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Nitin Fire Protection Industries Ltd.

BSE: 532854 Sector: Engineering
NSE: NITINFIRE ISIN Code: INE489H01020
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VOLUME 191267
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OPEN 6.90
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VOLUME 191267
52-Week high 32.35
52-Week low 3.60
P/E
Mkt Cap.(Rs cr) 195
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Nitin Fire Protection Industries Ltd. (NITINFIRE) - Director Report

Company director report

To

The Members

Nitin Fire Protection Industries Limited

Your Directors have pleasure in presenting their 22ndAnnual Report on the business andoperations of the Company and the accounts for the Financial Year ended 31st March 2017.

1. Financial summary or highlights/Performance of the Company (Standalone &Consolidated):

(Rs. in lakhs)

Particulars 2016-17 2015-16 2016-17 2015-16
Standalone Standalone Consolidated Consolidated
Sales and other Income 27167.14 47130.03 133097.07 149424.68
Profit Before Interest and Depreciation (4932.82) 4907.09 8307.69 18644.43
Finance Charges 4266.95 3471.86 6029.61 5250.05
Gross Profit (9199.77) 1435.23 2278.08 13394.38
Provision for Depreciation & amortization expense 469.76 655.91 2470.68 3287.28
Net Profit Before Tax (9669.53) 779.32 (192.60) 10107.10
Provision for income tax including deferred tax & wealth tax (27.20) 208.98 (36.78) 227.30
Tax adjustments of earlier years(net) - 26.47 - 26.35
Net Profit After Tax (9642.33) 543.87 (155.82) 9853.45
Share of (Loss) from an Associate (2637.81)
Profit/(Loss) for the year (9642.33) 543.87 (2793.63) 9853.45
Balance B/fd from earlier year 7300.10 6756.23 43645.29 33791.84
Balance available for appropriation (2342.23) 7300.10 40851.66 43645.29
Surplus carried to Balance Sheet. (2342.23) 7300.10 40851.66 43645.29

2. Review of Operations:

The total income during the year ended March 31 2017 on standalone basis stood at'27167.14 lakhs as compared to the previous year of '47130.03 lakhs. The net loss forthe year ended March 31 2017 is '9642.33 lakhs as compared to '543.87 lakhs profit forthe previous year. The loss for the year is mainly due to the lower turnover due to thesales returns by overseas clients increase in the finance costs due to non-realization ofreceivables adverse economic scenario write off of '2200.34 lakhs due to slowmoving/non moving stock '3349.00 lakhs on account of provision for doubtful debts'383.40 lakhs on account of provision for diminution in the value of investments '710.18lakhs is due to loss on account of foreign exchange translation.

The total income during the year ended March 31 2017 on consolidated basis stood at'133097.07 lakhs as compared to the previous year of '149424.68 lakhs. The net loss forthe year ended March 312017 is '2793.63lakhs as compared to the profit of ' 9853.45lakhs in the previous year.

3. Change in the nature of business:

There is no change in business of the Company during the financial year 2016-17.

4. Dividend:

Due to losses the Directors regret their inability to recommend any dividend for theyear ended 31st March 2017.

5. Reserves:

The Company has incurred loss of ('9642.33) lakhs and hence no transfer to the GeneralReserve arises in the current year.

6. Share Capital:

There were no changes in the share capital during the financial year 2016-17.

7. Directors Key Managerial Personnel Independent Directors & Compliance Officer:

Mr. Kailat Vaidyanathan (DIN: 00077323) retires by rotation at the forthcoming 22ndAnnual General Meeting of the Company and being eligible offers himself forre-appointment. The Board recommends his re-appointment.

All Independent Directors of the Company have submitted their declarations that theymeet the criteria of independence as provided in section 149(6) of the Companies Act 2013("Act") and Regulation 16(b) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI Listing Regulations 2015").

Mr. Atul Mehta & Mr. Hariharan Iyer were appointed as Additional IndependentDirectors w.e.f. September 1 2017 respectively. The Board also appointed Mr. Mehta asChairman of the Company till the board is complete.

Mr. Ramakant Madhav Nayak Mr. Satish Kumar Dheri and Mr. Krishna Kant JhaNon-executive Independent Directors resigned with effect from November 23 2016 May 262017and September 1 2017 respectively.

