To : The Members
Murudeshwar Ceramics Limited
Your Directors have pleasure in presenting the Thirty fourth Annual Report on thebusiness and operations of the Company and the accounts for the financial year ended March31 2017
FINANCIAL SUMMARY OR HIGHLIGHTS / PERFORMANCE OF THE COMPANY
The Board's Report shall be prepared based on the standalone financial statements ofthe company.
| || ||(Rs. In Lacs) |
|Particulars ||2017 ||2016 |
|Sales Income ||10524.53 ||11502.23 |
|Other Income ||89.22 ||134.05 |
|Total Income ||10613.75 ||11636.28 |
|Operational Expenditure ||8179.97 ||8797.13 |
|Increase/(Decrease) in stock ||(295.44) ||(21.98) |
|Interest ||1683.39 ||1978.22 |
|Depreciation ||720.78 ||713.63 |
|Total Expenditure ||10288.70 ||11467.00 |
|Profit / (Loss) for the year ||325.05 ||169.28 |
|Less Provision for tax ||66.25 ||18.41 |
|Less MAT Credit ||(66.25) ||(18.41) |
|Less Excess Provision written back ||- ||- |
|Add Deferred Tax Liability ||85.68 ||12.25 |
|Profit / (Loss) after tax ||239.37 ||157.03 |
|Profit available for appropriation ||239.37 ||157.03 |
During the year under report the Company has produced 1569487 Sq.mtrs. of Vitrifiedtiles and has not produced any Ceramic tiles. Whereas compared to previous year productionof Vitrified tiles is reduced by 21.32%. The sales income from Vitrified tiles has reducedby 21.58% at Rs.6546.01 lakhs compared to Rs.8347.57 lakhs of the previous year. Salesincome from Ceramic tile segment including Gujarat Wall tiles segment has increased by12.55% at Rs.680.12 lakhs compared to Rs.604.24 lakhs of the previous year. The Granitedivision did not produce any slabs during the year due to non-availability of qualityblocks.
In spite of the above hurdles the Company has managed to earn a profit of Rs.239.37lakhs (Previous year Rs.157.03 lakhs) which leads to an increase of 52.43% as compared toprevious year 2015-16.
Since the Profits of the Company is minimal and your Directors intent to reduce thefinance cost as early as possible. Your Directors have decided to skip the dividend forthe year 2016-17. Your directors are working to wards achieving higher results during theforth coming years.
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO IEPF
During the year an amount of Rs.468698.40 lying in the unpaid dividend account of theyear 2008-09 was transferred to IEPF account.
BRIEF DESCRIPTION OF THE COMPANY'S WORKING DURING THE YEAR / STATE OF COMPANY'S AFFAIRPROSPECTS
All the Vitrified and Ceramic Tiles are value-added products in the urban areas. Thereis a increasing penetration of Ceramic tile as a preferred option in rural areas. Risingawareness towards personal hygiene along with massive schemes launched by the Governmentof India the industry is expecting a positive growth in the near future. India's domesticconsumer market increase in working-age population and urbanisation is envisaged to augurwell for the aesthetically and technically superior high-end Ceramic tiles in the urbansegment than in the past. Our Company has started producing the Vitrified tiles of doubleand multi charge tiles in its new unit and our Karaikal unit is functioning with improvedgas allocation. The new unit at Sira Taluk Tumkur District may fetch better market forqua lity products. The Company is expecting a better growth in the near future.
The Showroom sales is yielding satisfactory return in major urban and rural areas. Theplaces where showrooms are not feasible the Company has expanded the dealership network.Depots located at various parts of the Country are providing quick services to thecustomers. The Company is focusing on Brand building according advertisements are given onregular basis to increase the sales. The Company continues the strategy of both projectand retail marketing. The incentives based payment to the marketing staff are fetchingbetter returns to the company. Advertisements in newspapers and on hoardings are given onregular basis. Your Directors are hopeful of achieving better results in the year 2017-18.
