatelypreceding financial year.
Accordingly Company had constituted CSR committee comprising Shri V. K. Bhartia(Chairman) Shri S. K. Nevatia and Smt. Uma Nevatia (Members). The Committee wasreconstituted due to sad demise of Late Uma Nevatia and Smt. Akshada Nevatia joined as anew member of the Committee.
Due to losses in three preceding financial years CSR is not applicable on the Companyin reporting financial 2016-17. Thus report on CSR activities as required under theCompanies (Corporate Social Responsibility Policy) Rules 2014 is not required.
During April 2017 the Company Chairman and Managing Director Chief FinancialOfficer and ex-Company Secretary received a Show Cause Notice (SCN) from Registrar ofCompanies Mumbai for alleged violation of section 134(8) of the Companies Act 2013. Asper SCN the contravention is in respect of Corporate Social Responsibility applicabilityin financial year 2014-15.
The Company has filed its reply to the SCN with the Registrar of Companies Mumbai. Inthe best interest of stakeholders of the Company to avoid litigation the Company haddecided to file an application with the Registrar of Companies Mumbai for compounding ofthe contraventions alleged in the SCN.
An Audit Committee of the Board has been constituted in terms of the relevant provisionof the Listing Regulations and section 177 of the Companies Act 2013. Constitution andother details of the Audit Committee are given in the Corporate Governance Report which isa part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
As required under Listing Regulations Management Discussion and Analysis Report formspart of this Annual Report.
Pursuant to the provisions of section 139 of the Companies Act 2013 and rules madethereunder the term of office of M/s Khandwala & Shah as the Statutory Auditors ofthe Company will conclude from the close of ensuing Annual General Meeting of the Company.The Board places on record its deep appreciation for the valuable contributions of theAuditors during their long association since the inception of Company and wishes themsuccess in the Future. Based on the recommendation of the Audit Committee Board at itsmeeting held on 26th May 2017 appointed M/s Ravi A. Shah & Associates CharteredAccountants (ICAI Firm Registration No. 125079W) as the Auditors of the Company in placeof the retiring auditors M/s Khandwala & Shah Chartered Accountants to hold officefrom the conclusion of the ensuing 59th Annual General Meeting until conclusion of the64th Annual General Meeting of Company to be held in the year 2022 subject to theapprovals of the members of the Company at the ensuing
Annual General Meeting and ratification by the members of the Company every yearthereafter if required. Your Company has received a certificate from M/s Ravi A. Shah& Associates Chartered Accountants confirming their eligibility to be appointed asAuditors of the Company in terms of the provisions of section 141 of the CompaniesAct 2013 and Rules framed thereunder.
Based on the recommendation of the Audit Committee Board at its meeting held on 26thMay 2017 appointed M/s Ratan Chandak & Co. Chartered Accountants (ICAI FirmRegistration No. 108696W) and M/s Ronak Gada & Associates Chartered Accountants (ICAIFirm Registration No. 133987W) as Branch Auditors of Nashik and Dehradunplantsoffice from the conclusion of the ensuing 59th Annual General the Company respectively tohold Meeting until conclusion of the 64th Annual General Meeting of Company to be held inthe year 2022 subject to the approvals of the members of the Company at theensuing Annual General Meeting and ratification of the Company every year thereafter ifrequired.
Your Company has received a certificate from M/s Ratan Chandak Gada & AssociatesChartered Accountants confirming their eligibility to be appointed as Branch Auditors ofthe Company in terms of the provisions of section 141 of the Companies Act 2013 and Rulesframed thereunder. The Proposal for their appointment has been included in the Noticeconvening the 59th Annual General Meeting for obtaining approval of the members of theCompany.
The observations of the auditors contained in their report are self explanatory andtherefore do not call for any further comments. The Audit Report does not contain anyqualifications and adverse remark.
As per the requirement of Central Government and pursuant to section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your Company is required to audit cost records.
The Board of Directors on the recommendation of Audit Committee has appointed M/s N.Ritesh & Associates Cost Accountants (Firm Registration Number 100675) as CostAuditor to audit the cost accounts of the Company for the financial year 2017-18. Asrequired under the Companies Act for the remuneration payable to the Cost Auditor formspart of the Notice convening the Annual General Meeting for their ratification.
GOODS AND SERVICE TAX
Goods and Services Tax (GST) is a landmark reform which will have a lasting impact onthe economy and on businesses. Implementation of a well-designed GST model thatapplies to the widest possible base at a low rate can provide significant growth stimulusto the business and contribute
Your Company has been preparing for migrating to GST for the past year; changes acrossIT systems Supply Chain and operations have been made keeping in mind the sweepingchanges that GST would bring in. While there are a few areas that need to be addressedthe Government has announced an intention to go live on GST on 1st July 2017 andyour Company is ready for this transformative reform.