8. Particulars of Remuneration to its Employees / Directors / Key Managerial Personnel

The information required under the provisions of Section 197 of the Act read with Rule5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 in respect of employees of the Company and Directors is furnished below:

Name Designation Remuneration - FY 2016-17(Rs.) Remuneration - FY 2015-16(Rs.) Increase / (decrease) in remuneration from previous year (Rs.) Ratio/times per Median of employee remuneration (times)
1 2 3 4 5 6 7
1 Partho Roy(*) CEO Project 3673336/- 7701507/- NA 23.92
2 Rahul N. Shah Whole-time Director - KMP 1993400/- 54000/- 1939400/- 16.74
3 Kunal N. Shah Whole-time Director 1979000/- 54000/- 1925000/- 16.74
4 Kamlesh Gandhi CFO - KMP 2139357/- 2184694/- 45337/- 7.39
5 Sraban Kumar Karan CS - KMP 935159/- 162138/- NA 3.17

*Partho Roy resigned with effect from August 31 2016. Increase /decrease for thoseemployees who was for part of the year is not applicable.

Qualifications and experience of the employee Date of commencement of employment Age Last employment held by such employee before joining the Company Nature of employment whether contractual or otherwise Percentage of equity shares held by the employee in the Company within the meaning of clause (iii) of Rule 5(2) Such employee is a relative of any director or manager of the Company and if so name of such director or manager
8 9 10 11 12 13 14
Bachelor in Computer Science and 31 Years 01.12.2012 51 New Age LLC UAE Contractual NIL No
Graduate in Commerce & Diploma in Business Management and 18 years 14.08.2014 39 Nitin Fire Protection Ind. Ltd. Contractual 6.44% (18831333 shares) Mr. Nitin M. Shah & Mr. Kunal N. Shah Directors are relatives
Bachelor in Electronic and Tele Communications and more than 3 years 14.08.2014 33 Nitin Fire Protection Ind. Ltd. Contractual 10.49% (30673000 shares) Mr. Nitin M. Shah & Mr. Rahul N. Shah Directors are relatives
C. A. and 36 years 17.06.2013 57 Greshma Shares & Stocks Ltd. Contractual NIL No
A.C.S. and 10 years 19.01.2016 40 Mehta & Mehta Company Secretaries Contractual NIL No

Other Disclosures pursuant to the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014:

Requirements Disclosure
1 Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year. Refer to the particulars of remuneration to Employees and Director. For this purpose sitting fees paid to the Directors have not been considered as remuneration.
2 Percentage increase in remuneration of Director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year. The salary of the CFO was increased by 5% during the year. During the year the directors were paid the salary as per the resolution approved at AGM.
3 Percentage increase in the median remuneration of employees in the financial year. 4.78
4 Number of permanent employees on the rolls of Company as on 31st March 2017. 138
5 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. Average percentile increase in the salary of employees other than managerial personnel is approximate 14% Average percentile increase in the salary of managerial personnel is approximate 14%
6 Affirmation that the remuneration is as per the remuneration policy of the Company. The remuneration is as per the remuneration policy of the Company.

Remuneration Policy:

Pursuant to the provisions of Section 178(3) of the Act the Board has on therecommendation of the Nomination & Remuneration Committee framed a remuneration policyon March 26 2016 for selection and appointment of Directors Senior Management and theirremuneration-

• Remuneration to Key Managerial Personnel and Staff is industry driven in whichit is operating taking into account the performance leverage and factors such as toattract and retain qualified professional and talent.

• For Directors it is based on the shareholders' resolutions provisions of theCompanies Act 2013 and Rules framed therein and guidelines issued by the CentralGovernment and other authorities from time to time.

Managerial Remuneration:

The remuneration paid to the whole-time directors has been provided in MGT-9(Annexure-III of the Director's Report).

The Company pays sitting fees to all the Independent Directors for attendance in themeetings of the Board of Directors and the Audit Committee constituted by the Board ofDirectors of the Company.

9. Meetings:

During the year ended 31st March 2017 the Board of Directors had met 6 (six) times on30.05.2016 03.06.2016 08.08.2016 06.09.2016 12.11.2016 and 11.02.2017.