RESEARCH AND DEVELOPMENT
The R & D wing of the Company has successfully developed new varieties of tileswith improved body matrix quality and cost effective product range. Efforts to upgradevariety body matrix shades and designs to suit market sentiments is being consistentlypursued. R&D wing is also exploring ways and means to improve operating efficiency.
DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES
The Company does not have any Subsidiary Joint ventures and associate Companies.
The net movement in the major reserves of the Company for FY17 and the previous yearare as follows :
| || ||(Rs. In Lacs) |
|Particulars ||FY17 ||FY16 |
|Capital Reserve ||15.02 ||15.02 |
|Capital Redemption reserve ||1600.00 ||1600.00 |
|Securities premium account ||11676.73 ||11184.53 |
|General Reserve ||12795.85 ||12795.85 |
|Profit and Loss Account ||2052.51 ||1813.14 |
CHANGE IN THE NATURE OF BUSINESS IF ANY
No Change in the nature of the business of the Company done during the year.
A statement indicating development and implementation of a risk management policy forthe Company including identification therein of elements of risk if any which in theopinion of the Board may threaten the existence of the company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of Section 149 of the Companies Act 2013 the Members at their meeting heldon 27th September 2014 appointed the following as Independent Directors of the Company :
Shri K Sunder Naik (upto 11-09-2016)
Dr. S S Hiremath
Shri Annappayya K
Shri Sankappa Keremane Shetty
Smt Sarvani Alva
In terms of Section 203 of the said Act the following were designated as KeyManagerial Personnel of your Company by the Board:
Shri Satish Rama Shetty Managing Director
Shri N M Hegde Chief Financial Officer
Shri Lakshmisha Babu S Company Secretary
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the Act and SEBI (LODR)Regulation 2015.
EVALUATION OF THE BOARD'S PERFORMANCE
Your Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which include criteria for performanceevaluation of the non-executive directors and executive director. Pursuant to theprovisions of Companies Act 2013 and Regulation 25 of the Listing Regulations the Boardand the Nomination and Remuneration Committee have carried out annual performanceevaluation of its own performance the directors individually as well the evaluation ofthe working of its Audit Nomination & Remuneration and Stakeholder Committee. EachBoard member completed a questionnaire providing feedback on the functioning and overallengagement of the Board and its committees on various parameters such as the compositionexecution of specific duties quality quantity and timelines of flow of informationdeliberations at the meeting etc. Besides this one meeting of the individual directorswith the Chairman of the Board was also conducted as a part of self-appraisal and peergroup evaluation. The Directors were also asked to provide their valuable feedback andsuggestions about the overall functioning of the Board and its committees. In a separatemeeting of Independent Directors performance of non-Independent Directors and the boardas a whole was evaluated. Performance evaluation of Independent Directors was done by theentire Board excluding the Independent Director being evaluated.
PARTICULARS OF EMPLOYEES AND REMUNERATION
The information required under Section 197(12) of the Act read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is appendedhereto and forms part of this Report as Annexure-1. The information required under Rule 5(2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided in the Annexure forming part of this Report. None of the Company'semployees were covered by the disclosure requirement. In terms of the first proviso toSection 136 of the Act the Report and Accounts are being sent to the members excludingthe aforesaid Annexure. Any member interested in obtaining the same may write to theCompany Secretary at the Registered Office of the Company. None of the employees listed inthe said Annexure is related to any Director of the Company.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
Six Board Meetings were held during the year. For further details please refer Reporton Corporate Governance.
COMMITTEES OF THE BOARD
The Committees of the Board focus on certain specific areas and make informed decisionsin line with the delegated authority. The following substantive Committees constituted bythe Board function according to their respective roles and defined scope:
Audit Committee of Directors
Nomination and Remuneration Committee
Stakeholders Grievance Committee
Executive Committee of the Board
Details of composition terms of reference and number of meetings held for respectivecommittees are given in the Report on Corporate Governance.
