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Hindoostan Mills Ltd.

BSE: 509895 Sector: Industrials
NSE: N.A. ISIN Code: INE832D01020
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OPEN 374.95
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VOLUME 110
52-Week high 479.00
52-Week low 322.05
P/E
Mkt Cap.(Rs cr) 62
Buy Price 360.10
Buy Qty 16.00
Sell Price 379.90
Sell Qty 10.00
OPEN 374.95
CLOSE 377.95
VOLUME 110
52-Week high 479.00
52-Week low 322.05
P/E
Mkt Cap.(Rs cr) 62
Buy Price 360.10
Buy Qty 16.00
Sell Price 379.90
Sell Qty 10.00

Hindoostan Mills Ltd. (HINDOOMILLS) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 112th Annual Report together withthe Audited Financial Statements for the year ended March 31 2016.

FINANCIAL RESULTS

The Company’s financial performance for the year ended March 31 2016 issummarized below:

(Rs. in lakhs)
Current Year Ended 31.03.2016 Previous Year Ended 31.03.2015
Gross Profit before Interest Depreciation and Tax 1084.27 476.36
Less: Finance Cost 331.34 195.07
Gross Profit after interest but before Depreciation 752.93 281.29
Less: Depreciation 1181.82 1011.38
Profit before Exceptional and Extraordinary Items and Tax (428.89) (730.09)
Add: Exceptional Items 222.54 41.50
Profit / (Loss) before Taxation (206.35) (688.59)
Less: (Excess) / Short Provision of Tax of earlier year 19.03 --
Profit after Tax (225.38) (688.59)
Balance brought forward from last year 2.96 684.35
Add: Transfer from General Reserve 312.81 87.10
Amount available for appropriation 90.39 82.86
Less: Proposed Dividend 74.90 66.58
Less: Tax on proposed Dividend 15.25 13.32
Less: Short provision of Tax on proposed Dividend for the year 2014-15 0.24 --
Balance carried to Balance Sheet -- 2.96

REVIEW OF OPERATIONS:

The revenue from operations of the Company for the financial year 2015-16 isRs.15925.53 lakhs. The Loss before tax is Rs.206.35 lakhs. The performance and overallview of the Textile Engineering and Composite business has been covered in the ManagementDiscussion and Analysis which forms part of this Directors’ Report.

DIVIDEND:

Your Directors are pleased to recommend a dividend of Rs.4.50 per equity share (lastyear Rs.4/- per equity share) for the financial year 2015-16 amounting to Rs.90.15 lakhs(inclusive of dividend tax). The dividend payout is subject to approval of Members at theensuing Annual General Meeting.

The dividend will be paid to Members whose names appear in the Register of Members ason August 02 2016 and in respect of shares held in dematerialised form it will be paidto members whose names are furnished by National Securities Depository Limited and CentralDepository Services (India) Limited as beneficial owners as on that date.

FIXED DEPOSITS:

The Company has not accepted any deposits from the public during the year under review.There are no outstanding deposits remaining unpaid / unclaimed as on March 31 2016.

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.

DIRECTORS:

All the Independent Directors have given declarations that they meet with the criteriaof independence as prescribed under sub-section (6) of Section 149 of the CompaniesAct 2013 and under SEBI (Listing Obligations and Disclosures Requirements) Regulations2015.

The Board of Directors had on the recommendation of the Nomination & RemunerationCommittee reappointed Mr. Abhimanyu Thackersey as Whole-time Director of theCompany designated as "Executive Director" for a term of 5(Five) years witheffect from June 08 2016 upto June 07 2021 subject to the approval of the Members in theensuing AGM. Mr. Krishnadas D. Vora be re-appointed as an Independent Director of theCompany not liable to retire by rotation to hold office for a term of 2 (Two) consecutiveyears commencing from the date of 112th AGM till conclusion of 114thAGM of the Company to be held in calendar year 2018. Mr. Naresh Kara and Mr. HrishikeshThackersey Directors of the Company will retire by rotation at the ensuing Annual GeneralMeeting and being eligible have offered themselves for re-appointment as Non - ExecutiveDirector and Executive Director of the Company respectively.