6 (six) Audit Committee meetings were held on 30.05.2016 03.06.2016 08.08.201606.09.2016 12.11.2016 and 11.02.2017 for the year ended on March 312017. Nomination andRemuneration Committee meetings were held on 30.05.2016 and 11.02.2017 for 2 (two) times.There were 1 (one) Corporate Social Responsibility Committee meeting on 11.02.2017 and 2(two) Independent Directors' meetings on 30.05.2016 and 11.02.2017. Stakeholders'Relationship Committee meetings were held on 30.05.2016 and 11.02.2017 for 2 (two) timesand Risk Management Committee meeting was held on 11.02.2017 for One (1) time during theyear ended 31st March 2017. The meetings of Board and Audit Committee on 30.05.2016 wereadjourned to 03.06.2016.

The details of which are given in the Corporate Governance Report. The intervening gapbetween two consecutive Board meetings & Audit Committee Meetings respectively werewithin the period prescribed under the Companies Act 2013.

The recommendation by the Audit Committee as and when made to the Board had beenaccepted by it.

10. Board Evaluation:

In line with the provisions under the Companies Act 2013 SEBI Regulations theevaluation of the Board Committee(s) and Individual Directors were made by the Board attheir meeting held on February 11 2017.

The evaluation questionnaires were circulated to all the directors along with agenda.It was consisting of three parts as follows:

BOARD EVALUATION;

DIRECTORS' SELF EVALUATION;

COMMITTEE EVALUATION.

Independent Directors (IDs) reviewed the performance of the non-independent directors(including WTD) the Chairman and the Board (as a whole).

The evaluation questionnaires from the Chairman of the Board Mr. Nitin Shah with hissignature(s) and remarks had not been received for placing before the IndependentDirectors at their meeting.

The Nomination & Remuneration Committee chaired by Mr. S. K. Dheri had discussedwith the Directors of the Company on overall board effectiveness.

The Board discussed overall performance of Board individual directors (including IDs)and committees of Board.

After a joint discussion the Chairpersons of the meeting of the IndependentDirectors' Nomination & Remuneration Committee and Board expressed satisfaction onthe evaluation of all the directors and overall performance of Board individual directors(including IDs) and committees of Board except Mr. Nitin M. Shah the Non-executivedirector of the Company whose evaluation remained pending till the receipt of theevaluation questionnaires duly signed.

The Board noted the non-receipt of the questionnaires from the Chairman of the BoardMr. Nitin Shah as he could not be present at the meeting.

11. Details of Subsidiary/Joint Ventures/Associate Companies:

Pursuant to sub-section (3) of section 129 of the Act the statement containing thesalient features of the financial statement of a Company's subsidiary(ies) associateCompany(ies) and joint venture(s) is given in Form AOC-1 as Annexure - I [Performance andfinancial position of the subsidiaries included in the consolidated financial statement].

Further the Annual Accounts and related documents of the subsidiary Company(ies) shallbe kept open for inspection at the Registered Office of the Company. The Company will alsomake available copy thereof upon specific request by any Member(s) of the Companyinterested in obtaining the same. Further pursuant to Accounting Standard AS-21 issued bythe Institute of Chartered Accountants of India Consolidated Financial Statementspresented by the Company in this Annual Report include the financial information of itssubsidiary(ies).

12. Auditors:

Pursuant to the provisions of section 139 of the Act and the rules framed thereafterM/s. Haribhakti & Co. LLP (FRN - 103523W/ W-100048) and Deloitte Haskins & SellsLLP Chartered Accountants (FRN -117366W / W-100018) were appointed as joint statutoryauditors of the Company from the conclusion of the twentieth annual general meeting (AGM)of the Company held on September 21 2015 till the conclusion of the twenty fifth AGM tobe held in the year 2020 subject to ratification of their appointment at every AGM.

One of the joint statutory auditors of the Company i.e; Deloitte Haskins & SellsLLP Chartered Accountants (Firm Registration Number 117366W/W-100018) has resigned w.e.f.the Statutory Audit of the Company for the Financial Year ended on March 312017 videtheir resignation letter dated May 17 2017 due to the limitation of time.

