Your Directors have pleasure in presenting 58th annual report of yourCompany for the financial year ended 31 March 2017.
1. Financial Results:
| || || |
(Rs. in Lakhs)
|Particulars || |
|2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Income ||35722.76 ||29930.29 ||35154.45 ||29707.55 |
|Profit before depreciation and tax ||25256.79 ||21744.05 ||25185.28 ||21742.89 |
|Depreciation ||812.97 ||670.13 ||812.97 ||670.13 |
|Profit Before Taxes ||24443.82 ||21073.92 ||24372.31 ||21072.76 |
|Provision for Taxes ||7448.87 ||6659.12 ||7430.13 ||6659.12 |
|Net Profit after Taxes ||16994.95 ||14414.80 ||16942.18 ||14413.64 |
|Balance brought Forward ||2376.30 ||1252.32 ||2388.15 ||1265.33 |
|Amount available for appropriations: ||19371.26 ||15667.12 ||19330.33 ||15678.97 |
|Appropriations: || || || || |
|1. Dividend ||1550.12 ||1197.83 ||1550.12 ||1197.83 |
|2. Tax on Dividend ||315.57 ||243.85 ||315.57 ||243.85 |
|3. Transfer to General Reserve ||19321.25 ||11849.14 ||19280.33 ||11849.14 |
|4. Surplus carried forward to Profit and Loss Account ||50.00 ||2376.30 ||50.00 ||2388.15 |
|Earning Per Share (Basic) (in Rs.) ||120.60 ||102.29 ||120.23 ||102.28 |
|Earning Per Share (Diluted) (in Rs.) ||120.60 ||102.29 ||120.23 ||102.28 |
2. Review of Operations:
Your Company achieved a consolidated turnover of Rs. 35722.76 lakhs an increase of19.35% over the previous year consolidated turnover of Rs.29930.29 lakhs.
Consolidated profit before tax was Rs.24443.82 lakhs as compared to Rs. 21073.92lakhs in previous year an increase of 15.99%.
Consolidated earnings per share amounted to Rs.120.60 (previous year Rs.102.29).Company's reserves increased from Rs. 66711.90 lakhs to Rs. 83692.64 lakhs.
Your Directors are pleased to recommend a dividend of 110% per equity share amountingto Rs.11 per equity share (previous year Rs.8.50) of Rs.10 each as dividend for the yearended 31 March 2017 for the approval of shareholders at the ensuing Annual GeneralMeeting.
Dividend Distribution Policy
As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the top 500 listed Companies shall formulate a Dividend DistributionPolicy. This policy is available on the Company's website at www.nesco.in
4. Sub Division of Equity Shares:
Your Company in its Board meeting held on 29 May 2017 has approved sub-division ofequity shares from Rs.10 to Rs.2 per share which is subject to the approval of theshareholders at the ensuing annual general meeting. The sub-division of equity shares ifapproved by the shareholders will initiate after 15 September 2017.
MANAGEMENT DISCUSSION AND ANALYSIS:
i) Nesco IT Park:
Income for the year was Rs. 14191.14 lakhs (previous year Rs. 12440.45 lakhs) anincrease of 14.07%.
Your Company has started construction of IT building 4 having built up area of approx.1700000 sq. ft. So far Rs. 25610.04 lakhs has been spent on IT building 4. The buildingis precertified Platinum rated under the LEED India for Core & Shell rating systemfrom the Indian Green Building Council. IT buildings 1 2 and 3 are fully occupied by wellrenowned companies. Hall 3 provides Incubation Centre; and Child Care Centre for childrenof employees working in Nesco IT Park.
ii) Bombay Exhibition Centre:
Income for the year was Rs.13276.56 lakhs compared to Rs.11183.36 lakhs in theprevious year an increase of 18.72%.
An amount of Rs. 345.51 lakhs was spent during the year for additional space addingmore facilities and improving infrastructure.