The familiarization programs for Independent Directors were conducted by the PracticingChartered Ac countant Mr. B.C.Shetty and other Company's professionals during the year.
The Board has laid down separate Code of Conduct for Non-Executive Directors and SeniorManagement personnel of the Company and the same are posted on the Company's website. AllBoard Members and Senior Management personnel have affirmed compliance with the Code ofConduct. The Managing Director has also confirmed and certified the same. Thecertification is enclosed at the end of the Report on Corporate Governance.
THE DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO ARE AS FOLLOWS :
The information required to be furnished pursuant to Section 134(3) (m) of theCompanies Act 2013 is appended hereto and forms part of this Report as Annexure-2.
REMUNERATION POLICY FOR THE DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
In terms of the provisions of Section 178(3) of the Companies Act 2013 and SEBI (LODR)Regulation 2015 the Nomination and Remuneration Committee (NRC) is responsible forformulating the criteria for determining qualification positive attributes andindependence of a Director. The NRC is also responsible for recommending to the Board apolicy relating to the remuneration of the Directors Key Managerial Personnel and otheremployees.
In line with this requirement the Board has adopted the Policy on Board Diversity andRemuneration Policy for Directors Key Managerial Personnel and other employees of theCompany. The copy of policy's are available on the company website www.naveentiles.co.in
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year wereon arm's length basis and were in the ordinary course of business. The Company present astatement of all related party transactions before the Audit Committee. Prior approval ofthe Audit Committee is obtained for the transactions which are foreseen and repetitivenature. Further there are no significant related party transactions during the year underreview made by the Company with promoters Directors Key Managerial Personnel ordesignated persons which may have a potential conflict with the interest of the Company ata large. The details of which is given as AOC-2 in Annexure-3.
Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
LOANS SECURITIES OR INVESTMENTS
During the year under report the Company has not provided any Loans guarantees andsecurities under section 186 of the Companies Act 2013. The details of investments areprovided in the schedules to the financial statements.
EXTRACT OF THE ANNUAL RETURN
Pursuant to Section 92 of the Companies Act 2013 and Rule 12 of The Companies(Management and Administration) Rules 2014 the extract of Annual Return in Form MGT-9is appended hereto and forms part of this R eport as Annexure-4.
The present auditors M/s. M A Narasimhan & Co. Chartered Accountants (ICAIRegistration No.002347S) Bengaluru will be holding office as Auditors of the Companyuntil conclusion of the ensuing Annual General Meeting. The said Auditors would vacateoffice as Auditors of the Company at the conclusion of ensuing Annual General Meetingpursuant to section 139(2)(b) of the Companies Act 2013 dealing with compulsory rotationof auditors.
Purusant to applicable provisons of the Companies Act 2013 on the recommendation ofthe Audit Committee it is proposed to appoint M/s. K.A. Raghupathy & Co. CharteredAccountants Bengaluru (Firm Registration No. 0115735) having office at No.81 "SRIGURUKRUPA" 2 nd Main 3rd A Cross Nanjappa LayoutVidyaranyapura Bengaluru - 560 097 as Statutory Auditors of the Company to hold officefrom conclusion of this 34th Annual General Meeting of the Company until conclusion of39th Annual General Meeting. Necessary resolution for the appointment of M/s. K.A.Raghupathy & Co. Chartered Accountants is included in the Notice of the AnnualGeneral Meeting.
No qualification adverse remarks or disclaimer have been made by the StatutoryAuditors with regard to the financial statements for the financial year 2016-17. TheStatutory Auditors of the Company have not reported any fraud as specified under Section143(12) of the Companies Act 2013.
INDIAN ACCOUNTING STANDARDS
Pursuant to the notification issued by the Ministry of Corporate Affairs datedFebruary 162015 relating to the Companies (Indian Accounting Standard) Rules 2015 yourCompany has adopted "IndAS" with effect from April 01 2017. The implementationof IndAS is a major change process for which the Company had dedicated considerableresources. The impact of the Change on adoption of IndAS has been assessed and the Companyis ready to adopt IndAS.