The Company has requested Haribhakti & Co. LLP vide the letter dated May 22 2017to provide the Confirmation satisfying criteria u/s. 141 of the Companies Act 2013 to putbefore the Audit Committee and Board for their recommendation to the shareholders of thecompany for ratification of appointment of auditors till the next annual general meetingto be held in the year 2018.

The Company received letter dated 24th May 2017 from Haribhakti & Co. LLP givingtheir consent to ratification for their re-appointment as Statutory Auditors for the yearended 31st March 2018. The Board recommends the resolution No. 3 of the Notice of the AGMfor the approval of the Members of the Company.

Audit Report: The Auditors' qualifications and reply of the management are as under:

Basis of Qualified opinion of Statutory Auditors' on Standalone Financial Statement:

a) Qualification in the Statutory Audit Report:

Note (a) of Statutory Audit Report describing the reasons for not recognizing provisionfor a claim of ' 50133481/- by a Bank with respect to a derivative contract entered intoby its erstwhile subsidiary Company the liability of which is taken by the company. Thecompany has filled the petition against the same. Pending final outcome of the matter weare unable to comment on the extent of provision required if any in this regard.

Management's Reply on Qualification in the Statutory Audit Report:

Consequent to part sale of equity stake in an erstwhile subsidiary in December 2010the Company has taken over an outstanding claim of a derivative contract amounting to'50133481/- (excluding interest). Based on a legal opinion the Company has filed apetition in the Hon'ble High Court of Bombay challenging the legality of the contract.Pending decision no provision is made in the books of account for this claim.

b) Qualification in the Statutory Audit Report:

Note (b) of Statutory Audit Report describing the reasons for not recognizing provisionfor diminution in the value of long term investment in equity shares of Worthington NitinCylinders Private Limited (WNCPL) aggregating '419504163/- as at March 31 2017. In theabsence of any assessment of the fair value of the investment as required under AccountingStandard 13 ‘Accounting for Investments' and audited financial statements of WNCPLfor the period subsequent to March 312015 we are unable to comment on the diminution ifany on the carrying amount of the investment as at March 31 2017.

Management's Reply on Qualification in the Statutory Audit Report:

Worthington Nitin Cylinders Private Limited (WNCPL) is our Associate Company and basedon the valuation of the fixed assets of WNCPL from an independent valuer the Company ishopeful that impairment if any will not be material and if any such thing is noticed infuture we will provide for the same.

c) Qualification in the Statutory Audit Report:

Note (c) of Statutory Audit Report describing the reason for not providing theimpairment in the carrying value of claims receivable shown under other current assetswhich is its share of costs incurred in an oil block exploration operated by Gas Authorityof India Limited (GAIL) amounting to '2263.73 lakhs. The Company and GAIL are engaged inarbitration proceedings and pending the final outcome of such proceedings we are unable tocomment on the extent of impairment required if any on the carrying amount as at31.03.2017.

Management's Reply on Qualification in the Statutory Audit Report:

The Company and GAIL are engaged in the legal proceedings for noncompliance of certainterms of Joint Operating Agreement as entered into. The Company believes that it will beable to recover its entire investment amount of investments hence no impairment isconsidered necessary

d) Qualification in the Statutory Audit Report:

Note (d) of Statutory Audit Report describing the export trade receivables amounting to' 16698.10 lakhs which are outstanding for long time payments for which are notforthcoming. We are unable to comment on the recoverability of the same.

Management's Reply on Qualification in the Statutory Audit Report:

The company's management is making all efforts to recover the same and is confident ofrecovery but the amount cannot be ascertained. Hence no provision is considerednecessary.

e) Auditors' Qualification in Internal Financial control report:

In the qualified opinion it is mentioned that material weakness have been identified inthe operating effectiveness of Company's internal financial control with respect toprovision for diminution of value of investment ( fully described in note 45 to thestandalone financial statement) provision for a claim on a derivative contract (fullydescribed in note 35 to the standalone financial statements) provision for notrecognizing impairment in the carrying cost claims receivables shown under othernon-current assets (fully described in note 33 to the standalone financial statements)and for Export receivables which are outstanding for a long period of time and paymentsfor which are not forth coming (fully described in note 46 to the standalone financialstatements) determination of terms of sale and purchase of items of inventory andunderlying documentation relating to internal movements of item of inventory and policydocumentation pertaining to human resources and payroll related matters which couldpotentially impact the related account balances when determined and recognized.