During the year 109 exhibitions and conventions were held in our Centre out of which27 were new organizers. Some of the new clients include Business Live RadeecalExhibitions I for Africa Beyond Infotainment Times Conferences Ltd. SumansaExhibitions. Narayan Seva Sansthan had this year organized wedding ceremony for 101couples at Bombay Exhibition Centre.
Our Centre continues to bring more visitors to Mumbai than any other venue.
Your Company has decided to build a new world class exhibition and convention centerwith integrated facilities. Plans for construction of first phase admeasuring 1500000sq. ft. are being finalized.
iii) Nesco Hospitality Private Limited:
Nesco Hospitality Private Limited wholly owned subsidiary of your Company earnedrevenue of Rs. 568.32 lakhs as compared to Rs. 222.75 lakhs during the previous yearprofit before tax was Rs. 71.52 lakhs
The Company has commissioned two food courts and started food services within NescoComplex with leading international and national food brands and is targeting to cater tothe growing demand of quality food services from the exhibition organizers exhibitorsvisitors and employees working in Nesco IT Park.
Your Company is now setting up a large kitchen facility in area admeasuring approx.24000 sq. ft. This facility is expected to be operational from July 2017. The facilitywill have capacity to produce about 15000 meals per day. An investment of about Rs. 15Crores is being made in this new world class hygienic kitchen facility.
In the year under review Indabrator income was Rs. 3388.52 lakhs (previous year Rs.2793.44 lakhs) an increase of 21.30%. Indabrator has recently won several largecontracts and has completed its expansion of machine building division at its VishnoliComplex Gujarat.
Income from investments and other income were Rs. 4298.23 lakhs (previous year Rs.3290.29 lakhs).
Your Company had no debt as on 31 March 2017. Company's liquid resources (fixedmaturity plans mutual funds cash & bank balances) increased by 1.70% to Rs.48680.57 lakhs from Rs. 47866.74 lakhs.
Estimated cost of developments proposed in Nesco IT Park Bombay Exhibition Centre andNesco Hospitality is about Rs.1500 Crores. It is our endeavor to finance these expansionsfrom our own resources without any borrowings and to remain debt free.
Your Company has neither accepted any deposits from the public during the year nor areany deposits outstanding for repayment.
6. Corporate Social Responsibility:
Your Company has undertaken various projects in the field of Education Healthcare andSanitation. Your Company is now supporting expansion of an English Medium Higher SecondarySchool and setting up of a new Surgical ICU.
Your Company is evaluating and will take up more CSR activities in different areas.Annual report of CSR activities is in "Annexure A" and is attached in thisreport.
7. Directors and Key Managerial Personnel:
Mrs. Sudha S. Patel Non-executive Director retires by rotation at the ensuing annualgeneral meeting pursuant to the provisions of Section 152 of the Companies Act 2013 readwith the Companies (Appointment and Qualification of Directors) Rules 2014 and articlesof association of your Company and being eligible has offered herself for reappointment.Her brief resume and other related information has been detailed in the annexure to thenotice.
Mr. Krishna S. Patel was designated as Managing Director of the Company and Mr. SumantJ. Patel was designated as Executive Chairman with effect from 01 August 2016.
Mr. Manu Parpia was appointed as an additional non-executive independent director onthe Board with effect from 10 May 2017. He shall be appointed as an independent directorfor a period of five years subject to approval of the shareholders in the ensuing AnnualGeneral Meeting.
8. Board Evaluation:
Pursuant to the provisions of the Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations (including any statutory modification(s) orre-enactment(s) for the time being in force) the process for evaluation of the annualperformance of the Directors Board and Committees was carried out. The criteria appliedin the evaluation process are detailed in the Corporate Governance Report which forms partof this report.
Regulation 17 of the Listing Regulations mandates that the Board shall monitor andreview the Board evaluation framework. The Companies Act 2013 states that a formal annualevaluation needs to be made by the Board of its own performance and that of its committeesand Individual Directors.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The evaluation process has been explained inthe Corporate Governance Report section in this annual report.