Mr. Nitin Singala Independent Director of the Company resigned w.e.f. August 112015.The Board places on record its deep appreciation for the valuable contribution madeby him during his tenure as Director of the Company.

Brief profiles of the Directors proposed to be re-appointed as required under SEBI(Listing Obligations and Requirements) Regulations 2015 are part of the Notice conveningthe Annual General Meeting.

(a) Board Evaluation:

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of SEBI(Listing Obligations and Requirements) Regulations 2015 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas the evaluation of the working of its Audit and Nomination & RemunerationCommittees.

(b) Remuneration Policy:

The Board has on the recommendation of the & Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management and theirremuneration.

(c) Meetings:

During the year four Board Meetings and four Audit Committee Meetings were convened andheld. The details of which are given in the Corporate Governance Report. The interveninggap between the Meetings was within the period prescribed under the Companies Act 2013.

(d) Committees of the Board:

Details of all the Committees their composition and Meetings held during the year areprovided in the Corporate Governance Report a part of this Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the provision of Section 134(3)(c) and 134(5) of the Companies Act 2013the Directors confirms to the best of their knowledge and belief:

(a) that in the preparation of the annual financial statements the year ended March 312016 the applicable accounting standards have been followed and there are no materialdepartures;

(b) that they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theloss of the Company for that period;

(c) that they had taken proper and sufficient care maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

(d) that they have prepared the annual accounts on a going concern basis;

(e) that they have laid down internal financial be followed by the Company and suchinternal financial controls are adequate and operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

KEY MANAGERIAL PERSONNEL:

During the year Mr. Devanand Mojidra Company Secretary resigned effective October 062015 and Mr. Jagat Reshamwala was appointed as a Company Secretary and President effectiveNovember 16 2015.

The Board of Directors at their Meeting held on May 04 2016 accepted the resignationof Ms. Heena Shah Chief Financial Officer effective May 16 2016 and appointed Mr. K.Nandakumar as President (Finance and Accounts) effective May 04 2016 to be designated asChief Financial Officer effective May 17 2016.

INDUSTRIAL RELATIONS:

The industrial relations continued to be generally peaceful and cordial during theyear.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Your Company has during the year under review transferred a sum of Rs.32670/- toInvestor Education and Protection Fund in compliance with the provisions of Section 125of the Companies Act 2013. The said amount remained unclaimed by the Members of theCompany for a period exceeding 7 years from its due date of payment.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All transactions entered by the Company during the financial year with related partieswere in the ordinary course of business and on an arm’s length basis. During theyear the Company had not entered into any transaction with related parties which could beconsidered material in accordance with the policy of the Company on materiality of relatedparty transactions. All Related Party Transactions were placed before the Audit Committeeas also the Board for approval. Prior omnibus approval of the Audit Committee is obtainedfor the transactions which are of a foreseen and repetitive nature. The transactionsentered into pursuant to the omnibus approval so granted are audited and a statementgiving details of all related party transactions is placed before the Audit Committee andthe Board of Directors for their approval on a quarterly basis. The policy on RelatedParty Transactions as approved by the Board is uploaded on the Company’s website.None of the Directors has any pecuniary relationships or transactions vis--visthe Company.

CASH FLOW STATEMENT:

In conformity with the Accounting Standard 3 issued by the Institute of CharteredAccountants of India and the provisions of SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 the Cash Flow Statement for the year ended March 31 2016is annexed to the accounts.

PARTICULARS OF EMPLOYEES:

There were no employees during the year covered under Section 197 of the Companies Act2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.

The information required pursuant to Section 197 read with Rule 5 (1) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is given below:

i) The ratio of the remuneration of Directors to the median remuneration of theemployees of the Company for the financial year.