Management's reply on Qualification in Internal Financial control report:

The clarification on the provision for diminution in value of investment of WorthingtonNitin Cylinders Private Limited for derivative contract claim for claims receivable andexport receivables not forthcoming have been explained above in audit observation and theCompany has made lot of improvements and initiated further process to implement therequired process and procedures in purchase and sales terms inventory and pay rollrelated matters.

f) Basis of Qualification opinion of Statutory Auditors' on Consolidated FinancialStatement:

The above qualification of Statutory Auditors' on Standalone Financial Statementremains same with respect to their basis of qualified opinion on Consolidated FinancialStatement.

The other qualification is that as more described in the note No. 45 of ConsolidatedFinancial Statement in the absence of audited financial statements of WNCPL for theperiod subsequent to March 312015 we are unable to comment on the diminution if any onthe carrying amount of the investment as at March 312017.

Management's reply on Qualification in Consolidated Financial Statement:

The Company has not received the audited financial statement from our associate companyWorthington Nitin Cylinders Private Limited (WNCPL) after that period as the accounts wereunder compilation.

13. Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed Mr. Kishor V. Ved Practicing Company Secretary to undertakethe Secretarial Audit for the financial year ended 31st March 2017. The report of theSecretarial Auditors in Form No. MR-3 is enclosed as Annexure II to this report. The viewsof Secretarial Auditor and the Management are as follows:

REMARKS OF SECRETARIAL AUDITOR MANAGEMENT'S REPLY
As explained to me by the management pursuant to Regulation 27 of the SEBI LODR Regulations the Internal Audit reports for the quarter ended 30.09.2016; 31.12.2016 & 31.03.2017 has not been submitted to the Board. There was delay in preparation of the internal audit report but the same have been submitted to the Board later.
Pursuant to regulation 27 of the SEBI LODR Regulations 2015 the Statutory Auditors of the Company have issued the modified opinion in respect of the financial statements for the year ended 31.03.2017. The explanations for the same have been mentioned in the directors' report.
Pursuant to regulation 30(6) of the SEBI LODR Regulations 2015 the Company shall disclose to stock exchanges inter-alia details of revision in credit rating. CRISIL vide their report dated 18.07.2016 has revised credit rating of the Company. However the Company has intimated the same to NSE & BSE on 03.08.2016. Hence there was a delay in disclosure for the period from 19.07.2016 to 03.08.2016. The company was not in agreement with the revision of rating as done by rating agency and company was in communication with the rating agency to not to revise the rating by providing necessary explanations etc. Hence the delay happened in reporting.
Pursuant to regulation 30(6) of the SEBI LODR Regulations 2015 the unaudited /auditedfinancial results are submitted to NSE & BSE within 30 minutes of conclusion of board meeting. There was delay in reporting the same for few quarters. The delay has been complied as per the provisions of the SEBI Regulations and circular with the payment of fine to the Stock Exchange(s).
The Company has accepted the unsecured loans to the extent of '.2.87 Crores from Mr. Rahul N. Shah - HUF (i.e. Karta of HUF) as also detailed in the register of contracts maintained by the Companyis not an exempt deposit within meaning of Rule 2(1) (c) (viii) of the Companies (Acceptance of Deposits) Rules 2014 as it is not received from Mr. Rahul N. Shah in his individual capacity as a Director of the company. However as explained to me no balance remains outstanding of Mr. R. N. Shah - HUF as on 31.03.2017. No balance remains outstanding as at 31.03.2017.
The Board of Directors of the Company at their meeting held on 30th May 2017 has noted that pursuant to Section 135 of the Act the Company is required to spend '2495341/- by the end of March 31 2017 as Corporate Social Responsibility expenditure for the financial year 2016-2017 and the same was not been spent by the Company as of 31st March 2017 due to insufficient revenue generation. No CSR expenditure was spent during the year due to the heavy losses of '96 crores incurred for the financial year 2016-17 and the resultant liquidity crunch.
The details regarding changes in shareholding of the one (1) of the promoters and two (2) out of the top ten (10) shareholders of the Companyduring the financial year 2015-16 as required under Section 92 of the Act were not filed in Form MGT-10 with the Registrar of Companies during the financial year. As of now the same falls under exemption and does not require filing according to the amendment issued by MCA.
Pursuant to Regulation 31(2) and 31(3) of the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations 2011 the promoters shall disclose the details of creation or invocation or release of encumbrance within seven working days from the creation or invocation or release as the case may be to stock exchanges and the target Company. During the financial year the promoters viz. Mr. R. N. Shah-HUF & Mr. Nitin Shah have disclosed the details of creation and invocation of their pledge shares to the Company & stock exchanges and it appears that in few instances there was a delay disclosing the details of encumbrance during the financial year. As and when the Company has received the details of encumbrance it is intimated to specified authorities.
The Company has filed the Annual Return (Form MGT-7) and Balance sheet (Form AOC-4-XBRL) for the year ended 31.03.2016 with the Registrar of Companies after delay and the additional fees have been paid thereon. The same has been filed.
The Company has filed the compounding application under FEMA with the Reserve Bank of India for delay in submission of Form ODI for reporting of Capitalization of Expenditure issue of Bank Guarantee and Annual Performance report for 2 years (2013 to 2015) and paid compounding fee on 19.04.2017. RBI has compounded the matter and issued the final order and the same has been complied.