INTERNAL FINANCIAL CONTROLS SYSTEMS AND ITS ADEQUACY
Adequate systems for internal controls provide assurances on the efficiency ofoperations security of assets statutory compliance appropriate authorizationreporting and recording transactions. The scope of the audit activity is broadlyguided by the annual audit plan approved by the top management and Audit Committee. TheInternal Auditor prepares regular reports on the review of the systems and procedures andmonitors the actions to be taken.
The Company has adopted policies and procedures forensuringtheorderlyandefficientconduct of its business including adherence to theCompanys policies the safeguarding of its assets the prevention and detection offraud the accuracy and completeness of the accounting records and timely preparation ofreliable financial disclosures.
The Company has in place a Risk Management Policy which was reviewed by the AuditCommittee and approved by the Board of Directors of the Company. The Policy provides for arobust risk management framework to identify and assess risks such as operationalstrategic financial regulatory and other risks and put in place an adequate riskmanagement infrastructure capable of addressing these risks.
As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on corporategovernance practices followed by the Company together with a certificate from theCompanys Auditors confirming compliance forms
CODE OF CONDUCT
Your Company is committed to conducting its business in accordance with the applicablelaws rules and regulations and highest standards of business ethics. In recognitionthereof the Board of Directors has implemented a Code of Conduct for adherence by theDirectors and Senior Management Personnel of the Company. This will help in dealing withethical issues and also foster a culture of accountability and integrity.
The Company has listed its shares on BSE Ltd. & National Stock Exchange of IndiaLtd. The Company is regular in payment of Listing Fees.
We seek to promote and follow the highest level of ethical standards in all ourbusiness transactions guided by our value system. The SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 mandated the formulation of certain policiesfor all listed companies. All our corporate governance policies are available on ourwebsite viz. www.hirect.com. The policies are reviewed periodically by the Board andupdated based on need and new compliance requirement.
The Companys Equity Shares have been admitted to the depository mechanism of theNational Securities Depository Limited (NSDL) and also the Central DepositoryServices (India) Limited (CDSL). The Company has been allotted ISIN No. INE835D01023.
Shareholders therefore are requested to take full benefit of the same and lodge theirholdings with Depository Participants [DPs] with whom they have their Demat Accounts forgetting their holdings in electronic form.
PARTICULARS OF EMPLOYEES
The information required pursuant to section 197(12) read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isattached as Annexure - C and forms an integral part of this report.
The information required pursuant to section 197(12) read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is notapplicable because Company has not employed any employee drawing salary of Rs. 8.5lacs per month or Rs. 1.02 cr. per annum during the year under review.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted aPolicy on Prevention
Prohibition and Redressal of Sexual Harassment at the Workplace in line with theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and the Rules thereunder. The Policy aims to provideprotection to woman at the workplace and prevent and redress complaints of sexualharassment and for matters connected or incidental thereto with the objective ofproviding a safe working environment where woman feel secure. The Company has alsoconstituted Internal Committees at all its locations to inquire into complaints of sexualharassment and recommend appropriate action.
The Company has not received any complaint of sexual harassment during the financial
INFORMATION ON MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments affecting the financial position of theCompany which have occurred between 31st March 2017 and 26th May 2017 being the date ofthis report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder section 92 of the Companies Act 2013 is annexed as Annexure - A and forms anintegral part of this report.
INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the applicable provisions of the Companies Act 2013 read with IEFPAuthority (Accounting Audit
Transfer and Refund) Rules 2016 (the Rules) all unpaid or unclaimeddividends are required to be transferred by the Company to the IEPF established bythe Central Government after the completion of seven years. Further according tothe Rules the shares in respect of which dividend has not been paid or claimed by the shareholdersfor seven consecutive years or more shall also be transferred to the demat account createdby the IEPF Authority. Accordingly the Company has transferred the unclaimed andunpaid dividends. Further the corresponding shares will be transferred as per therequirements of the IEPF rules details of which are provided on the website of theCompany viz. www.hirect.com.
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s GMJ & Associates a firm of Company Secretaries in Practice to undertakethe Secretarial Audit of the Company. The Secretarial Audit Report is annexed as Annexure- B and forms an integral part of this report.
The Secretarial Audit Report does not contain any qualifications reservation oradverse remark.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNING AND OUTGO
The information pursuant to section 134(3) (m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is annexed as Annexure - D and forms anintegral part of this Report.
SAFETY ENVIRONMENTAL CONTROL AND PROTECTION
The Company has taken all the necessary steps for safety environmental control andprotection at the plant.
The Directors wish to convey their appreciation to the Companys shareholderscustomers suppliers bankers distributors and all the technology partners for thesupport they have given to the Company and the confidence which they have reposed in itsmanagement and the employees for the commitment and dedication shown by them.
|Registered Office: ||For and on behalf of the Board of Directors |
|Lake RoadBhandup (W) ||For Hind RectifiersLimited |
|Mumbai - 400 078 || |
|Place: Mumbai. ||S. K. Nevatia |
|Date: 26th May 2017 ||Chairman and Managing Director |