Mr . Hrishikesh Thackersey : 15.53

Mr . Abhimanyu Thackersey : 28.30

ii) The percentage increase in remuneration of each Director Chief FinancialOfficer Chief Executive Officer Company Secretary or Manager if any in the financialyear.

Directors Chief Executive Officer Company Secretary or Manager % increase in remuneration in the financial year
Mr. Hrishikesh Thackersey 12.41
Executive Director
Mr. Abhimanyu Thackersey 27.19
Executive Director
Ms. Heena Shah 18.00
Mr. Devanand Mojidra (Up to October 06 2015) N.A.
Mr. Jagat Reshamwala Company Secretary (w.e.f. November 16 2015) N.A.

iii) The percentage increase in the median remuneration of employees in thefinancial year.

5.05%

iv) The number of permanent employees on rolls of the Company.

486 employees as on March 31 2016 in Hindoostan Mills Limited.

v) The explanation on the relationship between average increase in remuneration andCompany performance.

The average increase of 13.57% in remuneration given the Company was to partiallyoffset the average inflation of 6.0% in the year 2015-16 as also to prevent anysignificant employee attrition at lower levels.

vi) Comparison of the remuneration of Key Managerial Personnel against theperformance of the Company.

The total remuneration of Key Managerial Personnel (including Executive Directors)increased by 26.18% whereas the Gross Profit before interest Depreciation and Tax hasbeen increased to Rs.1084.27 lakhs in 2015-16 (`476.36 lakhs in 2014-15).

vii) Variation in the market capitalization of the Company price earning ratio asat the closing date of the current financial year and previous financial year andpercentage increase over decrease in the market quotations of the shares of the Company incomparison to the rate at which the Company came out with the last public offer in caselisted companies.

a) Variation in the market capitalization of the company. The market capitalization ason March 31 2016 was Rs.61.94 crore and was Rs.65.58 crore as at March 31 2015 atclosing price on Stock Exchange.

b) As at March 31 2016 the Company has incurred loss of (`225.38) lakhs and PriceEarning ratio of the Company (at closing price) was Rs.27.48 as at March 31 2016.

c) Present increase over / decrease in the market quotations of the shares of theCompany as compared to the rate at which the Company came out with the last public offerin the year: The Company has been in existence over 100 years. The equity shares of theCompany were listed more than 40-50 years back. Hence such old (the stock exchange) datais not available for comparison of share pricing at public offer.

viii) Average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and point outif there are any exceptional circumstances for increase in the managerial remuneration.

Average Salary Increase for KMP’s : 26.18%
Average Salary Increase for non-KMP’s : 13.57%

ix) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company.

Same response as in point (vi) above

x) The key parameters for any variable component of remuneration availed by theDirectors.

No Director has received any variable component of remuneration.

xi) The ratio of the remuneration of the highest paid Director to that of theemployees who are not Directors but receive remuneration in excess of the highest paidDirector during the year.

Mr . Akhil Hebber 1.17
Dr . Milind Khandwe 1.09
Ms. Heena Shah 1.06

xii) Affirmation that the remuneration is as per the Remuneration policy of theCompany.

The remuneration paid to employees of the Company is as per the remuneration policy ofthe Company.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your Company has been making continuous efforts to conserve energy and upgrade / absorbtechnology to optimize the energy cost. Information required under Section 134(3)(m) ofthe Companies Act 2013 read with Rule 8(3) (A) & (B) of the Companies (Accounts)Rules 2014 as amended from time to time forms part of this Report. However as per theprovisions of Section 136 (1) the report and accounts are being sent to all the Membersof the Company excluding the information relating to conservation of energy and technologyabsorption. Any shareholder interested in obtaining such particulars may inspect the sameat the Registered Office of the Company or write to the Company Secretary for a copy.