14. Disclosure about Cost Audit:

Pursuant to the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014 as amended from time to time the Companyis not required to carry out the cost audit for the financial year ended 31st March 2017.

15. Internal Audit & Controls:

Pursuant to Section 138 of the Companies Act 2013 read with the Clause 49 of theListing Agreements with Stock Exchanges and the SEBI (LODR) Regulations 2015 the Companyhad appointed M/s. Tolia and Associates Chartered Accountants (Firm RegistrationNumber:111017W) as Internal Auditor of the Company for the financial year 2016-17.

The existing Internal Auditor has expressed to discontinue internal audit of theCompany for the Financial Year 2017-18 due to pre-occupation. The Audit Committee is inthe process of finalizing the appointment of new Internal Auditor at the earliest.

16. Internal Financial Control System:

The Company has overall effective systems and procedure for internal control forensuring orderly and efficient conduct of business safeguarding its assets prevention& detection of frauds & errors & completeness of accounting records and timelypreparation of reliable financial information. These systems are periodically reviewed bythe Audit Committee of the Board of Directors. The Audit Committee and the Board haveensured that the said system is adequate considering the nature of business and size ofthe transactions.

17. Issue of employee stock options:

The Company has not issued / granted any stock options to its employees including itsKey Managerial Personnel and hence the provisions of Rule 12 (9) of the Companies (ShareCapital and Debentures) Rules 2014 are not applicable.

18. Vigil Mechanism / Whistle Blower Policy:

Your Company has put in place Whistle Blower Mechanism. The detailed mechanism is givenin Corporate Governance Report forming part of this report and the same has been posted onthe Company's website at the link http://nitinfire.com/blog/vigil-mechanism/vigil-mechanism.

19. Risk management policy:

The Company has been addressing various risks impacting the smooth operation and thepolicy of the Company on risk management is provided in Management Discussion and Analysissection of the Annual Report.

20. Management Discussion and Analysis:

Macroeconomic development:

In a backdrop of global uncertainty and slowing economic growth India was a brightspot in 2016-2017 with robust macroeconomic fundamentals. The next upcoming importantissue for the world leaders is to protect the world from global warming and destruction ofassets by fire. Globally the Fire protection industry is likely to grow steadily. The yearwas marked by two major domestic policy developments: Implementing the Goods and ServicesTax (GST) and the action to demonetize the ' 500 and ' 1000 bank notes inthe country.

Our business and strong track record

Nitin Fire Protection Industries Limited (NFPIL) is nationally and internationallycertified Fire Protection solutions provider with wide range of systems to protect andprevent from disaster of fire. The Company is providing end to end Fire ProtectionSolutions for various industries like Refineries Control Rooms Power Plants OffshorePlatforms Server Rooms & Data Centres Warehouses Commercial Spaces Hospitals andHospitality sector.

