Your Directors present their Fifty Seventh Annual Report and Audited Accounts of theCompany for the year ended 31.03.2017.
The operating results of the company for the year are as follows:
| || |
(Rs. in Thousand)
| ||2016-17 ||2015-16 |
|The profit for the year after meeting all expenses but before providing for Gratuity || || |
|Depreciation Taxation and extra-ordinary income is: ||115477 ||149241 |
|from which have to be deducted: || || |
|Gratuity according to statutory requirement ||10725 ||9160 |
|Depreciation for the current year ||152239 ||130350 |
|Provision for Taxation ||(31942) ||(6195) |
|Provision for Dividend ||1443 ||1443 |
|Tax on Dividend ||294 ||294 |
|Leaving a balance of ||(13809) ||14189 |
|To which have to be added: || || |
|The balance brought forward from the previous year ||16113 ||1924 |
|Making a total of ||(1169) ||16113 |
|Out of which transferred from General Reserve ||25000 ||- |
|Leaving a balance to be carried forward to next year's account ||23831 ||16113 |
State of Affairs & Operations
During the year under review the gross revenue of the company has decreased toRs.731.53 Crores as compared to Rs. 755.84 Crores in 2015-16. The profit beforedepreciation has decreased from Rs. 1400.81 Lakhs to Rs. 1047.51 Lakhs.
In the Financial Year 2016-17 income from operations was Rs. 744.92 crores ascompared to Rs.762.18 Crores in the previous year 2015-16. The profit before depreciationhas decreased from Rs. 1299.98 Lakhs to Rs. 962.47 Lakhs. Revenue of wholly ownedsubsidiary i.e. Hindusthan Speciality Chemicals Limited was Rs. 1350.59 Lacs (Previousyear Rs.635.90 Lakhs) and net profit after tax was Rs. (56.16) Lakhs [Previous year Rs.(178.97) Lakhs].
Your Directors are pleased to inform that the Company booked new orders worth 603.43 Crin 2016-17. However due to deferment of order execution by several customers thecommercial production for aluminium Conductors could not be taken during the year for someof these orders. The availability of our prime raw material for conductor division i.e.aluminum remained satisfactory. However due to upward swing of LME from USD 1713 inDecember 2016 to LME USD 1955 in March 2017 there were increase of prices of aluminiumforcing the customers to defer the orders.
The availability of power was comfortable except Mandideep Works. The company has beenable to keep the factories running with the help of captive power generating capacitywherever it was required.
There has been slow down in the issue of new tenders by major Power utility Power GridCorporation of India during the year but Efforts were being made to secure more ordersfrom private sector as well as state utilities.
During the year the company executed export orders (including Domestic sales in foreigncurrency) worth Rs. 4165 lakhs as compared to Rs.8896 lakhs during the financial year2015-16. The Company is continuously striving to increase its export order book and addmany more private and export markets.
Your Directors have recommended a dividend of Re. 1.00 per equity share(10%) for thefinancial year ended March 31 2017 amounting to Rs. 1736622/- (inclusive of tax ofRs.293737/-). The dividend payout is subjected to approval of members at the ensuingAnnual General Meeting.
The dividend will be paid to members whose names appear in the Register of Members ason 15th September 2017. In respect of shares held in dematerialised and physical form itwill be paid to members whose names are furnished by
National Securities Depository Limited and Central Depository Services (India) Limitedas beneficialowners as on that date.
Wholly Owned Subsidiary Companies
Hindusthan Speciality Chemicals Limited wholly owned subsidiary has become materialsubsidiary of the Company Hindusthan Speciality Chemicals Limited and two non-materialwholly owned subsidiary companies Hindusthan Vidyut Products Limited and HindusthanProjects Limited. Hindusthan Speciality Chemicals Limited (HSCL) company has takenfurther steps towards setting up of the state of the art green field manufacturingfacility of Epoxy Resin and formulated products at Jhagadia Distt Bharuch Gujarat. Theconstruction work has commenced and is proceeding actively on various fronts. Orders forlong lead-time Plant & Machinery packages has also been placed & ordering forfurther packages is in progress. The Company is marketing various grades of Epoxy Resins& specialty formulations in it's own brand name with the support of technologypartners. A well-equipped
Application Development & Testing facility having equipments catering to therequirement of customer's in area of electrical & composites sector has also beenset-up in Taloja facility. During the year 2017-18 the company has targeted to increasesales of manufactured products and also expand the product range into newer applications.Regional export markets are also being taken-up. A sum of Rs. 58.752 Crores has been paidtill 31st March 2017 by way of equity capital by your company to Hindusthan SpecialityChemicals Limited a wholly owned material subsidiary.