SECRETARIAL AUDIT REPORT
Pursuant to the Provisions of Section 204 of the Companies Act2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules2014 the Company hasappointed Hemanth & Co. Practicing Company Secretaries to undertake the secretarialaudit of the Company. The Secretarial Audit Report is appended hereto and forms part ofthis Report as Annexure-5.
Pursuant to relevant regulations of SEBI (LODR) Regulations 2015 and relevant sectionsof the Companies Act 2013 a Management Discussion and Analysis Statement Report onCorporate Governance and Auditors' Certifi cate are included in the Annual Report. TheCompliance certificate from the auditors regarding compliance of conditions of CorporateGovernance as stipulated in SEBI (LODR) Regulation 2015 from the period 01.04.2016 to31.03.2017 is annexed with the report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behavior. In line with the Code of Conduct any actual or potential violationhowsoever insignificant or perceived as such would be a matter of serious concern for theCompany. The role of the employees in pointing out such violations cannot be undermined.Pursuant to Section 177(9) of the Companies Act 2013 a vigil mechanism was establishedfor directors and employees to report to the management instances of unethical behavioractual or suspected fraud or violation of the Company's code of conduct or ethics policy.The Vigil Mechanism provides a mechanism for employees of the Company to approach theChairman of the Audit Committee of the Company.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROL
Pursuant to Sec.134(5)(c) your Company has proper and adequate system of internalcontrols. All transactions are authorized recorded and reported correctly. In additionthere are operational controls and fraud risk controls covering the entire spectrum ofinternal financial control. The ERP system which the company has implemented has helped infurther strengthening the Internal Financial Control.
With a view to familiarize the Independent Directors with the company's operations asrequired under listing regulation 25(7) the company has held various programmes ongoingbasis which interalia includes various presentation by practicing professionals businessheads and KMPs of the Company.
During the year the Company has allotted 2140000 Equity Shares and 4620000Convertible Share Warrants to Promoter/Promoter Group Company Murdeshwar Power CorporationLimited hence the Paid up Equity Share Capital of the Company increased from Rs.4082.17lakhs to Rs.4296.17 lakhs.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company does not have net worth of rupees five hundred crore or more or turnoverof rupees one thousand crore or more or a net profit of rupees five crore or more duringany financial year. Henceforth the disclosures as per Rule 9 of Companies (CorporateSocial Responsibility Policy) Rules 2014 shall be made as and when the Company meets thecriteria specified above.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code. All Board Directors and the designated employees haveconfirmed compliance with the Code.
DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutorysecretarial auditors and external consultants an d the reviews performed by Management andthe relevant Board Committees including the Audit Committee the Board is of the opinionthat the Company's Internal financial controls were adequate and effective during thefinancial year 2016-17.
Accordingly pursuant to Section 134(5) of the Companies Act2013 the Board ofDirectors to the best of their knowledge and ability confirm that:
a. In the preparation of the annual accounts the applicable accounting standards havebeen followed and that there are no material departures there from;
b. They have in the selection of the accounting policies consulted the StatutoryAuditors and have applied them consistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit of the Company for that period;
c. They have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
d. They have prepared the annual accounts on a going concern basis;
e. They have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
f. They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Your Directors acknowledge with appreciation the support and co-operation extended tothe Company by the Central Government Government of Karnataka Bankers FinancialInstitutions Dealers Members and employees of the Company. Your Directors also wish toplace on record their appreciation for the co-operation extended by M/s. SACMI Italy andM/s. BRETON Italy.
|Italy and M/s. BRETON Italy. ||for and on behalf of the Board of Directors |
| ||Dr. R. N. SHETTY |
|Place : Bengaluru ||Chairman |
|Date : July 31 2017 ||(DIN 00038810) |