We undertake large scale fire protection system installation and have successfullycompleted 34 years of operation in India and have completed various installations bothdirect & indirect across India.

We have following objectives:-

• Safe living of the society and increasing awareness and education of safety andsecurity at all times.

• To promote and use the advance technology and modern fire safety and protectionsystems.

INDUSTRY STRUCTURE & DEVELOPMENT

The Global Fire & Safety market is steadily increasing and company expects togradually increase its market share. There is a definite demand for Fire Protectionproducts worldwide with newer products under development. The Innovation and ProductDevelopment are the critical aspects of success in the industry.

Financial Performance

Financial performance of the company is given in the director's report.

OUTLOOK OPPORTUNITIES AND CHALLENGES

 

India:

The company had to face the recessionary market conditions and it had a difficult timerealizing the outstanding dues from the customers in the Middle East as well as South EastAsian countries due to slack in the overall business scenario in these countries. Due tothis the company could not meet the commitments of the working capital lenders. Also thereduction in the limit by one of the working capital lenders and the untied portion of theassessed working capital limit further added to the liquidity problems.

Due to the above the company is facing liquidity crunch to run its operations. Theaccounts of the company are monitored by the bank. The company is coordinating with theworking capital lenders for Debt Restructuring program. Hence till that time the companyis not taking any new major contracts/projects. The reduction in the price of oil andslowdown in the Middle East and South East Asian countries have also affected exportbusiness.

GST on most of the Fire protection Equipments and products is 28% which may have shortterm effects on the business. The overall Fire protection business outlook in India seemsgradually improving. Except Industrial clients small units like housing societies andcommercial complexes are expecting to create scope for Fire Protection Industry. TheCompany has over 60 (domestic + international) approvals from various agencies &regulatory bodies required to operate in this business & execute fire protectionsafety & security solution projects across various demographics Hence the Companybelieves that once the proposed debt restructuring programme and liquidity crisis is overthe company will be able to regain its past glory.

 

Global subsidiaries:

Although there is a recessionary trend in the UAE and South East Asia the company ishopeful that there will not be much deep in their turnover and profitability.

There will be large spending asset creation and business development in UAE due to theExpo 2020 and other events. With UAE contributing 76.92% of the total revenue yourCompany is in a position to capture the higher growth potential of the growing markets.Worldwide demand for this segment is expected to grow due to more awareness and concernsfor the safety.

The diversified portfolio of products and its regular up gradation has helped yourCompany to add value in markets of UAE South Asia and Europe.Our strength is ourdetermination and team work.

Human Resources

Employees are the key to achieve the Company's objectives and strategies. Your Companyconsiders human resource to be an important and valuable asset for the organization.Therefore it constantly strives to attract and retain best "Talents" for thepresent and future business requirements and growth. The Company thankfully acknowledgestheir commitment dedication and passion and sacrifices. And the Company expects theircontinuous guidance and support in future. The Company inspires and motivates employeesand promotes teamwork trust and confidence for the organizational growth and to attainthe organizational goals. The Company is focused in providing a meaningful environmentwhich provides them the confidence to realize their potential and motivates employees todevelop themselves personally and professionally. The required Initiatives are taken inthe areas of employee's health safety training and development. Company takes pains tosee that employee's interest and growth are not overlooked.

Risk Management and Internal Control System

The Company has a proper and adequate system of controls in order to ensure that allassets are safeguarded against loss from unauthorized use or disposal. Regular InternalAudit checks are carried out to ensure that the responsibilities are executed effectivelyand that proper and adequate systems are in place and is reviewed by audit committee setby the Management.

Your Company continues to comply with laws regulations and policies as per theregulatory guidelines that are applicable.

The Company monitors principal risks and uncertainties that can impact our ability toachieve strategic objectives. Internal controls are regularly tested for design andoperating effectiveness. The Internal Control System is supplemented by defined riskmanagement programme identifying and mitigating risks which are reviewed by the Board ofDirectors of the Company.

Cautionary Statement

In this Management's Discussion and Analysis and directors' report detailing theCompany's objectives projections estimates expectations or predictions and describingthe Company's strength strategies and estimates are "forward-lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied.