Hindusthan Vidyut Products Limited and Hindusthan Projects Limited wholly owned nonmaterial subsidiaries have not commenced any commercial activity during the year.
There has been no change in relationship of any subsidiary company during the year.
A report on the performance and financial position of each of the subsidiaries as perthe Companies Act 2013 is provided in the consolidated financial statement and hence notrepeated here for the sake of brevity. The Policy for determining material subsidiaries asapproved may be accessed on the Company's website at the link i.ehttp://www.hindusthanurban.com/pdf/policy/Policy%20for%20determining%20material%20subsidiaries_HUIL.PDF
Consolidated Financial Statement
The consolidated financial statements prepared in accordance with the Companies Act2013 and Accounting Standard (AS)- 21 are attached with the Annual Report.
Management Discussion and Analysis Report
As required under regulation 34 of the Listing Regulations with Stock Exchange theManagement Discussion and Analysis
Report is enclosed as a part of this report.
As a responsible corporate citizen the Company is committed to maintain the higheststandards of Corporate Governance and believes in adhering to the best corporate practicesprevalent globally. The report on Corporate Governance as stipulated under the ListingRegulations forms an integral part of this Report. The the Statutory requisitecertificateAuditors of the Company confirming compliance with the conditions of Corporate Governanceis attached to the report on Corporate Governance.
The Board Members and Senior Management Personnel have affirmed compliance with theCode of Conduct for the year ended March312017.Acertificatefrom the Vice Chairman &Managing Director confirming the same is attached to the Corporate Governance Report.confirmingcorrectness and of the financial statements adequacy of internal control Acertificate CFO measures etc. is also attached to the Corporate Governance Report.
Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that: a) In the preparation of the annual accounts the applicableaccounting standards have been followed; b) The selected accounting policies have beenapplied consistently and the judgments and estimates made are reasonable and prudent so asto give a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company for that period; c) Proper and sufficientcare has been taken for the maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities; d) The annual accounts have been prepared ona going concern basis; e) Internal Financial Controls laid down in the company areadequate and were operating effectively. f) Proper systems have been devised to ensurecompliance with the provisions of all applicable laws and these are adequate and areoperating effectively.
Directors and Key Managerial Personnel
Changes in Board of Directors and other Key Managerial Personnel
The Nomination and Remuneration Committee considered and recommended the appointment ofMr Vivek Dayaram Kohli as whole time director of the Company. The Board afterdiscussions appointed Mr Vivek Dayaram Kohli as Whole time Director with effect fromApril 1 2016 for a term of three years subject to the approval of the shareholders. Theshareholders in their 56th Annual General Meeting approved the appointment of Mr. VivekDayaram Kohli as Whole time Director. During the year under review Mr. Deepak Kejriwalwas re-designated as Chief Operating Officer-Conductor w.e.f. April 01 2016 andtherefore he ceased to act as the Chief Financial Officer.
On the recommendation of Nomination and Remuneration Committee and Audit Committee Mr.Anil Kumar Chandani was appointed as Chief Financial Officer in the category of keyManagerial Personnel as per the provisions of the Companies Act 2013 w.e.f. from01.04.2016.
Your company is in full compliance of Listing regulations and the Companies Act 2013with regard to the composition of Board of Directors.
Retirement by rotation
Mr. Rajendra Prasad Mody will retire by rotation at the ensuing Annual General Meetingand being eligible offers himself for re-appointment.
The Board recommends his re-appointment as Director liable to retire by rotation.
Eight meetings of the Board of Directors were held during the year. For furtherdetails please refer report on Corporate Governance of this Annual Report.
As on date the Audit committee comprises of Mr Mool Chand Gauba Chairman Ms. SumanLata Saraswat and Mr. Shyam Sunder Bhuwania. The Board has accepted all therecommendations made by the Audit Committee.