9. Training of Independent Directors:
Your Company's independent directors are highly qualified and have been associated withcorporate and business organizations. They have been associated with your Company sincelast several years hence they all understand Company's business and activities very wellhowever pursuant to Regulation 4 of the Listing Regulations the Board has shown all theIndependent directors Company's business and manufacturing activities and were alsointroduced to Company's staff. They were also introduced to new activities of theSubsidiary Company namely the Central Processing Unit (Kitchen Facility).
10. Declaration by Independent Directors:
All independent directors have given declarations that they meet the criteria ofindependence as prescribed under the provisions of the Companies Act 2013 and Regulation16(1)(b) of the Listing Regulations.
11. Number of Board and Committee Meetings:
Pursuant to Section 134(3)(b) details of Board Meetings held during the year are givenin the Report on Corporate Governance.
During the year four board meetings and four audit committee meetings were helddetails of which are given in the Corporate Governance Report. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013.
A separate meeting of independent directors pursuant to Section 149 (7) read withSchedule VI of the Companies Act 2013 and Regulation 25 was held on 30 May 2016.
12. Policy on Directors appointment and Remuneration and other details:
The Company's policy on Directors appointment and remuneration and other mattersprovided in Section 178 (3) of the Act has been disclosed in Corporate Governance Reportwhich forms part of Annual Report.
13. Director's Responsibility Statement :
In accordance with the provisions of Section 134(5) of the Companies Act 2013 yourDirectors confirm that: -
a) in the preparation of the annual accounts for the financial year ended 31 March2017 the applicable accounting standards and Schedule III of the Companies Act 2013have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of your Company as on 31 March 2017 and of the profitand loss of the Company for the financial year ended 31 March 2017;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) proper systems to ensure compliance with the provisions of all applicable laws werefollowed and that such systems were adequate and operating effectively.
14. A. Auditors and Auditors Report:
The Board of Directors in their meeting held on 23 May 2015 on the basis ofrecommendations of the Audit Committee in accordance with the provisions of Section139(1) of the Companies Act 2013 had appointed M/s Manubhai & Shah LLP to act asthe Statutory Auditors of your Company till the conclusion of the 60th AnnualGeneral Meeting. The Company has received certificate from the Auditors to the effect thatthe appointment is in accordance with the limits specified under Section 139 (9) of theCompanies Act 2013.
The Board of Directors in their meeting held on 29 May 2017 ratified the appointmentof Auditors for the financial year 2017-18.
The Auditors Report for the financial year 2016-17 does not contain any qualificationreservation or adverse remark.
B. Secretarial Audit and Secretarial Audit Report:
In terms of Section 204 of the Companies Act 2013 the Board of Directors at itsmeeting held on 29 May 2017 appointed Ms. Neeta H. Des ai of M/s. ND & AssociatesPractising Company Secretary as the Secretarial Auditor to conduct an audit of theSecretarial records for the financial year 2017-18. The Secretarial Audit Report for thefinancial year 2016-17 is annexed herewith as "Annexure B." The SecretarialAuditors Report does not contain any qualification reservation or adverse remark.
15. Particulars of Loans Guarantees and Investments:
The particulars of loans guarantees and investments made by the Company pursuant toSection 186 of the Companies Act 2013 have been disclosed in the financial statementsforming part of Annual Report.
16. Internal Financial Control Systems:
Your Company has well laid out policies on financial reporting asset managementadherence to Management policies and also on promoting compliance of ethical and welldefined standards. The Company follows an exhaustive budgetary control and standardcosting system. Moreover the management team regularly meets to monitor goals and resultsand scrutinizes reasons for deviations in order to take necessary corrective steps. TheAudit Committee which meets at regular intervals also reviews the internal control systemswith the Management and the internal audito' The internal audit is conducted at variouslocations of Company and covers all key areas. All audit observations and follow upactions are discussed with the Management as also the Statutory Auditors and the AuditCommittee reviews them regularly.