21. Extract of Annual Return

As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in FormMGT 9 as a part of this Annual Report is enclosed as an Annexure III.

22. Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report

There are no adverse material changes or commitments occurring after 31st March 2017which may affect the financial position of the Company or may require disclosure.

23. Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future

Nil.

24. Deposits

The Company has not accepted any deposits during the financial year under review.

25. Particulars of loans guarantees or investments under section 186(4) of theCompanies Act 2013

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the note 34 (I) &(II) to FinancialStatements.

26. Particulars of contracts or arrangements with related parties

Details of transaction with related party have been given in the notes to the financialstatements. There were no transactions required to be reported in form AOC-2.

27. Corporate Governance Certificate

A report on Corporate Governance approved by the Board of Directors of the Company anda certificate from Mr. Kishor V. Ved Practicing Company Secretary Mumbai for the yearended 31st March 2017 are enclosed to the report. The Company has fully complied with theCorporate Governance practices specified under the Companies Act 2013 and the ListingAgreement with the BSE Limited and the National Stock Exchange of India Limited and SEBIListing Regulations 2015.

28. Disclosure as per The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

Under the said Act the Company has set up a "Committee for Harassment of Women atWork Place" to look into complaints relating to sexual harassment at work place ofany women employees. During the year under review the Company has not received anycomplaints of harassment.

29. Conservation of energy technology absorption and foreign exchange earnings andoutgo

Information required under section 134(3)(m) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 with regard to conservation of energy and technologyabsorption and foreign exchange earnings and outgo are provided in Annexure IV attached tothis report.

30. Corporate Social Responsibility (CSR)

The Company has been carrying out Corporate Social Responsibility (CSR) activities.These activities are carried out in terms of Section 135 read with Schedule VII of theCompanies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules2014.

Annual Report on CSR activities is annexed herewith as Annexure V.

31. Directors' Responsibility Statement

To the best of knowledge and belief your Directors make the following statement interms of Section 134(3)(c) of the Companies Act 2013:

(i) that in the preparation of the Annual Accounts for the year ended March 31 2017the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;

(ii) the directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312017 and of the profit ofthe Company for the year ended on that date;

(iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) the annual accounts have been prepared on a going concern basis;

(v) that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(vi) that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

32. Transfer of Amounts to Investor Education and Protection Fund

Pursuant to Section 125 of the Companies Act 2013 the Company is having unclaimed orunpaid dividends of '89152/- for the year ended 31st March 2010 and the balance as onthe date of completion of 7 years from the date of transfer to Unpaid Dividend Accountwill be transferred to the Investors Education and Protection Fund (the Fund) set up bythe Government of India on or after October 23 2017.

Status of unclaimed and unpaid dividend

Year Ended Amount of Dividend Unclaimed and unpaid dividend as on 31st March 2016 % of Unclaimed and Unpaid Dividend
March 312010 441.11 0.8915 0.20
March 312011 630.16 0.5216 0.08
March 312012 882.21 0.7706 0.09
March 312013 441.11 0.2624 0.06
March 312014

No Dividend Declared

March 312015 585.54 1.0745 0.18
March 312016

No Dividend Declared

Members who have not yet encashed their dividend warrant(s) for the financial yearended 31st March 2010 onwards are requested to make their claims to the Companyaccordingly without any delay.

Details about fransfer of unclaimed shares has been given in the Corporate GovernnceReport.

33. Listing with the Stock Exchange

Annual Listing Fees for the year 2017-2018 to the BSE Limited (BSE) and National StockExchange of India Limited (NSE) is paid where the Company's Shares are listed.

34. Acknowledgements

Your Directors wish to place on record their appreciation for the contribution made bythe employees at all levels but for whose hard work and support your Company'sachievements would not have been possible. Your Directors also wish to thank itscustomers dealers agents suppliers investors and bankers for their continued supportand faith.

For and on behalf of the Board
Nitin Fire Protection Industries Limited
(Rahul N. Shah) (Kunal N. Shah)
Whole-time Director) (Whole-time Director)
(DIN - 00073226) (DIN - 00077216)
Mumbai September 12017