Declaration of Independent Directors
The Company has four independent directors namely Mr Ramawatar Joshi Mr Ratan LalNangalia Mr. Mool Chand Gauba and Ms. Suman Lata Saraswat. All the directors areprofessionally qualified and possess appropriate balance of skills expertise andknowledge and are qualified for appointment as Independent Director.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section
149(6) of the Companies Act 2013 and the Listing regulations.
Auditors i) Statutory Auditors
During the year under review M/s K.M. Agarwal & Co. Chartered Accountants (FirmRegistration No. 853N) resigned as statutory auditor w.e.f October 29 2016.
The Board of directors through circulation appointed M/s K.N. Gutgutia & Co.Chartered Accountants (Firm Registration
No. 304153E) as statutory auditors in casual vacancy on recommendation of AuditCommittee. The shareholders in the Extra Ordinary General Meeting approved theirappointment as statutory auditor M/s K.N. Gutgutia & Co. Chartered Accountants holdsoffice till the conclusion of 57th Annual General Meeting.
On the recommendation of Audit Committee the Board of Directors recommend theappointment of M/s K.N. Gutgutia & Co. as statutory auditor from the conclusion of57th Annual General Meeting to the conclusion of 62nd Annual General Meeting subject tothe ratification of shareholder in every Annual General Meeting. M/s K.N. Gutgutia &Co. have furnished their consent confirming that if appointed the appointment will be inaccordance with the provisions of Section 139 and all other applicable provisions of theCompanies Act 2013 and Companies (Audit and Auditors) Rules 2014 alongwith thecertificate of Peer Review Board of ICAI.
ii) Branch Auditors
M/s. Rajratan & Co. Chartered Accountants (Firm Registration No. 307101E) wereappointed as branch auditors of the company at the last Annual General Meeting held on21.09.2015 upto fifty eighth Annual general meeting subject to ratification by members atevery subsequent Annual General Meeting. Therefore ratification of appointment of
Branch Auditors is being sought from the members of the Company at the ensuing AnnualGeneral Meeting. qualification reservation or adverse remarks or disclaimer in theAuditors Report to the members on the Thereareno
Annual Financial Statements for the year ended 31.03.2017
iii) Cost Auditors
M/s. J.K Kabra & Co. Cost Accountants were appointed as Cost Auditors for auditingthe cost accounting records of our Company for the year ended March 31 2017 by the Boardof Directors the report for which is under preparation and will be filed in due course.The Cost Audit Report for the year 2015-16 has been filed under XBRL mode within the duedate of filing.
iv) Secretarial Auditor
The Board has appointed Mr. Amit Kumar Company Secretary in practice to conduct theSecretarial Audit for the financial year 2017-18. The Secretarial Audit Report for thefinancial year ended 31.03.2017 is annexed herewith marked as Annexure-A to this report.The observation in secretarial audit report is self-explanatory and need no comments.
The Secretarial Standards on Meetings of the Board of Directors (SS-1) and SecretarialStandards on General Meetings (SS-2) (together referred to as the Secretarial Standards)as approved by the Central Government have been issued by the Institute of CompanySecretaries of India (ICSI) under the provisions of Section 118(10) of the
Companies Act 2013 (the Act) vide ICSI Notification No. 1 (SS) of 2015 dated 23rdApril 2015 and published in the Gazette of India Extraordinary Part III-Section 4. TheseSecretarial Standards came into force w.e.f. 1st July 2015.
The Company is adhering both standards from 1st July 2015.
v) Internal Auditors
M/s. M.L Garg & Co. Chartered Accountants performs the duties of Internal Auditorsof the Company and their reports are reviewed by the Audit committee from time to time. Asper the recommendations of Audit committee M/s. M.L Garg & Co. Chartered Accountantswere re-appointed as internal auditors for the financial year 2017-18
The Authorised share Capital of the Company is Rs. 25000000/- divided into 2500000equity shares of Rs.10/- each. The paid up Equity Share Capital as on 31.03.2017 was Rs.14428850/-.
During the year under review the company has not issued any share capital withdifferential voting rights sweat equity or ESOP nor provided any money to the employeesor trusts for purchase of its own shares.