17. Vigil Mechanism/Whistle Blower Policy:
The Board of Directors has formulated a Whistle Blower Policy which is in compliancewith the provisions of Section 177(10) of the Companies Act 2013 and Regulation 22 of theListing Regulations. The Company has a vigil mechanism to deal with fraud andmismanagement if any. The policy is on the website of the Company.
18. Safety Health and Environment:
Your Company recognizes its role in health and safety as well as its responsibilitytowards environment and society. In fact your Company's goals are: no accidents noinjuries to people and no damage to environment. Safety and security of personnel assetsand environmental protection are also on top of the agenda of the Company at itsmanufacturing facilities.
Clean environment and sustainable development integrated with the business objective isthe focus of the Company. The projects and activities are planned and designed withenvironment protection as an integral part to ensure a safe and clean environment forsustainable development.
19. Corporate Governance:
In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with a certificate from M/s. Manubhai & Shah LLP CharteredAccountants confirming compliance with requirement of corporate governance forms anintegral part of this report.
20. Prevention of Sexual Harassment at Workplace:
As per the requirement of The Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 read with rules made thereunder your Company hasconstituted Internal
Complaints Committee which is responsible for redressal of complaints related to sexualharassment. During the year under review there were no complaints pertaining to sexualharassment.
21. Extract of Annual Return:
Pursuant to Section 134(3)(a) extract of Annual Return in Form MGT- 9 has been annexedherewith as "Annexure C".
22. Particulars of Employees:
The information required under Section 197 of the Companies Act 2013 read with Rule 5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of the Company has been annexed herewith as "Annexure D."
23. Conservation of energy technology absorption foreign exchange earnings and outgo:
The information on conservation of energy and foreign exchange earnings and outgoactivities in accordance with the provisions of Section 134(3)(m)of the Companies Act2013 read with Companies (Accounts) Rules 2014 forms part of the notes to accounts.
24. Subsidiary Company:
During the previous year your Company had entered into the business of food cateringand related services within the Nesco Complex. Nesco Hospitality Private Limited thewholly owned subsidiary of your Company is now operating Food Courts Day Care Centre andGymnasium in Bombay Exhibition Centre and Nesco IT Park. The Company is also in process ofsetting up a world class kitchen facility to cater to the needs of employees working inNesco IT Park and visitors to exhibitions and conventions.
A separate statement containing the salient features of financial statements ofsubsidiary of your Company forms part of consolidated financial statements in compliancewith Section 129 and other applicable provisions if any of the Companies Act 2013.
25. Related Party Transactions:
During the financial year 2016-17 your Company has entered into transactions withrelated parties as defined under Section 2(76) of the Companies Act 2013. Alltransactions with related parties were reviewed and approved by the Audit Committee. Allrelated party transactions that were entered into were on an arm's length basis and werein the ordinary course of business.
There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large.
The Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 is set out as "Annexure E" to thisReport.
26. Deposits from Public:
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
27. Business Responsibility Report:
A Business Responsibility Report as per Regulation 34 of the Listing Regulations formspart of this Annual Report.
28. Indian Accounting Standards:
Your Company has adopted Indian Accounting Standard (Ind AS) notified by MCA and therelevant provision of the Companies Act 2013 and the general circulars issued by theMinistry of Corporate Affairs from time to time. The significant accounting policies whichare consistently applied have been set out in the notes to the Financial Statements. Inthe preparation of the financial statements figures of previous year have beenreclassified restated or regrouped wherever necessary to bring it in line with the IndianAccounting Standard (Ind AS).
29. Consolidated Financial Statements:
The consolidated financial statements of the Company are prepared in accordance withapplicable Ind AS notified by Ministry of Corporate Affairs and form part of this annualreport.
Your Directors wish to convey their appreciation for the support extended by theshareholders clients and the employees of the Company.
For and on behalf of the Board of Directors
Sumant J. Patel
Mumbai 29 May 2017.