Foreign Exchange Earnings & Outgo:

(Rs. in lakhs)
Particulars 31.03.2016 31.03.2015
Foreign exchange earned 2739.36 2676.23
Foreign exchange used 631.80 3089.35

CORPORATE GOVERNANCE:

The Company is maintaining the standards of corporate governance and adheres to thecorporate governance requirements set out by SEBI. The Report on Corporate Governance asstipulated under the SEBI (Listing Obligations and Disclosures Requirements) Regulations2015 is an integral part of this Report. The requisite certificate from the Auditors ofthe Company confirming compliance with the conditions of corporate governance is attachedto the Report on Corporate Governance.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return as provided under Section92(3) of the Companies Act 2013 and as prescribed in Form MGT- 9 of Rules prescribedunder Chapter VII relating to Management and Administration under Companies Act 2013 isenclosed herewith as Annexure - I.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

In terms of the provisions of Section 135 of the Act read with Companies (CorporateSocial Responsibility Policy) Rules 2014 the Board of Directors of your Company hasconstituted a Corporate Social Responsibility (CSR) Committee which is chaired by Mr.Raoul Thackersey. The other Members of the Committee are Mr. K.D.Vora and Mr. Sujal Shah.The Committee has formulated and recommended to the Board a CSR Policy indicating theactivities to be undertaken by the Company which has been approved by the Board and thesame is available on your Company’s website www.hindoostan.com. The brief outline ofthe Corporate Social Responsibility (CSR) Policy of the Company and the initiativesundertaken by the Company on CSR activities is enclosed herewith as

Annexure -II.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS IF ANY:

There is no significant material order passed by the Regulators / Courts which wouldimpact the going concern status of your Company and its future operations.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. Based on the framework of internal financial controls andcompliance systems established and maintained by the Company work perform by theinternal statutory and secretarial auditors including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bythe management and the Audit Committee the Board is of the opinion that theCompany’s internal financial controls were adequate and effective during financialyear 2015-16.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has a vigil mechanism to deal with instance of fraud and mismanagement ifany. The Vigil Mechanism Policy is available on your Company’s websitewww.hindoostan.com

AUDITORS:

(a) Statutory Auditors:

M/s. M.A. Parikh & Co. Chartered Accountants (Firm Registration No. 107556W) wereappointed as statutory auditors of the Company to hold office till conclusion of 115thAnnual Genaral Meeting (AGM) to be held in the calendar year 2019 at the AGM held onDecember 12 2014. In terms of the provision of Section 139(1) of the Companies Act 2013the appointment shall be placed for ratification at every AGM. Accordingly theappointment of M/s. M.A. Parikh & Co. Chartered Accountants as statutory auditors ofthe Company is placed for ratification by the Members. In this regard the Company hasreceived a certificate from the Auditors confirming to the effect that if they arere-appointed it would be in accordance with provisions of Section 141 of the CompaniesAct 2013. The Board has duly reviewed the Statutory Auditors’ Report on theAccounts. The observations and comments appearing in the Auditors’ Report areself-explanatory and do not call for any further explanation / clarification by the Board.

(b) Cost Auditors:

The Board on recommendation of the Audit Committee re-appointed M/s. Anant AshokKatyare Cost Accountants as Cost Auditors of the Company for the financial year 2016-17on a remuneration of Rs.105000/- (Rupees One lakh Five Thousand Only) plus service taxas applicable for the said financial year and requested the Members to ratify theremuneration as recommended above.

(c) Secretarial Audit:

The Board has appointed M/s. PRS & Associates a firm of Company Secretaries inPractice to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportis annexed herewith as Annexure-III.

SEXUAL HARASSMENT:

During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

ACKNOWLEDGEMENT:

Your Directors would like to express their sincere appreciation for the assistance andco-operation received from the financial institutions banks Government authoritiescustomers vendors and members during the year under review. Your Directors also wish toplace on record their deep sense of appreciation for the Mumbai committed services by theCompany’s executives staff and workers.

For and on behalf of the Board of Directors
Raoul Thackersey
Chairman
Mumbai May 4 2016