Listing with Stock Exchange
The equity shares of the company were listed w.e.f July 14 2016.
The listing fees for 2016-2017 and 2017-2018 has been paid to BSE Ltd.
Annual Custody/Issuer fee has been paid to NSDL and CDSL the depositories where theshares of the company are dematerialized.
Material changes and commitments
No material changes or commitments have occurred between the end of the financial yearto which the financial statements relate and the date of this report affecting thefinancial position of the Company.
Annual Evaluation of Board and Directors
As required under the Companies Act 2013 and the Listing Regulations an evaluation ofthe performance of the Independent Directors was carried out by the Board of Directorsduring the year based on the criteria laid down by the Nomination and RemunerationCommittee. On an overall assessment it was found that all the Independent Directors havegiven a good account of themselves. The Board concluded that the Independent Directorsindividually and collectively were well qualified and their contributions were in theinterest of the Company. The Independent Directors in a separate meeting held on02.02.2017 reviewed and evaluated the performance of Non-Independent Directors Board as awhole and the performance of the Chairman of the Company. Keeping the requirements underthe Act and the Listing Regulations the Independent Directors laid down broad areas forevaluation. After detailed discussion it was concluded that the performance of the Boardcollectively and the Directors individually on all counts of evaluation were appreciable.
The performance of the Chairman and other Executive Directors was evaluated byIndependent Directors for leadership and direction to the Company judging as per theparameters of the evaluation criteria and it was noted that their performance wassatisfactory. It was further noted that the Chairman took proper initiative in policydecisions making with the senior executives and Board.
The Board carried out the performance evaluation of its committees. DirectorsAppointment and Remuneration
Appointment of Directors on the Board of the Company is based on the recommendations ofthe Nomination and
Remuneration Committee. The committee identifies and recommends to the Board personsfor appointment on the Board after considering the necessary and desirable competencies.The committee takes into account positive attributes like integrity maturity judgementleadership position time and willingness financial acumen management experience andknowledge in one or more fields of finance law management sales marketingadministration research etc. In case of Independent Directors (IDs) they should fulfillthe criteria of
Listing Regulations in addition to the general criteria stated above. It is ensuredthat a person to be appointed as director has not suffered any disqualification under theAct or any other law to hold such an office.
The Directors of the Company are paid remuneration as per the Remuneration Policy ofthe Company the gist of which is given under the heading RsRemuneration Policy' hereinbelow. The details of remuneration paid to the directors during the year 2016-17 are givenin Form MGT-9 annexed hereto.
The Company has a Remuneration Policy relating to remuneration of the Directors seniormanagement including its Key Managerial Personnel (KMP) and other employees of theCompany. The Remuneration Policy is in accordance with Section 178 of the Act and theRules made thereunder. The salient features of the Policy are given below:
i. Guiding principle
The guiding principle of the Policy is that the remuneration and other terms ofemployment should effectively help in attracting and retaining committed and competentpersonnel.
Non-executive directors are paid remuneration in the form of sitting fees for attendingBoard/ Committee meetings as fixedby the Board from time to time subject to statutoryprovisions. Presently sitting fee is Rs.10000/- per Board meeting and Committee meeting.
Remuneration of Managing Director is fixed by the Board of Directors on therecommendation of the Nomination and Remuneration Committee subject to the approval ofthe shareholders and other authorities if required. The Nomination and RemunerationCommittee while recommending the remuneration takes into account pay and employmentconditions in the industry merit and seniority of the person and paying capacity of theCompany. The remuneration which comprises of salary perquisites performance based rewardand retirement benefits as per Company Rules is subject to the limits laid down under theAct.
iii. Key Managerial Personnel (KMP)
Appointment and cessation of service of KMP are subject to the approval of theNomination and Remuneration Committee and Board of Directors.
iv. Other employees
The remuneration of other employees is fixed from time to time as per the guidingprinciple laid down in the Remuneration Policy and considering industry standards and costof living. In addition to salary they are also provided perquisites and retirementbenefits as per schemes of the Company and statutory requirements where applicable.
The Remuneration Policy of the Company is available on its website.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
Information required under section 134(3) (m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 is given in the Annexure-B to thisreport.
Compliance certificate of the Auditors
Company's Auditor M/s. K.N. Gutgutia & Co. confirming compliance with conditionsof Corporate Certificate Governance as stipulated in para D of Schedule V to the ListingRegulations is attached to this Report.
Corporate Social Responsibility (CSR)
The Company has a Corporate Social Responsibility Policy (CSR Policy) indicating theactivities to be undertaken by the Company which was duly approved by the Board. CSRCommittee of the Board has developed a CSR Policy the salient feature of which are givenas part of this report as Annexure-C. Additionally The CSR Policy may be accessedon the Company's website at the link:http://www.hindusthanurban.com/pdf/policy/HUIL_CSR%20Policy.pdf
Internal Control System and their Adequacy
The Company has adequate system of internal control to safeguard and protect from lossunauthorized use or disposition of its assets. All the transactions are properlyauthorized recorded and reported to the Management. The Company is following all theapplicable Accounting Standards for properly maintaining the books of accounts andreporting financial statements. The internal auditor of the company checks and verifiesthe internal control and monitors them in accordance with policy adopted by the company.The Company continues to ensure proper and adequate systems and procedures commensuratewith its size and nature of its business.
The Company values its investors immensely. With a view to keep its investors wellinformed of its activities the Company has taken the following initiatives:
- Maintaining user friendly investor section on the website of the Company i.e www.hindusthanurban.com
- A dedicated email id viz firstname.lastname@example.org for interacting onvarious matters with respect to share transfer transmission dividends and other relatedissues with the Company Secretary and Compliance officer.
In pursuance of the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for directors and employees to report genuine concerns has beenestablished. The Policy on vigil mechanism and whistle blower policy may be accessed onthe Company's website at the link:http://www.hindusthanurban.com/pdf/policy/HUIL_Whistle%20Blower%20Policy.pdf
Related Party Transactions
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. All related partytransactions were approved by the Audit Committee and the Board. The relevant informationregarding related party transactions has been set out in Note no. 31 of the StandaloneFinancial Statement for the financial year ended 31.03.2017.
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: http://www.hindusthanurban.com/pdf/policy/HUIL_RPT%20Policy.pdf
Significant Material Orders Passed by Regulators or Courts or Tribunals beenNosignificant passed by any Regulators Courts or Tribunals impacting the going concernstatus and Company's operations in future.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9 is annexedherewith as Annexure-D. Particulars of Loans Guarantees or Investments
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
Particulars of Contracts or arrangement with related parties
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. Such Related PartyTransactions which are proposed to be entered during the financial year are placed beforethe Audit Committee and the Board for approval. Prior omnibus approval of the AuditCommittee is obtained on annual basis for the transactions which are of a foreseen andrepetitive nature. The transactions entered into pursuant to the omnibus approval sogranted are placed before the Audit Committee for its review on a quarterly basis. TheCompany has formulated a policy for transacting with Related Parties which is uploaded onthe website of the Company(http://www.hindusthanurban.com/pdf/policy/HUIL_RPT%20Policy.pdf). Transactions with therelated parties are disclosed in Notes to the financial statements in the Annual Report.The disclosure in Form AOC-2 is attached asAnnexure-E.
Development and Implementation of a Risk Management Policy
The Company has a Risk Management Committee consisting Vice Chairman & ManagingDirector and Independent Directors and which has been entrusted with the responsibility toassist the Board in (a) Overseeing and approving the Company's enterprise wide riskmanagement framework; and (b) Overseeing that all the risks that the organization faces.The Company addresses the potential risks impacting the Company.
The Company has not accepted any deposits covered under Chapter V from public and assuch no amount on account of principal or interest on deposits from public wasoutstanding as on the date of the balance sheet.
Anti-Sexual Harassment Policy
Pursuant to the "Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 the
Company constituted Internal Complaints Committee at all its workplaces. There has notbeen any instance of complaint reported in this regard to any of the Committee.
Particulars of Directors and Employees as required under Section 197(12) of the Actread with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are given in Annexure-F and form part of this Report.
| ||For and on behalf of the Board of Directors |
| ||Rajendra Prasad Mody |
|Place: New Delhi ||Chairman |
|Date: May 15 2017 ||(DIN: 00140503) |